Mastering Corporate Credit Card Management Policy: Best Practices for Success

Corporate credit cards are a powerful expense management tool, as they offer a centralized statement that highlights employee purchases. With smart corporate credit card management, Finance teams can ensure budgets are followed.

>> Related: Who Should Use a Virtual Credit Card? <<

Extending Corporate Cards to Employees vs. Reimbursement

Not every company opts to issue a corporate card to employees. Today, many corporations still require employees to charge business expenses to their personal cards and submit them for reimbursement. There is definitely value in offering employees a corporate card so they don’t always have to front their business purchases on their personal card.

If your employee has a corporate card, it saves them from having to pay for job-related purchases while on the road, potentially causing cash-flow issues upfront and while awaiting reimbursement. Corporate cards also provide better visibility into who purchased what and where and allow for negotiated rates with frequently used vendors.

As noted by Brex, having access to a “credit card statement featuring all employee purchases can take the stress out of reconciling expenses.” Some of the other benefits Brex highlights include:

Credit Card Agnostic Expense Management

Today, many expense management and payment solutions are launching their own credit card as a way to generate additional profit. If a customer refuses to use the credit card associated with the system, they may face additional processing fees or penalties.

As we’ve stated previously, this is hardly a viable option for many companies today. The reality is that even for companies with wide adoption of corporate card usage, employees will occasionally need to be reimbursed for expenses made on their personal cards or corporate spend will occur on other accounts. Further, customers of companies that push the one card mantra are penalized with unbundling fees if they do not require single source purchasing.

Let’s face it, credit card selection isn’t a one-size-fits-all scenario. Different industries have different expenses—and the credit card issued by an expense management platform may not have the same benefits as a card issued by another financial institution. How you pay shouldn’t be limited or penalized.

Corporate Credit Card Management Best Practices

If your company issues corporate cards, it’s essential to follow a few best practices surrounding card use, expense reporting, and approvals, and have everything outlined in an easy-to-follow policy.

Establishing Corporate Credit Card Policies

For instance, you may want to limit the types of purchases certain employees can make on their corporate cards. If it is an employee in the field, you may only allow them to make fuel, construction supply, or related purchases. Or, if it is one of your business travelers, perhaps they must limit corporate card spend to travel or meals while on the road. You may opt to require receipts for all expenses, or only for spend over a certain amount, like $50.  (Often these limits and guidelines are similar to existing expense policies.)

Regardless of the guidelines you set forth, clearly define your corporate credit card policy.  And require each employee to read and sign that policy being issued a card on the company’s account.

Reconciling Statements

Like with any financial tool, it’s important to manage corporate cards responsibly to ensure the business is staying within its budget and avoiding costly mistakes. One of the best ways to do this is through regular reconciliation of corporate card statements.

Reconciling corporate card statements involves comparing each purchase on the statement with internal records to verify accuracy. This helps businesses identify discrepancies in spending patterns, as well as potential fraud or misuse of funds by employees.

The reconciliation of corporate credit card accounts is a daunting task for the Finance and Accounting department. To help streamline this process, take advantage of technology to automate processes such as alerts for overdue payments, automated billing cycles, and reminders for late-payment fees or unpaid balances.

Training Employees

Similar to your corporate travel policy, the guidelines related to your corporate credit card program need to be communicated clearly to employees and documented in an accessible location.

Optimizing Rewards and Incentives

Using corporate credit cards for business expense management comes with numerous benefits, including the potential to earn rewards and incentives. One way to maximize the value of corporate credit card-related rewards is by finding a program that offers relevant perks. Many programs offer points which can be redeemed for travel or merchandise; others have cash back options; and some reward cardholders with discounts at certain retailers or restaurants. Researching available programs and determining which one best fits your business needs is an important step in ensuring your reward-earning efforts will pay off.

For those managing corporate credit cards, set up an automated system for redemption of rewards points. Automating the process can help streamline redemption and maximize value from the reward program.

Preventing Misuse and Fraud

Misusing corporate credit cards can lead to a number of financial risks for businesses, such as:

Examples of common types of corporate card fraud include:

To prevent misuse and fraud,

>> Related: 5 Ways FinTech Reduces Fraud <<