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Verifying restaurant receipts requires more than meets the eye

by Uri Kogan July 12, 2021

Our ongoing “Did you know?” series highlights the capabilities and benefits of AppZen Expense Audit, bringing you deeper into what makes it tick and how you can take advantage of its capabilities. In this post, we look at receipt verification in a particular context: restaurants.

Eating out on a business trip, whether alone, with colleagues, or to entertain clients and customers is, by far, the single, largest source of T&E expenses. In fact, so far this year, meals represent nearly 27% of all expense lines processed by AppZen. (Mileage, the next most common expense type, represents less than half as many.)

But unlike some other expense types that are relatively straightforward, restaurant meals present auditors with peculiar complications and require masterful capabilities to address with automation, at scale. Let’s take a look at some of the quirks unique to meals and how AppZen’s Expense Audit is able to address them.

Quirk #1: The total isn’t necessarily the total.

When you eat at a restaurant with table service in the U.S., the check often arrives with an itemized receipt. You plonk down your credit card and then are handed another receipt to which you add the tip. Same transaction, two different documents, with different totals, time stamps, possibly even different dates, if you’re at the hotel bar late into the night. And if you’re only submitting the itemized receipt, there’s no way to know exactly what the tip was.

Expense Audit, powered by Mastermind AI, is smart enough to recognize when two meal receipts represent the same transaction, even when some of the data is a bit off. It also checks meals for the itemized receipt, which most companies require in their policy.

Quirk #2: Some restaurants aren’t really restaurants.

Sometimes they are other kinds of businesses, including types typically unauthorized for expensing, such as gentleman’s clubs, masquerading as restaurants by their merchant category codes. Normally an easy way to categorize spend, these codes can be distorted, so unauthorized charges can hide here easily.

Expense Audit doesn’t content itself with looking up merchant category codes or taking the employee’s word for it. In Accounts Payable, we’re used to controls like 2- and 3-way matching that ensure everything checks out. Since that’s not possible in T&E expenses, AppZen looks up each merchant online to validate the true nature of the business.

Quirk #3: Who pays?

When out to dinner with colleagues, who pays the check? Many companies require the senior-most employee to pay, but how carefully is this checked? Since there are two receipts, what happens if two folks try to reimburse? Or the same person submits both receipts, unwittingly or intentionally, on separate expense reports, months apart? What about sneaking in extra meal spend beyond the approved threshold by having different colleagues cover each meal?

Expense Audit includes a “manager as attendee” check that can verify whether one of the attendees listed is the manager of the person who submitted the receipt. It’s hard to track when two receipts are submitted separately by two different employees, but Expense Audit has a perfect memory for every line item, receipt, report, and employee it’s ever seen from your company. It looks at every one, and reads and understands each receipt, so no matter what information is entered in the expense report, it can figure out when multiple receipts represent the same transaction. And it can track the total spend by submitters and attendees in parallel to make sure everyone stays within daily limits, whether they paid for meals or not.

Quirk #4: Not everything on the check is ok.

Many organizations have policies against expensing alcohol, whether specific limitations on the percentage of the meal check, restrictions tied to a client project, or grant funding that has an alcohol prohibition or limitation in it. But the check doesn’t necessarily call out every item with alcohol, nor does it provide a separate total and percentage. How do you discern the difference between a Grey Goose and a goose liver pâté, or a shrimp cocktail and a cocktail special?

This is where it helps to build true domain expertise into your AI. AppZen’s AI understands and discerns alcohol brands, as well as dishes that have alcohol-sounding names but aren’t, and can apply different policies dynamically as needed.

Quirk #5: What’s appropriate can vary widely.

On the same day, a business traveler can grab a burger, fries, and drink on the way to the airport for $8 and take clients to a steak dinner for $1,000. A reasonable check size at McDonald’s in Columbus is very different than at Delmonico’s in New York, so if someone expenses $100 on fast food for themselves, something is awry.

When AppZen checks merchants online, it also checks what price band they’re in. If an employee travels to a local spot that isn’t in the current database, Mastermind AI can determine whether the check is reasonable for the number of meal attendees.

Quirk #6: One nice meal a day might be fine. Five isn’t.

Many expense types are measured in isolation. Was the flight in policy? Was the hotel allowed? But meals are also often grouped and counted against a daily limit. This is easy to check if all the day’s meals are on the same expense report, but what happens when one meal ends up on a different report a month later? 

But Expense Audit is powered by Mastermind AI, which never forgets. The meal that puts the employee over their daily limit, even if it’s submitted months later, will get flagged as high risk.

Wondering what else AppZen Expense Audit can do? Check out AppZen Expense Audit on the web, or reach out!

Uri Kogan

Vice President of Product Marketing