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Employee credit cards can be an effective way to help manage business expenses with the potential to earn rewards. To get the most out of this tool, it’s important to establish a well-defined policy for employees to read, agree, and sign before they get their cards.
Here are some key areas that are worth considering when deciding how to manage company credit cards for employees:
Card eligibility rules
Spending limits and approved charges
Repercussions for card use violations
Issuing rewards
What Is Employee Corporate Credit Card Management?
Managing employee corporate credit cards, like the American Express Corporate Platinum Card®, entails administering the use of company credit cards for employees and ensuring that policies are followed. For example, requiring employees to track expenses can help ensure they stay on budget and spend on approved items.
Effectively managing employee credit card usage can enable organizations to have more transparency over employee spending. It can also help to ensure accuracy in financial reporting and potentially prevent fraud or misuse of funds.
Strategies for Employee Credit Card Management
Some strategies on how to manage company credit cards include determining eligible users, the allocation of rewards, and clear guidelines for usage.
Determine Employee Credit Card Eligibility
Some businesses limit the number of employee credit cards issued to essential users. For example, companies might issue them to trusted employees who take frequent business trips, entertain prospective clients, or regularly purchase equipment and supplies on behalf of the company.
Besides making sure that only those who need cards have them, setting up clear eligibility requirements can help take the personal factor out of the equation. It can be less likely to affect morale if employees who are not granted cards clearly understand why.
Decide How Employee Credit Card Rewards Are Allocated
Whether points, miles, cash back, or other perks, rewards and card benefits can be a major attraction for most business and corporate credit card users. Part of handling business credit cards for multiple employees can also include a rewards policy for authorized users.
It’s up to the business to decide which options work best. Some options include:
Each card member keeps their rewards. The employee keeps the rewards they earn.
Rewards are divided between the card member and the company. The employee keeps half or a preset percentage of the rewards, leaving the rest for the business to use as it sees fit.
The company keeps the rewards. All rewards earned by using employee credit cards stay with the company and go toward company expenses. For example, miles may be redeemed toward business travel for any employee. Or the company might redeem rewards for gift cards to give to all employees.
All options offer different benefits. For example, sharing rewards with employees can help increase morale, while keeping perks may reduce costs.
Set Approved Expenses and Enforce Limits on Corporate Credit Cards
Companies can set limits on the types of business expenses based on the item, department, and card user. Try to clearly define what is considered an approved business expense and a personal expense. For example, employee credit cards for the sales department can be exclusively used for flights, hotel stays, entertainment, and meals when meeting with prospective clients.
Setting spending limits on corporate credit cards can also be key.
Consider the following best practices to help enforce corporate credit card limits:
Set limits through your credit card issuer. For example, the American Express Employee credit card program helps you make the most of your membership while staying in control of your business spending.
Create a clear policy that outlines how much employees can spend for certain expenses.
Determine a process for employees to make request for purchases above their limit.
Review spending management tools to monitor credit card transactions in real-time.
Establish clear roles on managing employee credit card receipts, such as when they will need to submit them to the accounting department.
Consider updating your guidelines on a regular basis, whether annually, semiannually, or quarterly, depending on what works best for your business, such as if your business adjusts spending limits based on quarterly financial reports. It’s important to clearly update any guidelines and have employees sign off on policy changes.
Outline Clear Employee Expense Report Requirements
Strictly enforcing expense report deadlines can help ensure accounting departments have the information they need to close the books every month. Having strict requirements can also help to keep employees accountable for their spending.
Managing employee credit cards effectively can entail enforcing eligibility guidelines, spending limits, expense report requirements, rewards usage, and consequences of policy violations.
It's common to ask employees to submit expense reports with receipts or invoices. Provide guidelines on exactly what information must be included and how often to turn in reports. Your accounting department can compare these to their records to ensure accuracy by monitoring, reviewing, and reporting any inconsistencies.
Some company credit cards for employees offer time-saving built-in features, like the ability to generate reports for each employee card, freeze and unfreeze employee cards, and categorize purchases.
Consider How to Handle Employee Credit Card Spending Violations
Part of creating a clear employee card policy is determining the consequences of spending violations.
It’s up to the business to decide how to handle infractions and enforce consequences, though there are several best practices to consider:
Require employees to pay the difference for small amounts in overspending or to explain in writing the extra charge.
Send warnings to employees who repeatedly violate policies.
Revoke credit card privileges for multiple offenses.
Escalate major problems like intentional fraud and consider terminating employment.
Once you have drafted this policy, have your legal team review it to ensure it complies with local, state, and federal law, and to identify any loopholes that could harm the business.
Managing Employee Credit Cards
Employee credit cards can be a helpful tool to simplify and increase visibility in company finances. Employees may also find it simpler to make purchases and be more productive in their day-to-day work. Managing employee credit cards effectively can entail enforcing eligibility guidelines, spending limits, expense report requirements, rewards usage, and consequences of policy violations.
FAQs
What tools can help businesses manage corporate card spending?
Some tools businesses can use include expense management software, which some corporate credit card companies offer. Businesses can also use software to capture receipts and documentation of expenses.
What factors should be considered when determining eligibility?
Some eligibility factors include how long an employee has been with the company, their role, and how frequently they travel. For example, a sales manager who meets with clients often or an HR manager in charge of purchasing supplies may benefit from a corporate credit card.
What steps can be taken if an employee consistently violates spending rules?
If any employee violates spending rules, businesses can give an initial warning. Other steps can include requiring the employee to provide written documentation of the reasons for overspending or reimburse the business. For repeat or larger offenses, businesses can revoke credit card access, give a more severe warning, or if need be, terminate the employee.
How should businesses allocate rewards earned on corporate cards?
Businesses can choose how to allocate rewards. Some options include allowing the employee to keep all the rewards they’ve earned, distributing them equally among staff or employees, or keeping some or all of the rewards for the business.
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