Credit cards can be a great way to build your business credit, but they can also lead to serious financial trouble if not managed properly. Besides the obvious risk of running up large balances and damaging your credit score, there are other things to consider when managing company credit cards. In this blog post, we’ll cover some best practices for managing company credit cards to help you make the most of the benefits without running into unnecessary problems.
1. Always Review Corporate Credit Card Statements
It’s important to review credit card statements regularly, as this will keep you informed of any unexpected or suspicious charges that have been made. This is especially true if the cards are shared amongst multiple employees. Make sure that all charges made with the company credit cards can be accounted for and that they were necessary expenses.
2. Establish Clear Guidelines
When issuing company credit cards, it is important to provide employees with clear guidelines and expectations for use. This includes setting limits on monthly spending and detailing the types of approved purchases. Some companies also set restrictions around purchasing alcohol or other non-essential items. Employees should be aware of any potential penalties they may face if they violate the company’s credit card policy.
3. Monitor Employee Usage regularly
It is important to monitor employee usage of company credit cards regularly. This helps ensure that the card is being used for its intended purpose, as well as allows you to identify any potential fraudulent activity or misuse. The frequency with which this should be done depends on your business’s unique needs and policies, but it is generally recommended that you check in at least once a month. Additionally, it is important to review the credit card statements for any suspicious activity and take appropriate action if necessary.
4. Develop Policies and Procedures for Acceptable Practices
To safeguard employee spending and protect the company from potential financial risks, it is important to set out clear policies and procedures for accepting credit card practices. These guidelines should include information about what types of purchases are deemed appropriate for company credit cards, how often credit card reports should be reviewed, who is authorized to use the cards, and what the consequences are for misuse or unauthorized spending.
5. Investigate Unusual Activity Immediately
If you suspect any activity on a company credit card that is out of the ordinary, investigate as soon as possible. It can be tempting to look the other way, but doing so increases your liability if it turns out to be fraud or misuse of funds. The sooner you act on any unusual activity, the less damage it will cause. Take appropriate steps to stop any unauthorized purchases, such as canceling the card and reporting it to the credit card issuer. Additionally, you should also inform your legal department or other appropriate personnel so they can take further action.
6. Automate Approvals and Reconciliations
To ensure that all company credit card activities remain within budget and comply with the policy, it is important to automate the approval process for purchases. Automating this step eliminates the need for any manual review of items, thus saving time and resources. Additionally, automated workflows can be used to reconcile purchase activity against budgeted amounts and flag any discrepancies or suspicious activity. Automation also helps to ensure that employees are held accountable for their purchases, as they cannot continually seek manual approval from supervisors or finance teams.
7. Train Employees Regularly
It is important to provide training on best practices for using company credit cards to all employees. Start by establishing a clear policy that outlines proper use, expectations, and responsibilities when handling company credit cards. Make sure everyone understands the policy and is held accountable for following it. It’s also a good idea to review the policy regularly with your employees, so they stay up-to-date on any changes or updates.
8. Take Advantage of Corporate Card Benefits
Since corporate cards come with plenty of perks, such as travel rewards and cash-back programs, it makes sense to take advantage of them. For example, many visa business credit cards offer discounts or bonuses when you pay for certain business expenses with your card. Additionally, most corporate cards come with fraud protection, which helps protect the company against fraudulent transactions. Finally, some cards may also provide additional benefits such as extended warranty coverage and travel insurance. By taking advantage of these benefits, businesses can save money while also protecting their company from fraud.
Managing company credit cards can be a daunting task, but with the proper policies and procedures in place, it is possible to ensure that all purchases are made responsibly and within budget. Regularly reviewing card statements for any suspicious activity and automating approvals and reconciliations can help reduce the risk of misuse or fraud.
Additionally, training employees and taking advantage of card benefits can help you save money while providing additional protections. By following these best practices, companies can ensure that their credit cards are used responsibly and that their financial interests are always protected.