How Can We Prevent Employees from Overclaiming on Reimbursements? Seeking Advice!

Dear Seniors, please guide me in forming a reimbursement policy. We already have a reimbursement policy where eligible employees can claim petrol and mobile allowance. Petrol is claimed at Rs 3.5/km for 2 wheelers and Rs 9 for 4 wheelers, and diesel for Rs 6.5/km. Employees can claim petrol conveyance up to Rs 2000 at different levels. If the amount exceeds this, they can get approval from the manager and claim it. We have mobile allowances at different levels - Rs 500, Rs 1000, and Rs 1500. I feel that employees are taking advantage of this. They sometimes claim Rs 5000 to Rs 8000 for petrol, stating they go for client visits. Also, mobile bills amount to Rs 1600.

How to Cut Costs on Reimbursement Policies

How can I cut costs on this? What policy can I create so that they can claim everything within a limit? Please assist me with this.

Thanks

Internal Audit Team for Claims

Do you have an internal audit team that audits the claims submitted by employees? If not, then you need to institute such a team first. It is their job to audit the claims. Generally, the head of the internal audit reports to the Head of Finance or CFO, as the case may be.

Procedure for Raising a Claim

Now, coming to the procedure of raising a claim: Are the claims routed through the managers? If not, let all the claims be vetted by the managers and have them give an undertaking stating that they have vetted the claims submitted by their juniors and have not observed any anomalies as such.

Petrol Allowance Analysis

Secondly, in your company, the petrol allowance is Rs 3.5/KM. However, if an employee is claiming a petrol allowance of Rs 5,000/-, then it shows that the employee has traveled about 1,500 KM in the month. Assuming there are 25 working days, the per day travel works out to 60 KM.

I recommend discussing the matter of conveyance allowance with the HOD. Do not express doubt on the veracity of the claims; however, you may express your concern about the rising expenditure on the conveyance allowance.

Purpose of Employee Travel

Why do employees visit clients' places? Are they salespersons or technicians? You may introduce a new KPI for the HOD, that is "% of Conveyance Allowance Against Sales (or Service Cost)". Thereafter, he becomes accountable to reduce the cost.

Mobile Bill Allowance

Regarding mobile bills, all telecom companies are offering free calls, including free roaming, and free data worth 1 GB per day. In that case, why do they need such a hefty allowance? You may discuss this with the HOD and reduce it to Rs 500/month.

Thanks,
Dinesh Divekar