Corporate credit cards are often a simple and efficient way to allow employees to make purchases on the organization’s behalf. Depending on the industry you are in, giving employees the freedom to buy items that your company may need can help keep things running smoothly.

There are also a number of benefits that come with using company credit cards including:

• Deals with vendors
• Tracking spending
• Improving business credit rating
• Eliminating ineffective employee reimbursement programs

However, there is a flip side to the corporate credit card: it can lead to abuse and overspending. These mistakes are costly for businesses and, if left unchecked, may lead to bankruptcy. No business wants to have more debt than they can afford.

The best way to ensure your company benefits from corporate credit cards is to manage them well. There are several ways that this can be done, including appointing a designated corporate credit card co-ordinator and regularly monitoring employee spending.

Here are some other tips to help you successfully manage corporate credit cards and employee spending.

9 Ways to Manage Corporate Credit Cards

You can do a number of things to ensure that your business benefits from having corporate credit cards in the hands of employees. These include:

1. Have a clear policy.

   Employees may sometimes be tempted to use their corporate credit cards for a personal purchase. While they often intend to pay the company back, this kind of spending should be discouraged. Let your employees know what is and what is not an appropriate use of their corporate credit card. Develop a policy and educate all your employees about the rules and what is expected of them if they are using a corporate credit card. An employee must know the rules before they are issued a card. Don’t rely on them reading a long document with a lot of fine print. It is also vital that they acknowledge their understanding of your company’s credit card policy.

2. Always get a receipt.

   Having documentation like a receipt makes it easier to ensure corporate credit cards are not being abused. No matter how much or how little was charged, employees should always provide you with a receipt. These receipts may also come in handy at tax time.

3. Distribute corporate credit cards sparingly.

   Having a corporate credit card is a big responsibility. It is a privilege that should be earned. Don’t feel that you need to allow all employees access to use one. As well, always ensure that you get the credit card back and cancel it immediately when an employee leaves the company.

4. Limit the spending.

   Create an expense policy that clearly indicates to employees how much they can charge on the card. Depending on your industry, you may need to set specific limits on airfare, hotel and accommodation, and other common employee expenses. Things can change in business and in the marketplace, so be sure to review these limits regularly to determine if they are still reasonable or if you need to change them. It is also wise to set a spending limit on each card. Senior staff may be permitted to have higher limits if necessary.

5. Regularly monitor credit card statements.

   It is important to monitor your statements to get an idea of what purchases each employee makes using the corporate credit card. This can also help you spot any purchasing problems or bad habits that an employee may have. Look for charges on personal items or items that employees may try to claim twice using any other purchase reclaim program you have. The best approach is to have supervisors or managers review corporate credit card purchases each month. They should be using your company policy to approve or decline the charges made on the card. Charges that are not in line with your company’s credit card spending policy should be the employee’s responsibility.

6. Set alerts.

   Your credit card company or your software can be used to set alerts that will notify you and/or your employees when the corporate credit card is being misused. Don’t be afraid to use them, as they are there to protect your organization.

7. Create a credit management plan.

   Having a credit management plan developed can help you stay in business with a minimal amount of debt. These types of plans are created by professionals and include a comprehensive look at your finances. They can help develop a budget and financial plan suited to your business.

8. Put employees on the line.

   Some companies have a reimbursement policy that puts the responsibility on the shoulders of employees to help prevent misspending. This works by only paying the employee the approved amount that they charged on the corporate credit card. Anything that was not authorized is their responsibility to pay back.

9. Designate a co-ordinator.

   Have someone monitor to ensure that all policies are being followed and that the paperwork is done correctly. They can also be in charge of cancelling company credit cards for employees who have left the company.

Having a good corporate credit card management process can help you avoid trouble in the long run. If you are interested in learning more about managing corporate credit cards appropriately, call Charles Advisory Services at 416-915-9007 or contact us here.