Best Practices for Corporate Credit Card Management
Every business needs to have strong procedures in place to track money being spent by employees on behalf of the business. The larger the business grows, the more complex this becomes. Some businesses use traditional employee reimbursement programs, others use corporate credit cards. This article will discuss these two expense tracking options and the best practices for keeping corporate credit card programs under control.
Corporate Credit Cards vs. Employee Reimbursements
Businesses typically chose to manage business spending by facilitating employee reimbursements for out-of-pocket expenses or by issuing corporate credit cards to employees.
Employee reimbursement programs have been used for years by businesses of all sizes. However, this process can be complex and time consuming. Employees are required to front costs of business-related expenses on their personal credit cards. Employees must track and file expense reports with managers, who then review and approve these costs. These are then passed on to the finance department to process the reimbursement.
On the other hand, with a corporate credit card account, businesses can manage all employee expenses from a single platform with built-in controls and expense management systems, streamlining this process. Finance teams and business leaders gain access to greater visibility across an organisation for who spends what, where and why.
Some businesses may take a hybrid approach. Key business leaders or members within the organisation who are responsible for the bulk of spend on behalf of the business are issued corporate credit cards. Other employees who only require occasional reimbursements can use personal payment methods and follow the employee reimbursement process for reimbursement.
How do Corporate Cards Make Expense Management Easier?
Corporate credit cards allow the finance team and business leaders to proactively manage employee expense in a number of ways.
- Set spending limits to enforce card transaction rules by employees or business unit.
- Control approved merchants or vendors and locations of credit card transactions.
- Request purchase approval before transactions take place.
- Monitor cash flow via a single credit card platform.
- Facilitate expense reporting process from within the business credit card platform.
- Immediately issue credit cards to new employees with an instant access to virtual cards.
- Limit fraud and misuse of business cards with built in controls and proactive monitoring.
5 Best Practices for Managing Corporate Credit Card Use
For any corporate credit card programs to be successful, a business must set expectations and clearly communicate cardholder responsibilities from the get-go. Here are some best practices for managing corporate credit card use.
Create an Expense Policy
Take time to set up a company credit card policy and guidelines for your business. This expense policy should set expectations and clearly communicate corporate cardholder responsibilities from day one.
Set Limits on Spending
Work with teams to set overall budgets and allow managers to allocate funds to teammates accordingly. Setting limits on spending or usage at the team and individual level, businesses can more actively manage corporate credit card spend.
Monitor Employee Spending Habits
Proactively manage employee spending habits by setting alerts and monitoring transactions actively on a regular basis, not just when the monthly statement is delivered. This is important for start-ups and entrepreneurs with limited operating capital.
Make Corporate Credit Card Expense Reporting Easy
The simpler the expense reporting process, the more likely employees will follow it. Investing in a spend management tool is a good way to streamlining and remove friction from your expense reporting process.
Sync with Your Accounting Software
When a business employs a modern corporate credit card program, it has the ability to save finance teams a considerable amount of time and paperwork. Many cloud accounting software’s have the ability to pull receipts and transaction categorisation details automatically.
Gallagher Keane Chartered Accountants
Gallagher Keane maintain their entire practise using cloud accounting software. Correctly tracking expenses and managing the expense management processes can be time consuming. Using cloud accounting software allows your business to streamline their expense tracking by building expense reports, tracking invoices, updating books, and issuing reimbursements. If you are interested in finding out more about Gallagher Keane’s online accounting services, why not book a no-obligation call with us.