Corporate Credit Card Policy Best Practices - 2023


When a company is driving towards growth, many investments need to be made. Right from working space to infrastructure to employees, the company needs to shell out a few dollars for attaining its goals. 

In this process, recurring expenses like software and hardware can't be taken care of by a single person. You will need to allocate it to different people and hand them a corporate credit card which they will use for official purchases like signing up for a new SaaS solution for a department or buying a laptop for new joiners, etc. 

But without a drafted policy for the expense card, there are chances of your employees overusing it without limits unnecessarily. That is why you need to have a completely drafted Corporate Card Expense Policy.

When you are looking to draft an expense policy for your employees, all you would want to tell them is to spend the amount cautiously, as they would do with their own money. But such discretionary guidelines are not very helpful in the business world.

Only when you establish a framework, you will be able to streamline your operations. You have got a lot more to focus on rather than following up with your employees every day for expense receipts.

According to the report sought from the "Small Business Credit Survey," 80% of businesses are expected to face financial mishaps in 2022, and 32% cited credit availability as a pain point. That's why it is important to have a corporate card expense policy in place. 

It is a great way to inform your employees of the rules and regulations of the corporate credit card. This can also help you establish cardholders accountable and prevent any unnecessary spending.

This article will walk you through the procedure for creating an effective corporate card expense policy and will also show you some of the best practices in managing the spending made through a corporate card. 

The Rise In Corporate Credit Cards

Corporate Credit Cards have become a more common commodity now than before. A report published by Wall Street Journal says one in five finance departments are looking to invest in more corporate cards in the coming years. 

But what is the benefit that companies enjoy by holding a corporate card? There are many, with expense tracking being one of the core benefits. 

Why do companies use Corporate Credit Cards?

Why do companies use Corporate Credit Cards
  • These resources make it easier to track the expenses you incur in your line of work, especially when it comes to travel-related ones.

  • They also help decrease the financial burden on employees who can't afford to wait to be reimbursed after paying for flights, hotels, and meals themselves.

  • With the introduction of credit cards into the company, delays in paying reimbursement are reduced.

  • Finance personnel may be able to negotiate discounts with preferred vendors.

  • It gives you the ability to broaden your options with this growing range of digital vendors.

Corporate Card Expense Policy

A corporate credit card policy is a document issued by an employer to their employees along with the credit card. This document outlines card usage guidelines as well as what constitutes misuse. 

Drafting a Corporate Card Policy To Avoid Fraudulent Activities

Though ample benefits can be delivered through a corporate credit card, it doesn't come without its risks. When you are issuing a credit card, you have to trust the person holding the card for its use. A report suggests that credit card fraud was the most common crime out of 450,000 fraudulent cases reported. 

To prevent your company from falling into such traps, you need to come up with a corporate card expense policy that has these pointers in it.

  • You need to have a limit for the overall number of cardholders

  • It's a good idea to aim for as few cardholders as possible when opening an account

  • When you keep your circle small, it's easier to spot any potential fraud

  • Review the company credit card policy terms and keep a copy available on your workstation.

How to Draft a Corporate Card Expense Policy?

1. Determine the purpose of your Corporate Credit Card

To start with, outline the purpose and scope of your corporate card expense policy- on a day-to-day basis, who will be responsible for creating, authorizing, and enforcing the policy. Similarly, you need to decide at what cadence it will be reviewed. 

Lastly, define who will be tasked with approving and monitoring the policy. This requires working with your leadership to determine the payment policy for personal, departmental, and corporate credit card use.

2. Outline the roles and responsibilities

Once you've considered the scope and purpose of your policy, you will want to outline the roles and responsibilities of employees, managers, and the T&E team. In addition, you'll set out expectations for each part in terms of expense submission, review, and approval. 

Finally, decide and assign a person to establish budgets, issue new cards, communicate with the credit card company, pay card bills, set the credit limits, and monitor and validate transactions on the corporate credit card.

3. Define the guidelines for company credit card spending

From there, you need to create expense guidelines for employee expenses, vendors, events, office supplies, and travel both on a personal and company-wide level.

Take a look at what your daily routine in business can entail. Consider trips, events, client meetings, ground transportation, entertainment, conferences, lodging, meals, parking, after-hours travel, and other expenses. Organize and determine which expense will be written off as a personal cost and which should be treated as a business expense.

4. Create Expense Guidelines For Card Holders

Next, we will use criteria to establish expense thresholds. Once that's done, we will determine the requirements needed for each level of expense reporting. Think about the various ways you manage your card, whether it's issuing the card, approving it for use, having it paired with receipts and business process logs, or receiving statements.

5. Keep In Mind Corporate Credit Card Policy Compliance 

Finally, determine the charges that will come under your corporate credit card policy and the penalty for out-of-compliance expenditures. You decide who's responsible for any penalties, at which point they review card spending, and against which thresholds compliance and penalties will be determined. 

There are two things to think about. Firstly, the reviewing party should be notified of out-of-policy spending as soon as possible, and secondly, it should tie into their disciplinary procedures.

As a company grows, it's important to plan for the future. The right corporate card and built-in expense policy ensure that employees adhere to the same standards and expectations. Providing resources and ensuring the Expense Life Cycle is consistent for your employees will result in an improved workforce and higher profit.

Best Practices For Corporate Card Expense Policy

You should have a policy that guides your employee's use of corporate credit cards. This will protect against accidental or deliberate misuse, reducing the risk of issuing corporate credit cards. The policy must be precise and easy to understand.

1. Responsibility of the corporate credit cardholders

Business credit cards can only be used for business expenses, never for personal spending. Only the named cardholder of a company's business credit card may use it - it's not to be shared with colleagues. As cardholders are liable to repay anything that goes against company policy, they are responsible for understanding the policies and any charges that go against them.

2. Assigning spending limits

You could set different limits for different employees. For example, an international sales professional is likely to spend more on overseas travel and accommodation than someone who's based in an office location. Some corporate card providers issue notifications when employees are nearing their spending limit. These notifications warn the employee when they may need to request more credit when things get too close to the limit but also flags any unusually high spending to the finance team.

3. Exceptions in Corporate Card Usage

Some items will need additional approvals – for example, high costs like overseas flights or spending on leisure activities for client entertainment or staff events. Make sure to list these exceptions and explain who needs to approve them and how to request them. This will help your employees get clarity for necessary expenditures at the right time. In addition, consider making exceptions, such as permission for expenditure on transport and accommodation in emergencies- but the policy should highlight the exact circumstance and how the employee must notify this has occurred.

4. Reclaiming Corporate Card Expenses

Ensure your organization has a clear record of all spending with company credit cards to monitor costs and adherence to policy. Clearly outline the best practices when retaining receipts and when you can reclaim money spent on the credit card if it comes indirectly to you. The onus is on the employee to justify any purchases they make on a company credit card. Before you make a credit card balance payment, make sure the employee has provided any necessary business justifications and receipts for items they have charged.

5. Lost or stolen Corporate Cards

Lost or stolen Corporate Cards

Fraud prevention is a significant issue for businesses today, especially if they're using corporate credit cards to purchase items. If a card is lost, employees must know how to report it as soon as possible. Make sure you've got this communicated with the corporate card provider in this matter so that they can cancel the card immediately. Explain the process of getting a replacement for a lost or stolen card and the time frame

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