7 corporate credit card policy rules to implement

Companies must keep their eyes on finances to protect their bottom line and help them grow. Corporate travel policy best practices typically require a corporate credit card policy. A clear corporate credit card policy is indispensable and, as with most processes, proactively designing it is the key to success.

What Is a Corporate Credit Card Policy?

Reimbursing employee expenses can be time-consuming and frustrating for employees who must wait for their money. When a company provides credit cards to its employees, setting expectations about how and when to use them is essential. A corporate credit card policy provides several compelling benefits, including:

• Increasing employee accountability.
• Decreasing the risk of misusing the card.
• Improving expense transparency.
• Helping control expense costs.
• Reducing employee confusion with managing expenses.

A robust policy can help companies keep a lid on costs, see where money is being spent, and protect the organization's long-range viability.

What Are the Most Important Rules to Include in Your Corporate Credit Card Policy?

Leaders must carefully consider the specific details of their process as they're crafting the company's corporate credit card policy. Failing to do this can create vague rules that are easy to misunderstand. Here are 7 components that should go into building a highly effective policy.

#1: Decide on Eligibility Requirements

Who needs a corporate credit card? The answer is the first step to building a successful policy. Rarely does every employee need a card, so avoid going down that road. Choosing the ones who receive a corporate credit card should be based on factors like:

• Job role. Salespeople, for example, typically use a corporate card.
• Level of responsibility. Junior associates probably don't need a corporate card, while a Director or VP probably does.
• Need for travel. Employees who work remotely or in the office full-time may not need a corporate card. On the other hand, it might make sense for the Events Manager and other employees who travel as part of their job to have one.

#2: Outline the Acceptable Uses

What is approved to be paid with a corporate credit card and what isn't? The more succinctly you can answer this question, the less likely the company will end up with undesired spending on the card. Set clear boundaries for business travel, lodging, parking, and dining out. Answer the common questions like "Can I pay for alcohol on the company card?" Proactively addressing potential expenses can save you trouble and money in the long run.

#3: Assign Credit Limits

Establishing credit limits is essential to keep unwanted or unapproved spending under control. Take into account what the employee will use the card for. For example, a person who travels for work extensively may need a higher card limit than someone who uses their corporate card solely for quarterly team dinners.

#4: Establish the Required Documentation for Expenses

Companies would be unwise to make payments for every employee's corporate credit card without documentation of where the charges came from and how they impacted the business. What will the company require of employees as "proof" of the expenses? A common way of handling this is by requiring expense reports. The expenses listed on expense reports should match the credit card charges for the time period. Fortunately, there are tools to help make this process more automated and less time-consuming than it once was. Consistent documentation requirements like how to report expenses, when they should be reported, and who they should be reported to should be included in the corporate credit card policy.

#5: Determine the Cardholder's Responsibilities

Explaining what the company expects of the employee regarding the corporate card is another crucial element of the policy. They should agree they will only use it for permitted purposes, will stay within the spending guidelines, and will provide the required documentation on their expense reports.

#6: Establish Consequences for Not Complying with the Rules

You've laid out a complete corporate credit card policy in writing. Now what? What happens if an employee goes over their card limit, uses it for personal expenses, or fails to provide documentation? Address non-compliance clearly as you craft the policy. Will they receive a written warning? Will they lose their card privileges? Will they face disciplinary actions?

#7: Secure the Cardholder's Written Agreement

Once you've hammered out the policy's details, create an authorization form and get every cardholder's signature agreeing they have received and read it. The signature acknowledges the employee understands the terms, will follow them, and is aware they can face negative consequences for misusing the card.

Creating a Successful Corporate Credit Card Policy

A well-crafted policy that governs how employees use their corporate cards is an important strategy for businesses that want to protect their financial health. It's a vital building block of a comprehensive expense and travel management system. By proactively writing a corporate credit card policy, openly sharing the requirements, and holding employees to them helps streamline expense management and minimize the risk of misuse.