It’s the moment you’ve waited for your entire professional career. The higher ups have met and decided to open the books to let you into the inner circle: you’re now a bonafide corporate credit card user.
And while getting plastic access might not actually be that dramatic, being a first time corporate cold holder can feel like a big deal. After all, this is company money you’re spending.
With the responsibility often comes a bit on confusion, particularly how and where one is entitled to use company cash. Is the Hyatt okay when a Best Western is around the corner? Is an expensive round of drinks for a client acceptable? What about personal meals with a friend?
While every company’s rules differ based on size (particularly young startups), there are a few general guidelines to follow to make sure you don’t get a call from accounting. We outlined some of the most notable here.
First, what is a corporate credit card?
You’ll hear the term “business credit card”, “company card”, “corporate credit card” and “small business card” thrown around interchangeably. With some nuance, these are all refer to the same thing – a card with authorized users who can spend on behalf of a company account.
On the rewards side, small business cards (companies with less than $4m in revenue) tend to have programs that earn points for small business needs (think office supplies and phone bills), while corporate cards are usually optimized for travel – some may even have partnerships with certain airlines or hotels that are beneficial to the company. For small businesses, these cards matter a lot as 42% of them use credit cards as their primary funding vehicle.
On an accounting side, corporate credit cards tend to have robust analytics about spending, and can sometimes be filed electronically, increasingly with the benefit of item specific L2 processing. Before you spend make sure you understand how your company submits expense reports.
Knowing how to optimize your company’s spending to generate rewards, and most importantly knowing who’s paying for what, will help to guide your purchase behavior.
Know your limits
This is probably the number one rule for company cards: don’t overspend.
For many, especially in large companies, the guidelines on spending limits come from mandatory trainings to new cardholders (JP Morgan reported 42% of large companies had such training programs). For others, this means looking up the company policy online, or in a pinch, talking with your manager, or someone in accounting.
The more ambiguous limits usually come from small and quickly growing startups, that have yet to formalize a spending plan. While we first and foremost always recommend having a conversation with whichever superior authorized your card, in a tight situation you can benchmark yourself against national averages. For example, if your company doesn’t have a specified per diem, it’s useful to know last year companies in major U.S. cities averaged $200-$400 for hotel costs and $106-$142 per pay for food. Air travel typically constituted a third of business trip expense, while “meeting and events” counted for only 5%.
Spending limits typically vary based on department, position and purchase type, so typically you should ask yourself how important a purchase is, and how does it proportionally line up in your budget. You generally want to spend as little company money as possible, but also don’t want need to stay in a cheap motel eating corner store snacks.
While less significant, it’s also good to keep track of transaction “velocity”, or more plainly the number of transactions you make on a business trip. While by itself it’s not inherently an issue, it can often make companies nervous (and give the accounting team headaches), so the less transactions generally the better, ideally one receipt per merchant.
Don’t Mix Business With Pleasure
Another big rule: if something is a personal expense, do not use the company card.
We get the line can be blurry sometimes, particularly for those in sales schmoozing with big clients. But if your job description doesn’t involve impressing potential clients, chances are you can quickly decide if a purchase if benefiting you or the company.
That means if you’re at Walmart buying office supplies for a conference, and see a tie you think would look nice for your next presentation – that’s not company money. A beer with a friend who’s in the town you’re visiting? Same deal. And while everyone’s tempted to try and slip a few dollars in on the company dime, keep in mind that 68% of companies conduct random audits to detect corporate card misuse. Not only will you be personally responsible for whatever money you spent on the company card, but your reputation and trust with the company could greatly suffer. Not worth the free meal.
Just because the plane landed, doesn’t mean the trip is over. The most crucial part of corporate cards comes at the end when expense reports are filed – and this means receipts. Get them for everything, and don’t lose them. We repeat: do NOT lose them.
First time card users reading that are probably rolling their eyes at the redundant warning, while those who’ve had cards for years are likely letting out a knowing chuckle. Receipts are the backbone of reimbursement, yet the little pieces of paper always manage to find a way loose.
The best practice is to take a picture of your itemized receipt the second you get it. Software is catching up to make processing and expensing less manual, but in the meantime it’s a good practice to get into.
As noted earlier, whether for accounting purposes or to help more easily catch fraud, some companies are fairly strict transaction and spending limit per merchant. Even if your company doesn’t have such a restriction, it’s best to minimize receipts across the board, and especially for one merchant. It might feel silly, but making sure everyone knows their full order and drinks before expensing a lunch – rather than going up five times for new items – will really improve your standing with the accounting team.
Another good practice is diligently following through with expense reports, by making sure items are properly categorized and labeled, and submitted ON TIME (read: don’t procrastinate until end of the quarter accounting is due.)
Don’t be afraid to enjoy the perks – when it’s appropriate
Since corporate cards are often used for travel, you may get a variety of benefits at airports and airlines.
For some cards like the Diners Club or Centurion level American Express corporate card, this means access to airport lounges of major carriers. For others this means preferred pricing on hotels or business class upgrades. Big companies are important clients for credit institutions, so if your company negotiated itself into a good deal, don’t be shy to take advantage of the benefits. As always, you want to be striving to minimize company spend, but with a free benefit like airport lounges, there’s no added cost.
Finally, if this all feels like a lot, don’t worry. If you’re a respectful employee who’s been authorized to use a company card, you probably deserve it. But if you find yourself in a situation where you want to have some precedent on what others do, you can always refer back to this guide. And if that feels like a lot then just remember the general principle, “Spend only what you can explain.”
Now safe travels you card slinger.