3 Things To Consider Before You Apply For Corporate Credit Cards
Corporate credit cards are excellent payment tools to streamline a company’s financial processes. However, they can also potentially cause problems to a company if not properly managed.
In this article, we list out some key considerations all company owners should take note of before making that all important decision to issue these crediting tools to key employees.
1) The need for proper guidelines
Like any other aspect of business, you need to set out proper guidelines to dictate how your employees are using these cards. These may include, among others:
The tiers of employees who are entitled to this facility
The credit limits assigned to different tiers of employees
The types of business items and/or the designated merchants that this credit facility can be used on
Without such guidelines, this payment tool can end up creating more hassle than convenience. And needless to say, the process of conceiving such guidelines takes up quite a bit of time – time which you must be prepared to spend.
2) Someone to oversee and manage the account
If you have taken the time to conceive the necessary guidelines, you’ll still need someone (or in certain cases, an entire team of personnel) you can trust to manage your company’s credit account. This may encompass duties such as:
Scrutinizing all the transactions made on issued corporate cards to ascertain that they are listed under company-approved business items and/or merchants
Tracing and authenticating the spending of each and every cardholder every month-end
Following up on suspicious transactions or transactions which are not approved
Balancing card spending against the company’s financial health
Without the required manpower and standard operating procedures to manage your company’s credit account; scenarios such as over-spending or even card abuse are very real. And if you have no one to help match the statements with actual company spending; be prepared to do the dirty work yourself!
3) The potential of card abuse
Even with the most carefully-conceived guidelines and the best people to oversee your corporate credit card account, there is always the potential of card abuse.
Exploitation of corporate cards can take place in many forms. It can be the intentional misuse of an issued corporate payment tool by an employee to purchase items for personal purposes (e.g. buying meals for friends then charging them as company expenses), or it can also be misuse in the form of “over-buying” (e.g. buying an extra case of pens for home use in addition to the required office supply). If not tackled professional, card abuse can also indirectly lead to gradual acceptance of unethical practices in the office, which in turn impacts morale and work culture.
Considering the risk of offending corporate employees, card abuse is definitely something that bosses need to think about before issuing corporate credit cards. If you don’t have the manpower or the time to monitor the accounts, unethical employees could potentially misuse their assigned credit cards right in front of your nose without you knowing about it. This, of course, has a detrimental effect on the overall financial health of the company.
Do you really need it?
Just like a personal credit card, it is something that needs careful consideration before you apply for one. Though it has the benefit of streamlining your company’s financial processes, you’ll need to make sure you have all the relevant guidelines and policies – and the manpower to boot – to make sure it’s working for you and not against you.
If applying for one gives you more questions than answers, then perhaps your company is not ready to take up a corporate credit card just yet.