Any business that allows employees to spend company funds can benefit from a corporate credit card expense policy. Learn what these policies cover, why they are important, and how you can create a comprehensive policy for your own company.
What is a corporate credit card policy?
A corporate credit card policy is a set of guidelines for business purposes that indicate who is eligible for a company card and how the account should be used.
As part of your larger expense and accounting policies, the card policy can cover cardholder eligibility and responsibilities, define spending limits, and explain the expense approval process. It should also address reimbursements, receipts, cards issues, and consequences for unauthorized spending.
This policy should be as comprehensive as possible, and list any exceptions that may apply as well as disciplinary action should an employee misuse the company card.
This is sometimes called a company card policy, or a card expense policy, but these terms all mean the same thing.
Steps for creating a corporate credit card policy
Use these steps as a guide as you set up your company’s card policy:
- Choose the kind of card you will use. Will it be a single corporate card shared amongst all the people who spend? Or will you issue credit cards for all employees who have spending needs? Your decision will affect how expense reports are generated, how reimbursements will work, and how you will hold people accountable for their spending.
- Decide who will review and approve budgets and spending. This can be individual managers or one specific person or team in your organization. No matter how you divide the work, it’s important to be clear about who is responsible for each stage, from creating budgets to finalizing expense reports.
- Define approved business expenses—and be specific. Travel expenses may seem obvious to you, but does that category include the gas that employees use to drive to the office each day? List not only categories but multiple examples so that your policy is easy to understand.
- State expense report expectations. Will employees need to save their receipts until the end of the month? Should they track their credit card statements? When can they expect to be reimbursed? Outline these procedures so everyone will know the protocol.
- Explain the consequences for breaking the company card policy. Whether it’s an understandable mistake or possible fraudulent spending, make it clear what the consequences will be for unapproved purchases on the corporate card, or steps to take if the card is lost or stolen.
Why your business should use a corporate card policy
A company credit card policy can help prevent expense-related miscommunication and fraud. It keeps everyone on the same page by providing a single source of information everyone can use, and makes it harder for everyone to make mistakes.
How a corporate card policy can prevent fraud
When employees are spending company money, there is often a potential for expense fraud. But if you format your card policy thoughtfully, you can reduce the risk of fraud and make it easier to track down fraudulent expenses when they occur. Be sure your policy includes these measures:
- Make sure every expense is tied to a specific spender. No matter how you organize your expense policy, it’s important to keep track of who is spending on each individual purchase. This allows you to hold people accountable and trace unauthorized spending.
- All spending limits should be communicated with cardholders. It is easier for employees to stay on budget and avoid personal spending when they understand the rules.
- Make sure your card policy is visible to everyone in the company. This helps prevent misunderstandings.
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