SaaS Management

  • 5 min read

Corporate Credit Card Policy Best Practices - 2024

Sreenidhe S.P

27th December, 2023

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In a business, various departments and the associated decision-makers would be involved. Although budgets are allocated to every department, how does one calculate the everyday spending, and how is the payment being made?

Most businesses prefer Corporate Credit Cards, but without a drafted policy for the expense card, your employees may overuse it unnecessarily without limits. That is why you must have a completely drafted Corporate Card Expense Policy.

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 crucial to have a corporate card expense policy in place.

Key Takeaways:

Deep understanding of how corporate credit cards can help save a lot of money for organizations starting from travel expenses to availing software subscriptions.

What is a corporate credit card policy?

A company credit card policy is a set of rules and regulations that govern employees' use of company-issued credit cards. Businesses must have a clear and concise credit card policy to protect themselves from fraud and misuse.

What expenses are allowed on a corporate credit card?

The expenses allowed on a company credit card will vary depending on the company's policy. However, some everyday expenses that are typically allowed include:

• Travel expenses: This includes the cost of airfare, hotel accommodations, rental cars, and meals while traveling for business purposes.

• Entertainment expenses: This includes the cost of meals, entertainment, and gifts for clients or customers.

• Office supplies: This includes the cost of pens, paper, printer ink, and other office supplies.

• Subscriptions: This includes the cost of subscriptions to software, magazines, and other publications that are used for business purposes.

• Education expenses: This includes the cost of tuition, books, and other fees related to continuing education for employees.

• Marketing expenses: This includes the cost of advertising, marketing materials, and other expenses related to promoting the company's products or services.

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 for reimbursements after paying for flights, hotels, and meals.

• 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 allows you 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 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

A corporate credit card has ample benefits but a few risks. When issuing a credit card, you must trust the person holding the card for use. A report suggests that credit card fraud was the most common crime out of 450,000 fraudulent cases reported. 

You need to develop a corporate card expense policy with these pointers to prevent your company from falling into such traps.

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

• Aiming 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 write a company credit card 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, define how those actions should be approved and monitored. 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 should outline the roles and responsibilities of employees, managers, and the travel & expense team. In addition, you'll set out expectations for each part regarding expense submission, review, and approval.

Finally, decide and assign a person to establish budgets, issue new cards, communicate with the credit card company, pay 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 must create expense guidelines for employee expenses, vendors, events, office supplies, and personal and company-wide travel.

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 payments are at personal cost and which fall under business expense.

4. Create Expense Guidelines For Card Holders

Next, we will use criteria to establish expense thresholds. Once this is done, we will determine the requirements for each expense reporting level. Think about the various ways you manage your card, whether it's issuing it, 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 under your corporate credit card policy and the penalty for out-of-compliance expenditures. There are two things to think about. Firstly, you must notify the reviewing party of out-of-policy spending as soon as possible, and secondly, it should tie into their disciplinary procedures.

As a company grows, it's essential to plan for the future. The right corporate card and built-in expense policy ensure 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 are bound 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 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 flag 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. 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 spending 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 purchases on a company credit card. Before making a credit card balance payment, ensure the employee has provided any necessary business justifications and receipts for items they have charged.

5. Lost or stolen Corporate Cards

Fraud prevention is a significant issue for businesses today, especially if they use corporate credit cards to purchase items. Employees must know how to report a card if a card is lost as soon as possible. Ensure you've communicated this with the corporate card provider so 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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About the author

Sreenidhe S.P

Sreenidhe is a SaaS management expert and has a keen interest in ITAM and SAM practices. She is adept when it comes to SaaS Vendor Management and SaaS Spend management. Her knowledge of SaaS and SaaS management is self-thought and is based on a lot of reading. Before joining Zluri, Sreenidhe was working as a full-time journalist. She is also equally passionate about fashion and aspires to own a boutique someday.