Issuing a corporate credit card can be a momentous occasion for both the employer and the employee. It proves the company has reached a level of business that allows it utilize more sophisticated expense management tools. For the employee it means they’ve reached a level of trust and experience within the business to warrant more responsibilities. However, before granting such privileges, an administrator needs to ensure certain things are in place.
1. What Type Of Corporate Credit Card Are You Using?
This is an important point because there are two main types of corporate credit cards. Corporate credit cards can be divided into company paid cards and employee paid cards. This determines the liability for charges made on the cards as well as who is responsible for making the card payments. Company paid cards are used by employees, but payments are made by the company. The company ultimately assumes liability for the charges made on the cards. It is also the company’s credit rating that is considered upon account application. For employee paid cards, the employee’s credit rating is checked before the cards are issued. The employee is responsible for the charges on the card and for making payments corresponding to those charges. Understanding which type of card your business uses will play an important part in creating a corporate credit card policy.
2. Is There A Corporate Credit Card Policy?
Because a corporate credit card is a financial instrument that’s based on a certain level of trust, there needs to be a protocol put into place dictating how it’s used and not used. Clear guidelines should be set regarding what constitutes legitimate use and what’s considered abuse or fraud. By establishing a written corporate policy, the employer can guarantee that any questionable financial activity is dealt with in a fair and consistent manner.
3. Who Is Responsible For The Corporate Credit Card Policy?
There should be a specific person or department who is responsible for the maintenance and enforcement of the credit card policy. This position would require ensuring that credit card bills are being paid on a regular basis, the expenses charged on the cards fall within the guidelines of the card policy and that the rules of the policy are enforced and updated when necessary. Those responsible for the credit card policy should also play a role in making sure that everyone in the company is aware of the policy.
4. Are Card Users Aware Of The Corporate Credit Card Policy?
Having a corporate credit card policy doesn’t help your company if it’s not effectively communicated to the employees. Before a card has been issued, employees should be trained in their proper use and what would be considered abuse. The repercussions for misuse or fraud need to be plainly spelled out. Annual policy reviews will keep this information fresh in people’s mind. Educating the employees about the rules and guidelines of credit card use is the first step in preventing abuse.
5. When Does The Corporate Credit Card Policy Take Effect?
If a corporate credit card policy is being enacted for the first time, having a specific date for the the policy to take effect allows everyone in the company to know exactly when they are expected to understand and adhere to the new rules. Without an explicitly stated starting date, violators of the policy could claim ignorance.
6. What Happens If The Corporate Credit Card Policy Is Violated?
Having a clear and consistent set of repercussions when it comes to corporate credit card policy violations is very important in maintaining an environment free of bias. Because the abuse of company funds can be looked upon as such a severe breach of trust that it could end someone’s career, having straightforward and unambiguous guidelines to deal with such financial transgressions is necessary to protect both the company and its employees.
7. Are There Spending Controls In Place?
Most corporate credit cards allow administrators to set spending controls. These can be customized using time limits, spending caps and purchase categorizations. By utilizing these options a company can mitigate any financial damage caused by a compromised card. Before issuing a card, it’s important to implement these spending controls and to inform the employee of the limitations.
8. Who Is Eligible For A Corporate Credit Card?
Having guidelines in place for the types of employees that are eligible for a corporate credit card will reduce confusion and maintain overall company morale. Many people see the issue of a corporate credit card as a sign of prestige and trust. Without clear guidelines in place, what may seem like random issuing of corporate cards can create jealousies and lower employee morale. Some companies will only issue cards to full time employees or people in specific departments. Some companies require employees to apply for a credit card. As long as there’s a consistent card issue policy in place, the likelihood of confusion or resentment is lowered.
9. Will Expense Reports Need To Be Filed?
Educating your employees on your expense reporting procedures will prevent confusion and reduce the need for chasing down receipts and reports. Because corporate credit cards generate monthly statements that can be monitored online in real time, some companies using corporate credit cards don’t require their employees to file expense reports. Other companies, especially those who use individually paid credit cards, still require their employees to submit reports detailing their expenses. Make sure your employees understand their obligations prior to issuing the card.
The Emburse Corporate Credit Card System
In association with Comdata, an industry leader in issuing commercial credit cards, the Emburse expense management system now offers corporate credit cards. If your business has a high annual revenue with a significant number of employees using company credit cards you may qualify for corporate credit cards. If you’re looking for an easier way for employees to deal with business expenses, get in touch with Emburse today for a free demonstration.