Company credit cards are a good way to help your business run faster and smoother. It streamlines paperwork and allows salespeople, purchasers, and managers to buy what they need when they need it.
But, company credit cards can also be misused and cause administrative problems if you're not careful with them. How can you manage your company's credit cards to avoid trouble? Here are a few tips.
Hand Them Out Judiciously. The first step to having company credit cards used properly is to be careful about who has them. Often, a business starts off with few cards handed out, but becomes less cautious as more people find them convenient. Assess annually who has company cards and whether they still need them, as well as how each user has behaved with their card. The fewer you give out, the more they will be respected and the less administrative work needs done.
Establish Rules About Use. The biggest misuse of company cards is using them for non-business purchases. So, you need to clearly define what the cards are allowed for and what they are not allowed for. Are they to be used for food and meals on the road or for gas? Are they only for purchasing materials for a job? Are certain individuals permitted to use their cards for certain purposes (such as people on the road)? Spell out exactly what is acceptable use and what is not.
Provide Written Consequences. Along with clearly defining the use of company cards, be clear about the consequences of misuse as well, and do it in writing. What happens after one unauthorized transaction? What happens after two or three? At what point will the card be taken away from the employee? At what point are there consequences to a person's job? After writing the card use policy and distributing it, be sure to follow it with few exceptions.
Reconcile Cards. Have cardholders work with the accounting department to reconcile card statements every month. While this can be hard for people to find time for, it's vital. The charges need to be properly coded and billed, and illegitimate charges need to be discussed as early as possible. Knowing that they will be involved in reconciliation helps people stick to approved card usage.
By creating a careful and written policy with regards to charges and reconciliation of company cards, you and your employees can enjoy the benefits without creating unnecessary expense and conflict. Which is what credit cards should always bring to the table.