Credit · June 26, 2020

Start a Policy Around Your Company Credit Card Program

A company credit card can be a fast and convenient way for your employees to cover business expenses. If they don't have to spend their own money, they don't need to wait for reimbursement.

However, this system involves more trust. It's easy for employees to run into issues with a company card if it's not clear exactly what's allowed. To get the most out of your company credit card program, consider creating a written policy covering key topics.


Program oversight

First, determine who will oversee the program. This could be a member of your accounting team or someone within your company who has prior business management experience. The program supervisor will track charges on all company accounts. They'll also be responsible for issuing new cards. Employees who need a company credit card can submit a request to this person.

Limits

With a business credit card, you set a limit for each employee's account. These limits can vary from employee to employee, and your policy could allow certain positions within the organization to have larger limits based on need. For example, salespeople who entertain clients could have a $3,000 limit, while in-staff employees who only need to cover incidentals might have a $500 limit.

Let employees know what they can spend each month. Make clear that if they go over, they're responsible for any penalties that come from spending past the card maximum. Your credit card company may allow you to adjust the limits at your convenience. If an employee has a business trip that will be more expensive than usual, they could request a temporary increase for that time.

As you plan credit card limits, make sure whatever you pick fits your monthly spending budget. You'll need enough cash flow to pay off all charges if multiple employees reach their limit.

Receipts

Your policy should also explain when to submit receipts. Without these, you'll just see the overall charge and the vendor, but you won't know exactly how the employee spent the money.

With a company credit card, employees don't need to request reimbursement because the charges are billed to the company directly. Your business will receive the monthly credit card statement, and you can see how much each employee spent. Your accounting department can meet with employee supervisors each month to confirm all purchases were for appropriate business purposes.

To avoid excessive paperwork, you may want to set a spending minimum that requires a receipt. For example, ask employees to include receipts for charges over $25 but not under $25.

Restrictions and penalties

Most policies restrict employees from using company cards for personal spending. You may also want to set up any other rules you think are appropriate, such as spending on alcohol or anything over $100 must be approved by a supervisor.

Educate employees about credit card transactions that lead to extra costs, such as international spending or cash advances. If employees still make penalized charges, consider making them responsible for the fee.

Disputes

Your policy should explain what happens when your accounting department sees a charge they don't think is appropriate. For example, the employee must bring in the receipt and then justify the purchase with their supervisor. If they can't, they need to reimburse the expense personally.

Have your written policy lay out the consequences for when an employee uses the card inappropriately. Do they keep the card so long as they reimburse the improper charges? How many warnings will an employee get before they lose the company credit card or even their job?

Fraud

Because there's always a risk that a card gets stolen, your policy should explain how to handle credit card fraud. Consider providing access to an online account so employees can review transactions, and have them call the credit card company immediately to report lost or stolen cards or when they notice fraudulent charges. Then, have them notify the person in charge of your company card program.

In addition, the head of the program should keep an eye on balances each month to see if there's any unusual spending. That way, you can get any issues fixed and return to normal as soon as possible.

By thinking through these issues and laying them out in a clear written policy, you'll ensure employees use company credit cards responsibly.

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This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.