Giving employees access to company funds can feel like a risk. Many finance leaders worry that increasing access to business spending will also increase the likelihood of fraud.
But in reality, the opposite is often true.
Outdated, manual expense processes can make it harder to detect and prevent fraud. Without clear visibility and control, businesses leave themselves exposed to errors, misuse and deliberate abuse.
We’ll explain what expense fraud is, why it happens and how you can reduce the risk by modernising the way your company manages spending.
Key takeaways:
- Expense fraud is often preventable. It’s not always intentional – unclear policies, manual processes and lack of oversight are often the root cause.
- Traditional expense management creates risk. Shared cards, delayed reporting and manual tracking make it harder to detect and control fraudulent spending.
- Visibility and control go hand in hand. Real-time tracking, spending limits and clear approval workflows make it easier to spot issues early.
- Empowering employees can improve security. Giving individuals controlled access to company funds increases accountability and reduces misuse when supported by the right systems.
What is expense fraud?
Expense fraud occurs when an employee submits a false, exaggerated or duplicate claim for reimbursement.
It’s one of the most common types of employee fraud – and it’s not always intentional. Whilst some cases involve deliberate misuse, others stem from confusion, unclear policies or simple human error.
For example, submitting the same receipt twice or incorrectly claiming shared travel costs as individual expenses can both fall under expense fraud.
Unintentional or not, however, expense fraud is a major problem. In fact, things like exaggerating mileage or buying office supplies and keeping them for personal use are estimated to cost UK businesses around £2 billion a year.
All these little things add up – and that makes it important to catch them before they get out of hand.
Common types of expense fraud
Expense fraud can take several forms. The most common include:
- Mischaracterised expenses: Personal purchases claimed as business expenses (e.g. a personal trip submitted as a work expense).
- Fictitious expenses: Fake or altered receipts submitted for reimbursement.
- Overstated expenses: Inflating the cost of a legitimate expense, such as increasing the reported tip on a meal.
- Duplicate claims: Submitting the same receipt multiple times and receiving multiple reimbursements.
Understanding these categories makes it easier to spot red flags early.
Why does expense fraud happen?
Expense fraud isn’t always the result of calculated wrongdoing. In many cases, it’s driven by a mix of opportunity, ambiguity, and behaviour.
Examples include:
- Employees unclear on what qualifies as a legitimate expense
- Frustration with restrictive or outdated processes
- Perceived unfairness (e.g. senior staff spending more freely)
- Lack of oversight or delayed review processes
Traditional expense systems often make these issues worse. When spending is centralised, manual and only reviewed after the fact, it becomes difficult to catch problems in time – or prevent them altogether.
The problem with ‘old-fashioned’ expense management
In many companies, expense management still relies on outdated processes.
This might look like having a shared company card passed between employees, a single person responsible for making purchases or manual expense claims submitted long after the transaction.
These approaches create several risks. It’s unclear who made specific purchases. Issues are often only spotted weeks later, and all the manual processes can lead to duplication and mistakes.
In short, the less visibility you have, the harder it is to control spending.
How to reduce the risk of expense fraud
Modern expense management flips the traditional model on its head. Instead of restricting access, it focuses on visibility, control and accountability.
Here are some of the most effective ways to reduce expense fraud:
1. Set clear spending rules
Make sure employees understand exactly what they can and can’t claim.
- Create a clear, accessible expense policy
- Define categories, limits, and approval processes
- Communicate consequences for misuse
Clarity reduces both intentional fraud and accidental mistakes.
2. Give employees controlled access to funds
Providing employees with their own company cards can actually improve control – if done correctly.
- Set individual spending limits
- Tailor permissions based on role or seniority
- Avoid shared cards that reduce accountability
When employees are responsible for their own spending, ownership increases and misuse decreases.
3. Track spending in real time
Real-time visibility is one of the most effective fraud prevention tools.
- Monitor transactions as they happen
- Flag unusual or out-of-policy spending instantly
- Avoid relying on end-of-month reviews
The sooner you spot an issue, the easier it is to resolve.
4. Automate approvals and oversight
Manual processes create gaps. Automation helps close them.
- Set up approval workflows for transactions
- Notify managers of unusual spending
- Reduce reliance on manual checks
This ensures consistent oversight without slowing teams down.
5. Build a culture of accountability
Fraud prevention isn’t just about systems – it’s about behaviour.
- Encourage transparency around spending
- Provide training on expense policies
- Reinforce that spending is monitored and reviewed
When expectations are clear and visibility is high, employees are far less likely to misuse company funds.
Pleo – a smarter way to manage business spending
Looking to make business spending both easier and safer? Look no further.
With individual company cards, custom spending limits, real-time tracking and automated approvals, Pleo gives finance teams full control and visibility without slowing employees down.
Instead of chasing receipts and reviewing expenses after the fact, you can prevent issues before they happen.
Not convinced? Take a look at what our customers are saying about Pleo:
“Pleo allows me to trust the system and the approach we have in place so I don't have any uneasiness about the level of spending in our business because I have great visibility and oversight."
- Damien Ponweera, Techspace
Final thoughts
Expense fraud is a real risk – but it’s often a symptom of outdated processes rather than employee intent. By moving away from manual, centralised systems and towards a more transparent, real-time approach, you can significantly reduce that risk.
Ultimately, the goal is to enable safe spending. With the right tools, policies and visibility in place, you can empower employees whilst keeping full control over your company’s finances.
