The perils of the pocket perk
Search the hashtag #companycreditcard on Twitter, and it will reveal some interesting habits from employees entrusted with the company plastic. While many posts are innocent fun and typically boastful jibes among 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, especially those who travel on a regular basis, with a company credit card. The benefits they offer your business and your employees make it worthwhile because:
- It saves employees having to personally 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 cause cash flow problems.
- It gives businesses complete visibility into who spent what, where and why, generating insight and opportunities to negotiate better rates with vendors.
Read the report to find out what SMBs should look for when trying to watch their spending.
How to manage company card use
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 a company credit card? Here are our top eight tips for success:
- Set expectations. Be clear as to 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 the company.
- Monitor spend. It’s good practice to monitor all spending. Look 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 purpose. Make the most of these alerts.
- Approve and control. Put steps in place that require supervisors or approving managers to accept every credit card statement from employees on their teams. And finally, appoint a designated controller who will be responsible for ensuring all of the above is in place!
Company credit cards are an excellent way to manage and improve visibility of your expenses spend, while at the same time empowering your people. To learn more about controlling spend, download the 5 Steps to Strategic Spend Management.