The perils of the pocket perk:
Type the search term #companycreditcard into Twitter and it will reveal some interesting habits from employees entrusted with the company plastic. While many posts are just innocent fun and typically boastful jibes with social media friends, it raises questions: How can you control company credit card spend and how do you limit abuse of this little pocket perk that your employees value so highly?
There are many sound reasons why you would provide your employees with a company credit card, especially those who travel on a regular basis. The benefits they give you and your employees make it worthwhile because:
- It saves employees having to bear the brunt of costs they incur while travelling on business. For those who are permanently on the road, these costs can rack up very quickly and provide cash flow problems.
- Meanwhile, it gives the business complete visibility into who spent what, where and why, generating insight and opportunities to negotiate better rates with vendors.
8 tips to keep the company credit card under control
But, as the Twitter search shows, not all employees can be trusted to the same degree. And any misuse or abuse can be costly. So, what can you do to make sure the benefits outweigh the risks when it comes to issuing employees with a company credit card? Here’s our top 8 tips for success:
- Set expectations – be clear how the company credit card should be used. Set out the user’s responsibilities and what is expected of them, the types of expenses they can incur, and the proof of purchase they need to provide with each item.
- Limit liabilities – set spending limits for certain items like hotel rooms and establish overall spending caps to limit your liabilities. Review limits on a regular basis to ensure they are still reasonable and not being exploited.
- Control card issuing – be careful to limit the number of credit cards issued to essential users. Make sure users are aware of their responsibilities and be sure to collect and cancel cards when an employee leaves.
- Monitor spend – it’s good practice to monitor all items of spend. Lookout for items bought for personal use, or items that users may then try to reclaim via your usual expenses reclaim process again, sometimes referred to as double-dipping.
- Secure details – store and record details of all credit cards and their holders securely with encryption. Encourage users to look after the card as if it were their own. Make sure they know how to report theft or loss and to do so ASAP.
- Insist on receipts – while they may not be required for expense reclaim, it’s still good practice to insist on receipts for all purchases, particularly if you wish to reclaim the VAT that you are entitled to.
- Set alerts – your credit card provider can notify you of any suspicious activity or attempts to use the card outside of its intended remit. Make the most of these alerts.
- Approve & control – put in place steps that require supervisors or approving managers to accept every credit card statement from employees in their teams. And finally, appoint a designated controller who will be responsible for ensuring all of the above is in place!
Want to find out more?
Company credit cards are an excellent way to manage and improve visibility of your expenses spend, while at the same time empowering your people. But their use is not without risk. So hopefully these 8 pointers have been useful in helping you to manage their use within your business. If you want to find out more download our latest whitepaper 5 Ways to Improve Control over Spend.