Expense Fraud: 5 Steps Business Owners Can Take to Prevent It
Monday, March 17, 2025
Running a business means wearing many hats, managing growth, keeping up with clients, and keeping a close eye on your books. One often overlooked risk is expense fraud.
Whether unintentional errors or deliberate abuse, expense fraud can quietly eat away at your profits and damage trust within your team. But with the proper steps in place, it’s preventable.
At J&S Accounting Services, we work with small businesses to tighten financial controls and create systems that prevent fraud before it starts. Let’s break down what business owners need to know.
What Is Expense Fraud?
Expense fraud happens when employees or contractors submit false, inflated, or duplicate expenses for reimbursement. This can include:
- Personal purchases disguised as business expenses
- Fake receipts or altered documentation
- Mileage padding or exaggerated travel claims
- Submitting the same expense more than once
- Using company credit cards for non-business items
5 Steps to Prevent Expense Fraud in Your Business
1. Implement a Clear Expense Policy
Outline exactly what is—and isn’t—reimbursable. Include rules around receipts, timeframes for submission, mileage tracking, and approval protocols. The more precise your policy, the harder it is to abuse the system.
2. Require Documentation for Every Claim
Receipts should be mandatory, and digital tools like Expensify, QuickBooks Online, or even Google Drive can help keep things organized. Don’t accept vague or undocumented expense claims.
3. Use Expense Management Software
Manual processes leave room for error (and temptation). Digital platforms offer real-time oversight and flag suspicious claims automatically, saving time and adding a layer of accountability.
4. Conduct Random Audits
Regular spot checks show that you’re paying attention. They don’t have to be aggressive enough to keep things honest and discourage cutting corners.
5. Train and Trust, But Verify
Most employees are honest, but providing training on expense policies and the consequences of fraud helps reinforce expectations and shows you take it seriously.
Where Is Expense Fraud Most Commonly Spotted?
Expense fraud tends to happen in areas where:
- There is limited oversight or one person handles all the finances
- Travel and entertainment expenses are frequent
- Company credit cards or petty cash are used with minimal tracking
- There’s a culture of “it’s not a big deal” or poor internal controls
Industries like construction, consulting, sales, and marketing, where staff may travel often or manage client entertaining, see this most frequently.
Who Is Most Commonly a Victim of Expense Fraud?
Small and mid-sized businesses are most at risk, especially those without a dedicated finance team. In many cases, the fraud is committed by trusted long-term employees who know the systems and how to work around them. That’s why regular oversight is key, no matter how close your team is.
What Should You Do If You’re Accused of Expense Fraud?
If you’re an employee or contractor accused of submitting fraudulent expenses:
- Remain calm and cooperative
- Gather your documentation (receipts, travel logs, email approvals)
- Ask for clarification on the specific concern.
- Consult with HR or legal if necessary. Whether intentional or not, take accusations seriously and communicate openly while your case is reviewed.
What Are the Consequences of Committing Expense Fraud?
Consequences depend on the severity, intent, and company policies, but may include:
- Immediate termination of employment
- Repayment of the fraudulent amount
- Legal action or criminal charges in cases of large-scale or repeat fraud
- Damage to personal and professional reputation
Even small frauds can have significant consequences, especially when trust is broken.
Let’s Protect Your Business
At J&S Accounting Services, we help Savannah business owners tighten their internal controls and set up smart systems that reduce risk, without micromanaging your team. Whether you need help creating an expense policy, implementing QuickBooks Online, or running an internal audit, we’re here to help.
📍 Local, experienced, and invested in your success.
Need help reviewing your current expense process?
Let’s schedule a consultation and protect your business from the inside out.
👉 Contact J&S Accounting Today
About J&S Accounting
At J&S Accounting, we provide expert bookkeeping services tailored to the unique needs of small businesses and nonprofits. We recognize the challenges that come with maintaining accurate financial records and how vital this is for the smooth operation and growth of your business. As a woman and minority-owned firm, we’re proud to offer our expertise to businesses in Savannah, GA, and across the nation, helping them navigate financial complexities and achieve better financial management.
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Disclaimer:This content is for information purposes only and should not be considered legal, accounting, or tax advice, or a substitute for obtaining such advice specific to your business from a professional accountant. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. J&S Accounting does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. J&S Accounting does not warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers and viewers should verify statements before relying on them.
© 2023 J&S Accounting. All Rights Reserved.
Disclaimer
This content is for information purposes only and should not be considered legal, accounting, or tax advice, or a substitute for obtaining such advice specific to your business from a professional accountant. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. J&S Accounting does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. J&S Accounting does not warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers and viewers should verify statements before relying on them.