Tips to create a company credit card policy that works

By Citizens Staff

A company credit card policy helps your business reap the benefits of business credit cards and avoid missteps. Even a simple company credit card policy can establish guidelines to stipulate approved expenditures, spending limits, cardholder responsibilities, and other details of business credit card use. When cardholder responsibilities are clear, your business can tap a powerful financing option that consolidates spending, increases transparency, and helps with expense management.

Use the tips below to learn about some important elements of a company credit card policy.

Requirements for eligibility

Establish clear criteria for who in your organization is eligible to receive a business credit card. This may help to manage expectations for employees and managers, and ensure that cards are only issued to authorized users.

Eligibility factors for a company credit card policy may include:

• Seniority. Specify how long an employee should be with the company before they are eligible to be a cardholder. For example, this could be after 90 days of employment and good performance.
• Roles. A senior staff member who frequently meets with and entertains clients, or a department manager who purchases supplies, may benefit from a business credit card.
• Travel requirements. An employee who travels frequently as part of their job will likely have more use for a card. Business credit cards can be helpful in creating expense reports.

Cardholder responsibilities

Draft a policy that specifies the ground rules for business credit card use. Also include an acknowledgment that the employee takes responsibility for the card and agrees to follow the guidelines.

Cardholder responsibilities to address may include:

• Credit card credential protection. Offer detailed information on how to keep credit card information safe, such as strong passwords, two-factor authentication, and fraud alerts.
• Expense approval procedures. Explain how to obtain necessary approvals for expenditures and who is authorized to approve spending.
• Consequences for policy violations. Many improper expenditures are innocent mistakes, so it could be wise to simply state that the employee will repay the cost of a personal expense.
• Lost or stolen cards. To reduce the risk of unauthorized or fraudulent card use, emphasize the importance of immediately reporting lost or stolen cards, and how to do so.

Consider asking your attorney to review your company credit card policy. When you issue a new card, make sure employees read and sign the policy to acknowledge receipt. Employees should also be given a signed copy of the authorized cardholder responsibilities.

Spending limits and uses

A clear company credit card policy detailing appropriate business expenditures will help your business avoid misunderstandings and unauthorized staff charges.

A company credit card policy on spending limits and use should cover:

• Acceptable expenses. For many businesses, expenditures often fall into two broad categories: travel/entertainment and company expenses. Make sure to explain in simple, straightforward language what expenses are allowed for each category.
• Travel/entertainment. Set clear boundaries for typical travel expenses, such as transportation, lodging, parking, client dinners, and meals while traveling or working outside normal business hours. For example, there may be a daily limit on meal costs, and you may want to stipulate that employees only book economy-class airline seats or stay at hotel chains with negotiated room rates.
• Company expenses. Depending on your needs, it could make sense to only cover preauthorized expenses, such as software subscriptions, certain office supplies, services such as cleaning or maintenance, or other essentials.
• Unacceptable expenses. A potential list of forbidden expenses may include cash advances, luxury hotel accommodations, non-business transportation, cannabis, or lottery tickets.
• Spending limits. These should be based on the employee’s role, as well as where and when they will use the card. An event coordinator or salesperson who travels regularly may require a higher limit than a manager who buys an occasional team dinner.

Valid exceptions to these rules are inevitable, so build flexibility into your policy by describing a simple process for seeking advance approval of out-of-policy spending.

Expense reporting

Consolidated business credit card statements provide an overview of spending, but employees should still submit individual expense reports with information and accompanying documents that substantiate expenses.

Guidelines for employee expense reporting can include:

• What tool to use. Many companies use a software app, or you might create a spreadsheet template with required data fields.
• Necessary details. Ask employees to provide the amount, date, vendor, expense category, and a detailed description for each expense, such as the name of the client entertained. Providing a “cheat sheet” that lists all of your expense categories along with examples of each may help employees create more accurate reports.
• Documentation to submit. You might ask for receipts, delivery confirmations, invoices, mileage logs, or boarding passes. If you do not require employees to submit digital or paper receipts, establish a best practice for how long they should store those documents, in case of a discrepancy or dispute.
• Deadlines. Ask your team to submit timely expense reports, such as by the end of each month.

More information

We are committed to helping your business reach its potential. Our dedicated business banking professionals can help you find the right product to meet your business’s needs. To learn more, please call 800-428-7436, visit us online, or visit your nearest Citizens branch.