Wed 31 Dec 2008
Avoiding the Pitfalls of Company Credit Cards
As your business grows you may find that you need to trust some of your employees with a company credit card. For some small business owners, it is hard to imagine that their trusted employees would do anything amiss with the card, but it does happen.
When you issue cards to your employees, there are a few steps that you can take to be sure that there is no misunderstanding about the proper use of the card.
Have a Policy
First, you will need to develop a clear policy about how the card is and is not allowed to be used. This will be different for every situation, so you'll need to put a lot of thought into what types of expenses the employees will be allowed to charge.
Some business owners want the cards to be used strictly for business travel. Charges for office supplies or local business lunches are not allowed. Others want the card to be used solely for entertaining clients.
Whatever expenses you decide to allow, be sure that the employee receives a written copy of the credit card policy prior to being issued a card.
Keep a signed copy of the policy in the employee's file.
Track Card Usage
Secondly, you will need to track how the card is used. A quick scan of the monthly statement is all it should take to help you be sure that the cards are being used properly.
You can do this yourself, or have your accountant keep an eye on it.
It's also a good idea to set some type of limits on the card. You may choose a daily or monthly dollar limit. Some choose to also limit the number of transactions per day or per month.
By spelling out a clear credit card policy and keeping your eye on the monthly statement, you will find that issuing business credit cards will make things a little easier for both you and your employees.