Why your business needs a company credit card policy [Downloadable template]

Why your business needs a company credit card policy [Downloadable template]

  • Don’t rely on verbal agreements with staff entrusted with a company credit card.
  • A proper company policy on credit card use is essential to manage threats and reduce liability.
  • See what should be in your company credit card policy to guard against misuse.

One of the easiest ways for companies to get into hot water is the use of a company’s credit card to pay for the personal expenses of directors or employees. And maybe just as messy is the use of your personal credit card to pay for business-related expenses, which get reimbursed later. Either way, it's liable to be disorganised and opens you up to risk.

Your trusted employees' access to a business credit card or corporate charge card should be one of the first liabilities you control as your company grows, by making everyone adhere to a company credit card policy.

Create a company credit card policy

policies tab in files

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Don’t rely on a verbal agreement on the day your employee gets their shiny new card.

Instead, you need to combat these potential threats by creating a comprehensive credit card policy surrounding the use of company credit cards, and getting everyone who has a card to adhere to it.

Once you make the policy available to your team, take the time to go through it with every person who will have access to the card and make them sign it.

What to include in a company credit card policy

Signing a contract/policy

Make sure your company credit card policy has these necessary inclusions:

  • Outline responsibilities: Write down clear guidelines on the responsibilities of the cardholder, including rules around security, privacy, violations of use and repercussions of misuse. Employees must use reasonable care in protecting their card from loss or theft; and they must promptly report loss or theft to the financial institution and to the business owner or a senior manager responsible for staff credit cards.
  • Set clear spending limits: The individual card may already have a predetermined limit, but you should also clarify that any and all spending should be limited to the needs of specific tasks. If you have multiple departments, it might be worth setting different spending limits according to their needs.
  • Acquire monthly reports: Every employee should retain receipts from their business-related transactions and then submit a report at the end of each month with all relevant paperwork. You should cross-check their reports against your credit card statements.
  • Set explicit rules around personal use: It should go without saying, but it’s important to outline restrictions around the credit card’s use, specifically that it should never be used for personal expenses and that there will be severe repercussions if the rules are broken.
  • Scrutinise: Employees need to know that every transaction will be seen by the accounts / finance team, and probably management as well. Make them aware that they are being watched. Don’t leave anything to chance. Conduct regular reviews of every employee’s credit card usage so you can overcome any hurdles before they become major obstacles. If you have an accounting department, work with them to streamline the process.

Cards are a fantastic business tool once the liability is taken care of

The overarching takeaway is that your business can’t just be good on the offence, it needs a rock solid defence.

Business owners need to maintain control over the company’s money,  over who has access to the credit cards and the spending habits of the team.

Corporate credit cards can help your business grow, but they should always be adopted with the potential liability risks safeguarded first. 

Do your due diligence and ensure a solid company policy is place, putting you in a better position to boost business while reducing liability.

Download our template here.