Corporate credit cards are an important tool for many companies. Using the company credit card is often the ideal way to manage individual expenses like entertaining clients and business travel.
\r\nHowever, company credit cards are also one of the most notorious leaks of company funds to bad employee decisions. From simple bad budgeting decisions to outright fraud and theft, these cards create undue opportunity and temptation for employees to misuse company funds.
\r\nFortunately, you can keep these incidents to a minimum with increased accountability. When your employees know that every expense will be examined and recorded according to existing policies, you are far less likely to need an audit in the future. Here are five of the best practices for keeping your company credit card usage on the level.
\r\nEditor's note: Looking for the right accounting software for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.
\r\n\r\nOne of the biggest risks with a company credit card is not being able to determine who has made a fraudulent or suspicious charge. This happens most often when a team or whole department shares a single card. This means that anyone with the number, expiration date and security code can theoretically make a charge – with or without the team manager's knowledge or approval.
\r\nIn fact, department cards can even open you up to past employees who still remember the details. The solution? Assign cards to people, not teams. Each card should have an employee's name on it and they are solely responsible for how it is used. This way, any charge is linked directly to a person who can be consulted and audited. When they leave, their card is canceled. If a new person needs access, they get a separate card with a separate set of financial records.
\r\nWhen it comes to employees who have spending authority, the best way to keep everyone on the same page is to have a clear set of written rules. You want to define how much social employees are allowed to spend entertaining a client, when they are allowed to accept travel package deals, and how it is appropriate to spend per-diem budgets. The more rules you have defined, the easier it will be for employees to follow them.
\r\nOf course, unexpected situations happen. Mistakes happen, and employees have to think on their feet. When a questionable expense occurs in these circumstances, you realize that a new guideline is necessary to help employees deal with a similar situation in the future. Always be ready to write a new expenditures guideline, with leniency for the first employee to encounter an undefined situation. Consider putting together an easy-to-reference handbook so that employees can check their situation before making a decision or calling for guidance.
\r\nBefore entrusting employees with a company credit card, draw up a document with explicit terms. The document should present the expectations the company has about using the company card. At a minimum, you should include the following policies when drawing up your company credit card contract:
\r\nTo help you develop your credit card policy, search online for templates. There are numerous free and paid templates that help you customize your company credit card policy. Check-in frequently to make sure employees are following the rules you've developed. The following are a few resources to consider when developing your own company credit card policy:
\r\nPaying for client expenses is absolutely necessary for a number of account-based occupations. Your team members who are in charge of client relationships need the ability to take clients out to lunch and otherwise entertain them, and often to pay for their own travel expenses. This means they need a reasonably free hand with expenses, but this also creates the temptation to \"splurge\" a little on things the company might not approve of, such as personal hotel upgrades, entertaining romantic partners and inadvisable partying.
\r\nThe key to accountability with this kind of company credit card is a timeline. Make sure your employees who entertain clients can write a clear report of how they entertained the clients and what each expense on the card paid for. If the reports don't match, an audit is the next step.
\r\nBe ready to handle the emergencies and unexpected situations as they do come up. Many employees make mistakes with the company card when they have to solve problems on their own. Missing a flight, discovering a rental car was not reserved, dealing with a client who demands overspending.
\r\nIf you can, have a plan for handling the unexpected and out-of-control situations before they happen. Policies are a good place to start, but you may also want a help line that traveling or entertaining clients can call at all times for help. A travel manager or service and a financial manager who are available for situational consultations can help your employees make the right company card decisions in the moment.
\r\nIf, on the other hand, there is evidence of card misuse, be very careful about when and how you choose to discipline employees who overstep their bounds with the company card. Let the punishment fit the crime. Be lenient about understandable mistakes and strict about blatant abuse of the privilege.
\r\nAlso, be as transparent as you can afford to be so that other members of the team can see how you carefully address accounting issues. This will make it easier for employees to report their own mistakes and come to you when they're worried a coworker is misusing their card without fear of unreasonable consequences.
\r\nWhen it comes to financial accountability, record keeping is paramount. No matter how much you trust your team and how lenient you want to be, having clean financial records shouldn't hurt anyone who is aboveboard about their expenditures. This means that for every company credit card expense, there should be a clear and well-defined explanation.
\r\nStart by making it a policy to write a report each time the card is used. Just like how the police write a report for every time they have to fire their guns, it's not punitive when it's standard procedure. And if anything doesn't immediately line up on paper, don't hesitate to investigate. Ask the cardholder to write a clearer report, explain the unusual circumstances, or audit if you have to. It's always better to know.
\r\nKeeping corporate credit card accounts on the level requires a combination of well-written policies, record keeping and expert management. When your employees know exactly when and how they are authorized to use their cards, everyone will have an easier time using their cards correctly without mistakes or the temptation to splurge without permission.
\n","docType":"article","guid":"articles_1aff7c9d1a66803ce96a642fe405a396","lastModified":"2021-01-07T19:00:00.000Z","published":"2019-02-07T15:00:00.000Z","structuredData":null,"subtitle":"Increase accountability for your company's credit card holders.","template":"long_form","title":"5 Tips to Keep Control of Company Credit Card Accountability","type":"article","author":{"avatar":null,"bio":"With more than 15 years of professional experience within the field of high-technology, Steve Johansson brings a thorough and insightful take on technology news and trends. \r\n\r\nSteve has worked on the planning, development and execution of corporate communications programs for an extensive list of technology leaders, including Hewlett-Packard, Western Digital, Polycom, VeriFone, Spireon, ShoreTel, Palo Alto Networks, Extreme Networks, iPayables and many others.","name":"Steven Johansson","image":null,"slug":null,"social":{"facebook":"https://www.facebook.com/ipayables/","linkedin":"https://www.linkedin.com/company/150436/","twitter":"https://twitter.com/ipayables","website":"http://www.ipayables.com/"},"status":"enabled","title":null,"type":"New BDC Member","user":{"imagePath":"https://staging.business.com/images/uploads/user/profile/21bbfd189dfcac8a3db6f4a1806d2d42f7665.jpg","profile":{"company":"iPayables","jobTitle":"Director of Marketing","website":"http://www.ipayables.com/"}}},"breadcrumbs":null,"channels":{"primary":{"name":"Finance","slug":"finance"},"sub":{"name":"Finances","slug":"finances"}},"meta":{"robots":"index, follow","description":"If your staff uses company credit cards, here are a few tips for keeping card holders accountable.","title":"How to Keep Company Credit Card Holders Accountable - business.com"},"parsedContent":{"json":[{"component":"p","children":["Corporate credit cards are an important tool for many companies. Using the company credit card is often the ideal way to manage individual expenses like entertaining clients and business travel. "]},{"component":"p","children":["However, company credit cards are also one of the most notorious leaks of company funds to bad employee decisions. From simple bad budgeting decisions to outright fraud and theft, these cards create undue opportunity and temptation for employees to misuse company funds."]},{"component":"p","children":["Fortunately, you can keep these incidents to a minimum with increased accountability. When your employees know that every expense will be examined and recorded according to existing policies, you are far less likely to need an audit in the future. Here are five of the best practices for keeping your company credit card usage on the level."]},{"component":"p","children":[{"component":"strong","children":["Editor's note: Looking for the right accounting software for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs."]}]},{"component":"RfqWidget","props":{"className":"bz-form-widget","id":"bz-form-widget-0","widgetCategoryId":"10695"},"children":[" "]},{"component":"h2","props":{"id":"1-assign-one-user-per-card"},"children":["1. Assign one user per card."]},{"component":"p","children":["One of the biggest risks with a company credit card is not being able to determine who has made a fraudulent or suspicious charge. This happens most often when a team or whole department shares a single card. This means that anyone with the number, expiration date and security code can theoretically make a charge – with or without the team manager's knowledge or approval."]},{"component":"p","children":["In fact, department cards can even open you up to past employees who still remember the details. The solution? Assign cards to people, not teams. Each card should have an employee's name on it and they are solely responsible for how it is used. This way, any charge is linked directly to a person who can be consulted and audited. When they leave, their card is canceled. If a new person needs access, they get a separate card with a separate set of financial records."]},{"component":"h2","props":{"id":"2-set-clear-guidelines-with-credit-card-policy"},"children":["2. Set clear guidelines with credit card policy.",{"component":"strong"}]},{"component":"p","children":["When it comes to employees who have spending authority, the best way to keep everyone on the same page is to have a clear set of written rules. You want to define how much social employees are allowed to spend entertaining a client, when they are allowed to accept travel package deals, and how it is appropriate to spend per-diem budgets. The more rules you have defined, the easier it will be for employees to follow them."]},{"component":"h3","children":["Expect the unexpected"]},{"component":"p","children":["Of course, unexpected situations happen. Mistakes happen, and employees have to think on their feet. When a questionable expense occurs in these circumstances, you realize that a new guideline is necessary to help employees deal with a similar situation in the future. Always be ready to write a new expenditures guideline, with leniency for the first employee to encounter an undefined situation. Consider putting together an easy-to-reference handbook so that employees can check their situation before making a decision or calling for guidance."]},{"component":"h3","children":["What to include in a company credit card policy"]},{"component":"p","children":["Before entrusting employees with a company credit card, draw up a document with explicit terms. The document should present the expectations the company has about using the company card. At a minimum, you should include the following policies when drawing up your company credit card contract:"]},{"component":"ul","children":[{"component":"li","children":[{"component":"strong","children":["Dictate what types of purchases are permitted with the company credit card."]}," As an example, you will likely forbid cash advances or purchases of bank checks with a credit card. Most importantly, you should state explicitly that the card shouldn't be used for personal expenses.",{"component":"br"},{"component":"br"}]},{"component":"li","children":[{"component":"strong","children":["Provide a limit on the credit card."]}," Companies should list the maximum amounts allowed for purchases made with the card. To decide on an amount, evaluate the types of purchases you expect employees to make with the card and come up with what you and your account department feel is a reasonable limit.",{"component":"br"},{"component":"br"}]},{"component":"li","children":[{"component":"strong","children":["Consider a policy on how to submit accounting reports."]}," Within the policy, state when expenditure sheets must be submitted to your accounting department. As an example, you may require expense sheets every two weeks for all charges made to the company card.",{"component":"br"},{"component":"br"}]},{"component":"li","children":[{"component":"strong","children":["Develop a plan on how an employee should report any lost or stolen company credit cards,"]}," and add these rules to the contract.",{"component":"br"},{"component":"br"}]},{"component":"li","children":[{"component":"strong","children":["List any penalties if the rules aren't followed by the employee."]}," For instance, you could state that the card will be forfeited if the employee misuses it. You should also state that company credit cards must be returned upon termination or resignation."]}]},{"component":"p","children":["To help you develop your ",{"component":"Link","props":{"href":"https://www.business.com/articles/business-credit-expense-policy/"},"children":["credit card policy"]},", search online for templates. There are numerous free and paid templates that help you customize your company credit card policy. Check-in frequently to make sure employees are following the rules you've developed. The following are a few resources to consider when developing your own company credit card policy:"]},{"component":"ul","children":[{"component":"li","children":[{"component":"a","props":{"href":"https://www.betterteam.com/company-credit-card-policy","target":"_blank","rel":"noopener nofollow"},"children":["Better Team"]}]},{"component":"li","children":[{"component":"a","props":{"href":"https://resources.workable.com/company-credit-card-policy","target":"_blank","rel":"noopener nofollow"},"children":["Workable"]}]},{"component":"li","children":[{"component":"a","props":{"href":"https://www.rocketlawyer.com/business-and-contracts/employers-and-hr/company-policies/document/corporate-credit-card-policy","target":"_blank","rel":"noopener nofollow"},"children":["Rocket Lawyer"]}]}]},{"component":"h2","props":{"id":"3-ensure-that-client-expenses-match-a-timeline"},"children":["3. Ensure that client expenses match a timeline."]},{"component":"p","children":["Paying for client expenses is absolutely necessary for a number of account-based occupations. Your team members who are in charge of client relationships need the ability to take clients out to lunch and otherwise entertain them, and often to pay for their own travel expenses. This means they need a reasonably free hand with expenses, but this also creates the temptation to \"splurge\" a little on things the company might not approve of, such as personal hotel upgrades, entertaining romantic partners and inadvisable partying."]},{"component":"p","children":["The key to accountability with this kind of company credit card is a timeline. Make sure your employees who entertain clients can write a clear report of how they entertained the clients and what each expense on the card paid for. If the reports don't match, an audit is the next step."]},{"component":"h2","props":{"id":"4-have-a-clear,-consistent-plan-for-handling-problems"},"children":["4. Have a clear, consistent plan for handling problems."]},{"component":"p","children":["Be ready to handle the emergencies and unexpected situations as they do come up. Many employees make mistakes with the company card when they have to solve problems on their own. Missing a flight, discovering a rental car was not reserved, dealing with a client who demands overspending."]},{"component":"p","children":["If you can, have a plan for handling the unexpected and out-of-control situations before they happen. Policies are a good place to start, but you may also want a help line that traveling or entertaining clients can call at all times for help. A travel manager or service and a financial manager who are available for situational consultations can help your employees make the right company card decisions in the moment."]},{"component":"p","children":["If, on the other hand, there is evidence of card misuse, be very careful about when and how you choose to discipline employees who overstep their bounds with the company card. Let the punishment fit the crime. Be lenient about understandable mistakes and strict about blatant abuse of the privilege."]},{"component":"p","children":["Also, be as transparent as you can afford to be so that other members of the team can see how you carefully address accounting issues. This will make it easier for employees to report their own mistakes and come to you when they're worried a coworker is misusing their card without fear of unreasonable consequences."]},{"component":"h2","props":{"id":"5-dont-hesitate-to-investigate"},"children":["5. Don't hesitate to investigate."]},{"component":"p","children":["When it comes to financial accountability, record keeping is paramount. No matter how much you trust your team and how lenient you want to be, having clean financial records shouldn't hurt anyone who is aboveboard about their expenditures. This means that for every company credit card expense, there should be a clear and well-defined explanation."]},{"component":"p","children":["Start by making it a policy to write a report each time the card is used. Just like how the police write a report for every time they have to fire their guns, it's not punitive when it's standard procedure. And if anything doesn't immediately line up on paper, don't hesitate to investigate. Ask the cardholder to write a clearer report, explain the unusual circumstances, or audit if you have to. It's always better to know."]},{"component":"p","children":["Keeping corporate credit card accounts on the level requires a combination of well-written policies, record keeping and expert management. When your employees know exactly when and how they are authorized to use their cards, everyone will have an easier time using their cards correctly without mistakes or the temptation to splurge without permission."]}]},"resource":null,"sponsorship":{"sponsorType":"no-sponsor","name":null,"thumbnail":null,"bio":null,"slug":null,"status":null,"social":{"website":null,"linkedin":null,"twitter":null,"facebook":null}},"thumbnail":{"path":"https://staging.business.com/images/content/5c5/786d75a215ecc498b4570/1500-0-","caption":"Yulia Grigoryeva / Shutterstock","isBlurred":false},"bestPicks":null},"related":{"relatedArticles":[{"title":"How to Write an Effective Credit Explanation Letter for FHA Mortgages","canonical":"https://www.business.com/articles/writing-effective-credit-explanation-letters-for-fha-mortgages/","slug":"writing-effective-credit-explanation-letters-for-fha-mortgages","thumbnail":"https://www.business.com/images/content/5d0/b9df67b4374fb4c8b456c/1500-0-","dek":"Follow these tips to write a better FHA credit explanation letter.","lastModified":"2020-02-11T12:58:00Z","published":"2010-12-01T21:30:00Z","sponsored":false},{"title":"SBA Loan Default: A Complete Guide for 2020 and Beyond","canonical":"https://staging.business.com/articles/sba-loan-default-guide/","slug":"sba-loan-default-guide","thumbnail":"https://staging.business.com/images/content/5dc/047af7b437483068b4572/1500-0-","dek":"Here's comprehensive guide to all your questions about SBA loan default, forgiveness and the SBA Offer In Compromise.","lastModified":"2021-08-06T20:42:00Z","published":"2019-11-04T15:00:00Z","sponsored":false},{"title":"What Small Business Owners Should Know About Direct Deposit","canonical":"https://www.business.com/articles/direct-deposit-services-small-business/","slug":"direct-deposit-services-small-business","thumbnail":"https://www.business.com/images/content/5df/3cdfc9c658ac81c8b4567/1500-0-","dek":"Learn about the pros and cons of using direct deposit payroll services.","lastModified":"2020-07-23T17:07:00Z","published":"2019-12-17T16:30:00Z","sponsored":false},{"title":"A Nonprofit's Guide to Accounting","canonical":"https://www.business.com/articles/nonprofits-guide-accounting/","slug":"nonprofits-guide-accounting","thumbnail":"https://www.business.com/images/content/5e4/4ebdb5a215ef3248b457b/1500-0-","dek":"Accounting for a nonprofit organization can be complex with the strict tax requirements. 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