How do you manage corporate credit cards?
What are the problems you face managing corporate credit cards that are provided to employees, especially when the bill is paid directly by the company.
A common challenge can be employees mixing personal expenses with business expenses. It occurs by mistake or the employees aren't clear on what is considered a business expense or not. In this case, you'll want to set up a way for employees to reimburse the company, as Danielle mentions above.
As long as you come up with and communicate a clear credit card expense policy to your employees who have access to a corporate card, you shouldn't have to worry as much about monitoring their activity. The Business.com team recently published this guide which can help answer your question: How to Create a Business Credit Card Expense Policy
The guide above can help you decide what level of monitoring you want to have over the corporate cards given to employees. Most importantly, only give corporate cards to those on the team you trust!
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The practice expense account is a highly regarded benefit of partnership. A physician’s expense account can have a substantial impact on operating expenses if not carefully managed, because this corporate ‘perk’ can be overutilized. Practice executives must constantly scrutinize purchases and debit partners accordingly to keep cash and operations flowing.
Advantages to corporate credit cards
Corporate credit cards have several advantages, primarily in enabling access to capital for purchases. Most businesses still have difficulty accessing to credit for operational expenses and major capital expenditures due to the strict criteria for lending established by financial institutions.
For More information - http://www.bankbazaar.com/credit-card.html or http://www.aaos.org/news/aaosnow/jun11/managing3.asp
Receipts - the #1 pain of bookkeepers is getting substantiation from cardholders. I would suggest a cardholder policy that they sign that they must provide receipts for everything over $25 along with a policy stating thresholds of acceptable spend for meals and entertainment, hotel stays, etc.
Aggregate vs. Individual limits - your company will have an aggregate credit limit (the amount of total credit the company has) that will usually not be the sum of all the individual limits (each cardholders threshold of credit). This becomes a problem when all cardholders want to charge up to the limit in a given period and can cause those with credit still available to have charges declined due to the aggregate limit having been reached and a necessary payment to be made to free up credit. This requires someone with a handle on the cash flow, a controller or accountant/bookkeeper.
Personal charges put on credit cards - most ppl don't have intent to fraud here but I've seen where an employee has a personal bank credit card and a company issued credit card from the same bank and inadvertently uses the company card for a personal charge. Just requires an account to be setup like "employee reimburseable expense" or something until the employee can reimburse the company.
In my experience corporate credit cards are a valuable tool but the downside is facing the fact that giving an employee access to the credit line can potentially lead to problems in the future. I have created agreements and contracts for companies in order to mitigate potential losses. Another option I have explored is a secure credit line and thus far it has been an beneficial tool if you would like to know more feel free to contact me and I will be more than happy to discuss in more detail.