Providing employees with a credit card they can use for business expenses offers a number of benefits. Not only will employees not have to front their own money for company expenses, but spending will also be better controlled, and your company will reap the benefits of any rewards program attached to its credit card of choice.
However, before you issue corporate credit cards, it's important to have a company credit card policy in place so that employees are aware of what they're allowed to use their company credit card for, employee expenditures are predictable and budgeted for, and the company is protected in case of misuse.
Steps to follow when setting up a company credit card policy
1. Determine what counts as an approved expense.
The first step in creating a card policy is determining what expenditures are approved business-related expenses and when. This should include all potential travel expenses (e.g., airfare, rental cars fees, gas, lodging, meals), entertainment expenses, software purchases and subscriptions, material costs, research expenses, and anything else that an employee may need to spend money on to be able to achieve their jobs.
Some companies, particularly hybrid and remote ones, allow employees to expense cell or internet service, device purchases, and even office purchases. These should be covered in the car policy as well, especially if some or all of these fall under your company's purchasing process or should be done through a preferred vendor. If your company's credit card provider offers virtual cards, be sure to include what expenses those should be used for in your card policy as well.
It is also important to specify which expenses require additional approval from a manager or executive and who that person would be. In addition, you may want to explicitly prohibit certain categories, such as "adult entertainment" that could, in some circumstances, fall into an otherwise approved spending category.
2. Establish credit card spending limits.
Once you've established your approved expense categories, set specific spending limits that employees must adhere to. There should be a limit for both overall spend and individual transactions.
This doesn't need to be a fixed limit per person and can vary based on employee role, seniority, location, or other factors that are relevant to how much an employee needs to spend. The important part is that limits are written down and communicated to employees.
If you're using a spend management platform that allows you to specify these limits for each card directly, be sure they're set by the platform administrator. This way, transactions that exceed the spending limit will be automatically declined instead of becoming an administrative headache later.
3. Establish a process for reporting expenses and requesting reimbursements.
Employees should know when to send in receipts and submit expense paperwork, if necessary. This process will be determined in part by the sophistication of your credit card provider. With a more advanced provider that has the technology to categorize expenses automatically, it may not be necessary for employees to submit receipts for some -- or all -- transactions. With less sophisticated providers, you may want them to submit receipts for all transactions, or at least all above a certain amount.
Even with automatic expense categorization, you may want receipts submitted for certain transactions, especially those where itemization can be important such as hotel stays.
While it's not directly connected to your business credit card program, you should also have a similar policy in place for reimbursement of employee expenses that were not put on the company card. While these should be minimal if you issue corporate credit cards to all employees, it's important to have a policy for handling them when they do occur.
4. Establish a policy for handling misuse and unauthorized expenses.
It's also important to have a policy for handling credit card misuse, such as using the corporate card for personal expenses or exceeding established spending limits. Not only will this policy serve as a deterrent against misuse, but it will also protect your company if disciplinary action is needed against an employee for violating and charging unauthorized expenses.
You will need to determine whether employees will need to reimburse the company for unauthorized expenses and at what threshold, if any, as well as the procedure for those reimbursements. Additionally, you'll want to establish the disciplinary rules and procedures for company credit card policy violations, which may include revocation of the employee's credit card privileges and potentially even termination.
Torpago makes managing company credit cards easy
Regardless of your corporate credit card policy, Torpago makes it easy to manage your credit card program. We combine a rewards-enabled credit card with an intelligent spend management platform that makes it easy to implement spend and transaction limits, including restricting merchant types transactions will be approved at the times of day during which cards will be valid.
Request a demo today to learn more about the benefits of the Torpago platform and why we're trusted by over 1,000 businesses for their company credit card needs!
