Up to 14% of Employee Expenses Are Overpaid, Study Shows AI Detects Errors

Even a few small errors in employee expense claims can quietly cost companies millions. Data from Rydoo, an expense management software provider, shows that firms are overpaying on employee reimbursements by 5–14% on average.

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While most expense submissions follow policy, gaps in manual review processes allow costly errors and even deliberate fraud to slip through. Rydoo analyzed over 10 million expense claims through its Smart Audit module, which uses AI to detect non-compliance.

Non-Compliance Drains Money and Time

The findings reveal that 86% of expenses comply with company policy, leaving 14% of claims at risk. This 14% includes both errors, such as misclassified or incomplete claims, and intentional actions like duplicates or falsified receipts.

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Left unchecked, these claims inflate operating costs and reduce potential VAT recovery. Manual expense reviews compound the problem. A mid-sized company of around 650 employees could spend 2,300 hours annually checking claims, yet still miss repeat patterns or anomalies.

“Advanced AI audit solutions can close control gaps by enabling finance teams to automatically review every claim in real time and apply policy consistently, while maintaining human oversight where it adds value,” said Sebastien Marchon, CEO of Rydoo. “With meaningful time and cost saving benefits, companies that fail to embrace technology in expense management will fall behind.”

However, artificial intelligence is changing the way finance teams approach expense compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term. By analyzing 100% of claims in real time with roughly 97% accuracy, AI flags anomalies automatically.

From Detection to Intelligent Governance

Low-risk, recurring claims – around 70% of submissions – can be processed without human intervention, freeing finance staff to focus on exceptions and higher-risk cases.

According to the study, AI not only improves accuracy but also reduces the hours spent on manual checks, improving operational efficiency across finance teams.

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With AI embedded in platforms, finance teams can shift from periodic auditing to continuous assurance, combining real-time monitoring with human-in-the-loop oversight. This approach ensures policy compliance while giving employees faster processing of legitimate claims.

While AI helps control compliance, it also creates new challenges. Fake receipts generated by AI tools and manipulated claims using simple software are becoming more sophisticated, making traditional manual audits increasingly insufficient. Marchon warns that 30% of expense fraud could be AI-generated in the near future, highlighting the need for technology-driven detection systems.

Real Savings and Strategic Value

Automation Automation Automation is defined as the procedure of making an apparatus, a process, or a system to operate by mechanical or electronic devices that replace human labor. Additionally, automation is also sometimes referred to as mechanization or robotization. For example, employees have many costly needs, including government regulations. However, robotic workers don’t need much other than some routine maintenance and the occasional bug fix for an equipment malfunction or software bug. There is no overtime Automation is defined as the procedure of making an apparatus, a process, or a system to operate by mechanical or electronic devices that replace human labor. Additionally, automation is also sometimes referred to as mechanization or robotization. For example, employees have many costly needs, including government regulations. However, robotic workers don’t need much other than some routine maintenance and the occasional bug fix for an equipment malfunction or software bug. There is no overtime Read this Term isn’t just about preventing overpayments. Rydoo’s data shows that around 70% of low-risk claims – like subscriptions, commute allowances, and routine purchases – can be processed end-to-end automatically.

This saves hundreds of hours per year and improves the consistency of reviews. High-value or ambiguous expenses still benefit from human oversight, allowing finance teams to focus on strategic, high-impact work.