Define Employee Credit Card Responsibilities
If you issue credit cards to your employees, you need to implement rules that govern how your employees can use the credit card. They’ll be responsible for following these rules and for keeping the card safe and secure. Employee credit card policies may include, but are not limited to:
Who can use the cardSpending limits per cardApproved expenses that may be charged to the cardRepercussions for inappropriate use of the card
You need to communicate spending limits, activities considered violations, and repercussions for using the card inappropriately. Employees are responsible for making sure the card is kept in a safe location, that the card account is free from fraudulent activities, and that the card’s number is kept private. You may also want to state that the business credit card is only to be used by the employee and not any other individual.
Spell Out Spending Limits
You’ll need to establish rules and guidelines that dictate activities or transactions where the credit card should be used, and how much can be spent on the card. In most cases, the spending should be limited to the needs of specific employees for certain tasks or travels. Each department can have its own spending limits, and they should be added up and synchronized with the department’s overall expense budget. For example, you could limit each card’s spending to no more than $3,000, but if an increase is needed, an employee can make a case for it with the chief financial officer (if you have one) or you. Every employee should not exceed this limit, and if one does, they should cover any over-the-limit fees. Lastly, the company’s credit cards should never be used for cash advances.
Require a Regular Usage Report
You’ll need a process to hold employees responsible for the company’s credit card usage. At the end of each month, employees should submit a detailed report of all charges, receipts, and applicable accounting codes. Every employee should ensure that they attach the expenditure receipts to the monthly statement before submission to the company for verification purposes. All these usage reports need to be done on time to avoid late card payments. This will help you monitor your monthly expenditures with ease, and auditing will be simpler.
Clearly State That Cards Are Not for Individual Expenses
It may be wise to be very strict on the usage of the employee credit card, clearly stating that no one is allowed to use it for personal expenses. The definition of personal usage, in this case, is an expense not related to the operation of the business. The company should have specific consequences for any employee who uses the card for their own personal expenses.
Review Employee Credit Card Usage
If your business issues employee credit cards, you should conduct a review of each employee’s card usage each month. You can include the employee’s supervisor, too, and will definitely want someone from the accounting department. The supervisor of the employee should ensure that the usage of the card is limited to what it was meant for. Additionally, the accounting department should verify whether all the receipts and other expenditure documents submitted by the employee are authentic. Every company that uses corporate and employee credit cards should have a clear, effective, and detailed employee credit card policy to head off any misuse of the cards. It can avoid issues or misunderstandings, and prevent bottlenecks in case an employee needs to incur work-related expenses and has no other payment method.
