It is very easy for business-related expenses for official trips, sales calls, and entertaining clients to escalate. You can help your company set limits on expenses and control official business charges with a corporate expense card.
While it can be a convenient tool to ensure that your company achieves some of its goals, a company-issued charge card is easy to abuse, if there are no guidelines on its proper and prudent use.
What is a corporate charge card?
A corporate charge card is different from small business and personal credit cards. Some companies provide a select number of employees with a credit card to charge approved expenses related to the conduct of business. The card contains the name of the company and the name of the employee.
Managing the use of a corporate charge card
It is very easy to abuse a corporate charge card if there are no rules limiting its use. Your company will make savings if you exercise proper corporate credit card expense management.
1. Keep corporate and personal card expenses distinct and separate
It is very easy for employees to charge some personal expenses on their corporate credit cards. They think that they can pay the company when payment is due. But they can forget about it. See to it that you have rules discouraging employees from charging personal purchases on company cards. They should understand what charges are acceptable.
2. Require proof of all expenses
Ensure that your employees are using the corporate credit card correctly. Require them to submit receipts for all credit card charges. The practice will give you a clear view of how your employees use the credit card. Moreover, it removes the potential of committing fraud, since the IRS allows no receipts for purchases under $75. You also need those receipts as proof of all business expenses in case of a tax audit.
3. Set spending limits
It is vital for employees to understand what and how much can be charged to the corporate credit card. Your expense policy should detail what types of business-related expenses are allowed.
4. Issue corporate credit cards sparingly
You show your employees that you trust them by giving them corporate credit cards. However, it is critical for your business security and growth to only issue credit cards when necessary. A company credit card is easy to abuse. Small purchases under $75 will still amount to large sums of money if the card is fraudulently used regularly.
5. Monitor the spending habits of your employees
It is easier to manage corporate credit card expenses if you are able to analyze your employees’ spending patterns. You can get the information from the regular statements from the bank or the card issuer. You’ll be able to see the fraudulent charges, whether you receive a report from your employee or not.
Employees can potentially abuse the trust you give them when you do not keep them in check. These best practices will help you monitor and manage your corporate credit cards efficiently.
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