Corporate credit card policy - A guide for businesses
In the age of digital payments, it’s no surprise that plenty of business expenses are being made with corporate credit cards. Travel and entertainment, for one, contribute to a notoriously large portion of corporate credit card expenses. With the rise of online purchases and subscription payments, many businesses are seeing an increase in their card usage.
While using corporate credit cards is convenient, it can go awry if a valid corporate credit card policy is not implemented. You could run into the risk of misunderstanding, misreporting, and even card misuse. As corporate credit card usage increases, so should the importance of having a solid corporate credit card policy and management system.
What is a corporate credit card policy?
As its name implies, a corporate credit card policy is the policy associated with corporate credit cards used within your business. It encompasses guidelines and expectations regarding corporate card issuance, usage, and reporting.
With a good corporate credit card policy in place, your finance and accounting teams can ensure better spend controls and analytics.
Importance of a corporate credit card policy
Better financial control
It may be easy to track expenses when you only have one or two corporate cards across the whole business. However, when you start issuing cards for multiple employees, controlling your expenses becomes more complicated.
With the right corporate credit card policy for employees, you can reduce the complications and make sure that everyone is spending within the limit given to them.
Reduction in card misuse
When all your employees are on the same page about your corporate credit card management, it’s easier to ensure that no one is misusing their corporate cards. Everyone knows exactly what card expenses are and aren’t allowed.
When you have clear guidelines and consequences, employees are more likely to adhere to your corporate credit card policy, meaning that you’ll see fewer instances of card misuse.
Streamlined expense reporting
Corporate credit card policy doesn’t just stop at guidelines surrounding card usage. Having good policies related to how employees do their card expense reporting is also important.
You’ll be saving everyone’s time and making expense reporting easier when everyone is aware of what exactly is required for submission. It also eliminates any confusion when there are clear expectations on who are the approvers responsible for reviewing expenses and requests.
Improved reimbursement process
It’s not very often that your employees can get reimbursed immediately after making an expense. There are complex approval and administrative processes that bog down everyone.
Your finance team will be wasting valuable time and your employees won’t be happy about the wait. When you have corporate credit card policy guidelines in place, you can instead issue corporate cards for your employees and bypass the hassle.
Enhanced compliance
For the sake of running your business smoothly, you want all your employees to comply with company policies. Violating company policy could also mean violating industry regulations, which could land you in trouble.
Companies need to have an enforced corporate credit card policy to avoid those violations. When everyone has a clear understanding of all the rules and expectations, compliance will naturally be assured.
Improved employee morale
Contrary to popular belief, having rules in place and enforcing them don’t hamper employee morale. If anything, employees are much happier when there is no confusion. For one, no one has to be walking on eggshells terrified of violating company policies.
Even better, your employees will be able to get through processes related to cards quickly. Not having to waste time will improve employee morale.
Corporate cards to help streamline your expense reporting process
Key components of a corporate credit card policy
A good corporate credit card policy should be clear, concise, and easy to implement and enforce. You want all your employees to be on the same page when it comes to understanding the corporate credit card policy guidelines, but more importantly, you want to ensure that everyone is complying with these guidelines.
To achieve that, it’s important to have some key components that will improve the quality of your corporate credit card management.
1. Eligibility to get a corporate card
You want to be very clear about what the purposes of a corporate credit card are. When that has been communicated with your employees, it will become easily comprehensible who may or may not need a card. Outline corporate credit card policy criteria about who in your company will be eligible to get a corporate card, as well as how to get one.
2. Cardholder roles and responsibilities
When you assign a corporate credit card to a particular employee, you want to be clear about the expectations that you have concerning their role and responsibilities as a cardholder. Having a detailed outline of the rules that come with being a cardholder will make it easier to communicate them with your employees, meaning that issuing cards will go smoothly.
3. Spending guidelines
The spending possibilities are endless when an employee is equipped with a corporate credit card. However, with some ground rules laid out, you can make all your employees aware of what they can or can’t spend on.
Additionally, a good corporate credit card policy for employees should have details on who they should touch base with if they have any questions regarding card expenses.
4. Procedure in situations where the card is lost or stolen
While the best corporate credit card policy for lost or stolen cards is to prevent the misfortune from happening in the first place, sometimes it is unavoidable.
You want to be prepared for those cases by having a corporate credit card policy that addresses those circumstances. This includes outlining steps to cancel a card, typically starting with emphasizing letting the company know as soon as possible.
5. Protocols for addressing fraudulent activities
On the off chance that fraud attempts happen, it never hurts to be prepared. In fact, you should make it a priority when you outline your corporate credit card policy that everyone in the organization knows what the protocols are when fraudulent activities occur.
Be clear about the steps that must be taken, what the consequences are, and what each person’s responsibility in the situation is.
6. Well-defined request and approval workflows
Your employees need to report what kind of expenses they’re making with their cards. However, without any well-defined reporting policies and approval workflows, the process can get confusing. There will likely be a lot of time wasted going back and forth to complete any missing information.
Make it clear to your employees what is expected of them when they report expenses or request new card limits.
Get the best corporate credit card program for your business
How to implement a corporate credit card policy?
Develop a comprehensive policy
The first step to implementing a successful corporate credit card policy is to have a good one. To do that, you want to get into the nitty-gritty details of all your policy components.
Be as clear and comprehensive as possible by identifying which areas need what guidelines, as well as the reasons why those corporate credit card policy guidelines are in place.
Have proper communication with employees
Once you have developed the best and most comprehensive corporate credit card policy for employees, you have to be sure that you communicate it with them.
Every employee should be well aware of the corporate credit card policy that you have set up. You want them to ask any questions that they have and clear up miscommunications so that everyone is on the same page.
Give proper training to employees
You’ll likely have some systems in place that will act as supporting tools for your corporate credit cards. When you equip your employees with cards, it’s important that they understand how to use these systems.
Make sure that you set up proper training modules to explain corporate credit cards, your expectations of their usage, as well as expense reporting procedures.
Set up procedures for issuing cards
It makes everyone’s life easier when there’s a clear procedure for corporate card issuance. Instead of everyone fumbling around with the same confused questions over and over again, you want to have a proper procedure for issuing cards that every employee can follow should they need a card. This way, the team in charge of getting the cards issued can also do so easily.
Monitor the usage
A corporate credit card policy is of no use if no one is monitoring the card usage. Good corporate credit card management involves closely monitoring how your cards are used. You’ll ensure that employees are complying with your policy guidelines and be able to flag any card misuse should it happen.
Plus, you’ll also be more aware of your company’s financial health.
Make sure to enforce the policy
You want to be sure that employees know what the consequences of violating your corporate credit card policy are. Remind them regularly of what your policy guidelines consist of and what the consequences are.
In the unfortunate circumstances where someone violates policy, you also want to be strict and enforce the consequences. However, be sure you do so in a way that is fair.
Review and update the policy
Your corporate credit card policy will not remain the same forever. For example, if you have previously only operated domestically but are expanding your business internationally and your employees have to travel outside of India, you want to update your corporate credit card policy to reflect international travel card expenses. Make sure that you review your policies regularly and update them accordingly.
5 Best practices for managing a corporate credit card program
1. Set a distinction between corporate and personal expenses
It’s imperative to be direct and explicit about what is classified as corporate expenses and what isn’t.
For example, some companies may include lunch during work hours in their list of corporate expenses, while many others may consider it a personal expense.
You want to set a distinction and ensure that all your employees are aware of the corporate credit card policy guidelines that you have in place.
2. Issue corporate credit cards only if it is necessary
While it’s true that corporate credit cards are extremely useful for making business expenses, you don’t want to be handing them out freely.
Be sure that you know the specific purpose of every issued corporate card. Not only does it set a good example for your employees to follow, but it also makes corporate credit card management much easier.
3. Monitor card usage and spending effectively
A corporate credit card policy for employees is only as good as they are enforced. Therefore, you must monitor your card usage and business spending to ensure that everyone is adhering to the policies.
It is a good idea to deploy a system or platform that could assist you in monitoring your cards, leading to tighter control of your business expenses.
4. Integrate your corporate credit cards with accounting software
Corporate credit cards should be tools that are integrated with the rest of your finance processes.
For the best corporate credit card management, you’ll want to integrate your cards with the accounting software that you use. This way, you can sync your card expenses with your general ledger data. It saves time, increases productivity, and also ensures that you’re in compliance with all policies.
5. Streamline your expense reporting
Considering that expense reporting is key to any sort of corporate credit card management, you want the process to be as easy as possible for everyone involved. It also encourages employees to adhere to corporate credit card policy guidelines when it doesn’t take up too much of their time. Your employees are more likely to report expenses if they know that they can do it on the go.
Why choose Volopay corporate cards for your business?
Get your business corporate cards that make it easy for you to enforce a corporate credit card policy. Volopay corporate cards come with a system that allows you to easily track, monitor, and regulate your company card expenses all through a single dashboard.
Employees can also report card expenses as soon as they happen with a mobile app that can be used on the go. No more spending will go unaccounted for. Making sure that everyone complies with your policies is easier than ever with Volopay.