At the end of a long day running your company, the last thing you want to do is sift through piles of expense reports or try to balance your business’s checkbooks. Opening a credit card for your company and giving reliable employees their own card simplifies your financial record-keeping. But credit cards aren’t candy. Choose your employees wisely; establish limits and rules before handing the cards out.
Set Clear Purchasing Rules
Differentiating between a business expense and a personal expense can be a gray area. Test whether an expense is legitimate by determining how it directly benefits your company or the employee. Establish a list of expenses that an employee can charge using the company card. The Society for Human Resource Management lists commonly allowed expenses, such as airfare when traveling to meet with clients and meals with clients. Ask each employee to sign the list and agree not to use the card for any other purchases.
Unauthorized charges can happen, despite company policy. Have your employees agree to a policy for unauthorized charges before you distribute the credit cards. A simple way to handle charges that fall outside of business expenses is to deduct them from an employee’s paycheck. Then each employee will sign a document stating they agree to have the amount of any authorized charges taken out of pay until it is paid off.
Keep a close eye on purchases each month after cards are distributed. Reviewing your card’s statements is essential so that you are aware of any strange purchases, either from your employees or fraudulent activity. For example, cash back cards from American Express, such as the SimplyCash Business Card, let you set up account alerts. The alerts will tell you right away if any unusual purchases take place. You can also see what each employee is charging to the card.
Reduce the Risk of Fraud
Your business’ credit history is on the line when employees are responsible for company credit cards. Providing employees with a lesson in responsible card use can help mitigate risks. For example, the Non-Profit Risk Management Center suggests teaching employees not to give out the credit card number over the phone, unless the employee initiated the phone call. Also, reduce fraud and the risk of theft by asking employees only to carry the business credit card when they know they will need to use it.
Take Care with Terminated Employees
Letting an employee go is inevitable. Have any terminated employees return their company cards before they leave the building. Call the card company, and tell them the person no longer works for your business. You should cancel the card number, as well.