Tips on How to Develop an Effective Employee Credit Card Policy
How to cut down on unnnecessary expenses
Nowadays both small and large sized businesses are trying every way to minimize expenses that are related to traveling or any other purchases done by employees for the benefit of the enterprises. One of the best ways to cut down unnecessary employee expenses is by creating an employee credit card policy. To reduce misuse of the company's credit card, the company should lay out rules and regulations concerning how the business credit card should be used.
However, not many companies are aware of the best ways on how to develop employ credit card policies. Many business owners always have the desire to create these policies but lack direction on how to do it. Due to this, here is a vivid description on how companies can effectively create employee credit card policies.
Responsibilities Of the Cardholder
If a company issues credit cards to its employees, there has to be set rules that govern the card's usage. The employees should be held responsible for the security of the card as well as the privacy of any information related to the company. The employees should ensure that the card is kept in a safe location, the card is free from fraudulent activities and the card's identification number is protected. The company should also state that the business credit card is only limited to be used by the employee and not any other individual.
Spelling Out Spending Limits
The company should be able to come up with rules that dictate on activities or transactions where the credit card should be used. In fact, the spending should be limited to the needs of specific employees. Each department should have their own spending limits. As a company, it is good to inform each employee about the spending limits at the time of issuance. In addition, every employee should not exceed this limit and if one does, they incur over the limit fees. Lastly, the company's credit cards should never be used for cash advances.
Regular Usage Report
Every company should hold employees responsible for any company credit card's usage. Let's say that at the end of every month, every employee should submit a detailed explanation of all charges, receipts and the right accounting codes. Every employee should ensure that they attach the expenditure receipts to the monthly statement before submission to the company for verification purposes. All these should be done on time to avoid late payments. Doing so will ensure that the company monitors its monthly expenditure with ease and auditing becomes simpler.
No Usage of Cards On Individual Expenses
The company should be very strict on the usage of the employee credit card in that no one is allowed to use it for personal expenses. In short, the usage of the card should be limited to business-related activities. The definition of personal usage, in this case, is an expense not related to the operation of the business. The company should be very hard on any employee who uses the card on his/ her own payments.
If a company issues out employee credit cards, it is recommended to conduct a card's review after a specific period of time. The review of the card should be done by the employees' immediate supervisor together with a member of the company's accounting department. The supervisor of the employee should ensure that the usage of the card is limited to what it was meant for. On the other hand, the accounting department should verify whether all the receipts and other expenditure documents submitted by the employee are authentic.
Therefore, every company should have an effective and reliable employee credit card policy to hinder misuse of the card by individuals. It will place a company in a good financial position since no employee will misuse his card for personal expenses. Also, the company should make sure that both the supervisor and the accounting department understand all aspects of the policy.