Adjustments to Expense Reimbursement Compliance Strategies under the Normalization of Remote Work
The pandemic drove the proportion of remote work from 17% to 41%, generating a surge in new reimbursement needs. Jessica Staley, Vice President at SAP Concur, advises companies to set clear reimbursement rules for home office equipment, internet, and furniture, and to use AI systems for 100% expense auditing. Taking VMware as an example, its quarterly 1.5 million reimbursement claims undergo full automated review, saving 8,000 full-time equivalent work hours, halving reimbursement wait times, and boosting employee satisfaction by 75%.
Editor's note:The author, Jessica Staley, is Vice President at SAP Concur. The views expressed in this article are solely her own.
Earlier this year, a marketing campaign by a Toronto restaurant sparked attention on social media, bringing corporate expense reimbursement discussions to the forefront of cultural conversation. The restaurant humorously renamed menu items after home office supplies to make them more "expense-report-friendly"—a chicken burger was dubbed a "mini dry-erase whiteboard," and a cheeseburger became a "silicone keyboard cover."
While this anecdote is amusing, it also highlights a reality: as remote and hybrid work models have become widespread post-pandemic, companies urgently need to upgrade their compliance solutions to address entirely new expense scenarios.
Adapting to the New Normal: From Travel Policies to Home Office Expenses
Before the pandemic, about 17% of the U.S. workforce worked from home; a year after the outbreak, that figure jumped to 41%. Today, a large number of employees who previously rarely submitted expense reports are now generating expenses regularly. In this context, companies must clarify policy expectations and leverage new tools to enhance compliance while maintaining employee productivity.
What lies at the root of compliance issues arising from remote work? A common pitfall is that companies attempt to apply existing rules directly to new scenarios they were never designed to cover. Companies need to acknowledge this shift and develop targeted new policies.
This means companies need to extend their travel expense management approach to cover new expenditures from a distributed workforce. For example, nearly all large enterprises have supplier relationships with designated airlines, car rental companies, and hotels, and set daily travel allowance caps. Now, home office expenses require an equally detailed level of specification.
Organizations should clearly list the types of equipment and services that are reimbursable, such as video conference lighting, monthly internet fees, and office furniture. Additionally, they can set spending limits on items like monthly supplies or larger purchases such as printers.
According to SAP Concur data, between 2019 and 2020, the frequency of expenses categorized as "miscellaneous" rose by 58%, reflecting new employee needs for professional equipment and supplies—such as ring lights. These items were not previously necessary, but as employees participate in video conferences more frequently, their practical utility has grown significantly. However, overly broad expense categories lack the necessary context to judge whether spending is reasonable, leading to numerous questions for finance departments. Companies should establish dedicated expense categories with clear parameters to minimize unclear expenditures.
Additionally, regulatory requirements must be considered. Several U.S. states, particularly California and Illinois, have detailed rules on what companies must reimburse. CFOs and their teams need to be familiar with these regulations to avoid potential litigation risks.
AI-Powered Compliance Audits: From Sampling to Full Coverage
Many companies deter fraud and unusual spending by stating that "all expenses will be subject to strict audits." Even if full manual audits are impractical, the deterrent effect of "expense claims may be reviewed" often effectively encourages employees to follow the rules.
The good news is that AI-based automated systems now make full-scale expense review possible for organizations of all sizes. These systems can evaluate expense reports in seconds, identify errors or suspected fraud, and flag items for manual review. Their comprehensive expense management capabilities accelerate the entire process, reducing wait times for employee reimbursements and improving overall efficiency for compliance teams.
Take VMware as an example: the company deployed an AI-driven expense management solution, shifting from random sampling manual audits to full, immediate automated audits of 150,000 expense reports each quarter. As a result, the company saved 8,000 full-time equivalent hours, cut reimbursement wait times in half, and boosted employee satisfaction by 75%.
Building a Culture of Compliance: Rules and AI as Dual Drivers
In the foreseeable future, expense report volumes are likely to remain high. But organizations have two key resources to build a culture of compliance: clear rules and AI-based audit tools. Most employees will comply once they know and understand the rules, while AI systems effectively catch oversights and attempts to "game the system."