How to handle employee misuse of corporate credit cards?

There is a very thin line between spending and splurging, and when your employees start to splurge, it could spell disaster for your business. Employees are provided with a corporate employee credit card to equip them with the ability to make work-related purchases such as buying office supplies, SaaS subscriptions, paying vendors, etc.

A company credit card is an essential part of a business to maintain accountability, and security and eliminate financial bottlenecks. But when employees start running up huge bills on work-related expenses or use the corporate card for personal use, that essentially comes under the misuse of credit cards.

In this article, we discuss how you can prevent misuse of credit cards and steps to take when employees are abusing company credit cards.

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How to prevent employee misuse of company credit cards?

We know that implementing proper protocol when credit card misuse is still ongoing might seem difficult, but don’t be disheartened. Putting these practices in place can help you avoid employees abusing company credit cards in the future, while you deal with current defaulters:

Mandatory proof of purchase

To effectively prevent misuse of company credit cards, it is essential to enforce a strict policy requiring employees to submit proof of purchase for every transaction made using company cards. This documentation is vital, as it provides a clear audit trail, ensuring transparency. Without proper proof of purchase, it becomes nearly impossible to verify the authenticity of the submitted expense details, leading to potential issues.

Set spending limits

Implementing spending limits is crucial for effective financial management. This involves capping hotel room costs, overall trip expenses, and even designating specific days and time slots for various expense categories. By establishing clear and reasonable spending limits within your business employee credit cards, you can significantly reduce the risk of misuse and promote responsible spending behavior among employees.

Monitor and report spending

Keep a constant check on employee spending to detect any expense report abuse right away. More importantly, keeping a close eye on the purchase of goods and services bought for personal use on the company credit card, which the employee might try to reclaim through employee reimbursements, is crucial. To support this, businesses should adopt strategies for better managing employee expenses to enhance accountability and compliance.

Expense approval workflow

Create an expense approval workflow where supervisors and managers are required to approve transactions or funding requests. You may also require a compliance controller to oversee and ensure that your expense policy is being implemented properly.

Set alert notifications

While not all credit card providers allow you to set alerts, completely customizable Volopay corporate credit cards allow you to set alerts in case of suspicious or fraudulent transactions. Moreover, you can set alerts when cards are being used outside of their intended expense category and when they go over the limit.

Formulate expense policy

Setting verbal expectations is not enough, your business needs to have an ironclad expense policy in place with a card user agreement for a specified period. Mention the proper process of using the company credit card, employee’s responsibilities, the approved list of expenses, and how to submit the receipt for each expense.

What to do if you suspect misuse of credit cards?

Are you seeing expenses on card history that don’t make sense, or coming across values that simply don’t add up? It could be due to your employees’ misuse of credit cards. Company resources are precious to keep the business running, however, pointing fingers at your employees without proof can sour your relationship with them indefinitely.

Gather evidence

Once you have witnessed a pattern, it’s time to gather all the evidence for investigation. Statements, receipts, and a ‘back-end’ transaction report on the corporate credit card. Doing so will reveal the POS on these transactions so you can have concrete proof in case the employer claims that the card got stolen, lost, or misused by someone else.

Check statements, receipts

A one-off incident of going over budget could be an accident, but a repeated pattern is a deliberate misuse. You have to comb through credit card statements, receipts received from employees, and expense reports every week. If you find a regular streak of violations, immediately freeze or block that corporate credit card.

Conduct investigation

Once you have collected relevant documents, conduct an internal investigation for low-range employee credit card misuse. In case credit card abuse is committed by a senior-level executive, it is wise to hire an external investigation to maintain transparency and decorum and eliminate any bias or misuse of their position in the company.

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Corporate cards best practices for employees

Sometimes, when companies suspect employees abusing company credit cards it could simply be a genuine confusion on the employees part. Some employees might be struggling with a vague expense policy, others might not be aware of the expense reporting process. Either way, we have listed some best practices that employees can follow to always stay away from any expense that could be misconstrued as misuse:

Track your receipts religiously

Retain receipts of any purchase you make using a company credit card. By doing so, you are saving yourself and your employer from figuring out what the expense is for. So when the time comes for the employer to ask you about your credit card spending, you have all the information necessary to justify the purchase.

Practice caution and safeguard your card

Business employee credit cards aren’t just a rectangular plastic card you are carrying around in your pocket, they essentially contain a part of your company’s resources and therefore must be treated with the same security as you would practice for your personal credit cards. In case of theft or loss, report to your company ASAP so that the card can be blocked.

Follow compliance regulations

Companies using business employee credit cards have an extensive expense policy in place to prevent and penalize credit card abuse. Knowing about your company’s expense compliance regulations in advance can help you spend more conscientiously than before.

Analyze spending through better judgment

It’s great if your spending is well within compliance standards already, but you can still use your judgment to see which expenses are worth your company’s money and which aren’t. Exercising your better judgment will help you simplify and streamline your spending and earn your employer’s trust even more!

Lost or stolen company credit cards

In case an employee misplaces or has their company credit card stolen it is best practice to immediately block or freeze that card. If you don’t do this at the earliest it will be extremely easy for fraudulent individuals to practice misuse of company credit card.

When considering the best practices for using corporate credit cards, it's also essential to choose the right card that aligns with your business needs. To learn more about the key factors to consider, check out our article on choosing the right corporate credit card for your business.

Take control of your corporate cards with Volopay

In an ideal world, all employees would keep a perfect record of all their purchases and maintain a scrapbook of 30 days’ worth of receipts before the credit card statements arrive. But keeping receipts for so long is cumbersome and (let’s be honest) an unfair ask. Instead of just relying on an expense policy, choose Volopay corporate credit cards with built-in, customizable spending limits that come with real-time alerts and notifications for overspending.

Volopay offers physical and unlimited virtual corporate credit cards, just load in the Volopay credit onto a card, set the cardholder and spending limit and that’s it! Our cards can be linked to multiple departmental budgets or a single one according to your need. Receive card-wise spend break up and set up to 5-level approval system per card.

That’s not all, Volopay physical cards are VISA authorized and data protected so you never have to worry about security ever again. In case of theft or loss, freeze or block physical/virtual cards directly from the app.

FAQ's

What happens if a employee uses company credit card for personal use?

Volopay gives you the utmost control over the cards you create. You can set limits on spending and assign approvers for additional budget inquiries. Any expense they make reflects in the platform and is out for everyone to see. If they make unauthorized payments with it, the admin can cancel the transaction or block the card altogether.

Is Volopay corporate credit cards available in all countries?

Right now, Volopay virtual cards are available in Singapore, Australia, India, Singapore, Indonesia, and the Philippines.

Who is liable for a company credit card?

The employer is responsible and liable for the corporate credit card and its charges. The employees’ part ends with expense reporting. It’s the employer who must reconcile the expenses and take care of repayments and taxation. Credit card providers only check business owners’ credit scores and payment history before offering the product.

What are some common cases of misuse of company credit cards?

If you have a common credit card that’s used by everyone in your company, employees might use them for personal purposes. Even if it’s noticed and found, it can be hard to track who did it. They also are used for personal lunches that get reported under business. An employee can also share the card with his/her coworker who is unauthorized to use the card.

Are Volopay corporate cards protected from misuse?

Volopay corporate cards give your business the utmost protection against fraud and misuse. You can assign one card to each employee and monitor their expenses centrally. The admins set limits for each card, and to receive more funds, employees must get internal approvals. If any anomalies are found, the admin can block the card right away. Such strict measures reduce the possibility of misuse and fraud.