Why It’s Time to Arm Your Employees with Business Credit Cards

Why It's Time to Arm Your Employees with Business Credit Cards The idea behind allowing employees to have their own company credit cards tends to be focused on security and convenience. There is simply too much that can go wrong by handing an employee cash— there is no protection against it getting lost or stolen, and it can’t be canceled and reissued. When it’s gone, it’s gone.

Checks are an alternative, but then you have to write out a check to every single vendor your employee does business with— not to mention many businesses aren’t thrilled about accepting checks, even business checks. Hotels are a perfect example: if your employee is traveling and needs to stay the night out, it’s unlikely a hotel or motel will accept a secondhand check as a form of payment.

If you’re still giving your employees cash or checks to conduct business regularly with, it’s time to consider the convenience of a business credit card. Before you hand one over, however, here are a few things to keep in mind.

Safeguard Against Errors in Use

In order to clarify your expectations, have a written policy for your employees to read and sign prior to giving them a company credit card. A written contract ensures there is no confusion with respect to your policy. Get it in black and white with a signature to minimize problems.

It’s Just Business

While you may feel like a certain amount of flexibility will keep your employees happy, you need to ask yourself if you are willing to pay for their personal expenses. In some cases, you may be perfectly willing to pick up a lunch tab or an employee’s hotel expenses.

However, if you plan on being reimbursed, you should be aware of how much your employees owe you, because if the amount you garnish their wages per week or month results in them being paid less than minimum wage per hour, you could be breaking the law. In Texas, for example, the Workforce Commission strictly forbids such practices. Don’t allow your employees to spend beyond their means using your company business card, or you will be held liable. That’s why it’s a good idea if you retain a strict policy of “for business-related expenditures only,” and have that in your written policy.

Documentation

While you always want your employees to give you the receipts for expenses accrued, receipts are not enough. Make sure you have a document in template form that enables them to outline the details of a receipt. The document should include the date of the purchase, the name of the place and location the purchase was made, invoice numbers if they’re available, and a brief description of the items or services paid for. You can use online invoice software to track the spending. That way, expenses can be entered and updated frequently and accurately.

Their Name, Not Yours

Putting the credit card in your employee’s name instead of yours is a safeguard for your company’s credit rating. As Capital Solutions Bancorp points out, it detours an employee’s temptation to misuse the card. If it’s in their name, the charges and credit score is a reflection of their spending, not your company’s. In a positive light, putting their name on the card also means they can improve their credit rating, especially if large expenditures are paid off every month.

What are your thoughts on employee credit cards?

Author: Ryan Harrison is a small business marketing consultant based in Phoenix, Arizona who specializes in digital branding and content marketing.

One thought on “Why It’s Time to Arm Your Employees with Business Credit Cards

  1. Employee credit cards simplify your reimbursement process in two ways. Firstly, employee credit cards reduces the need for you to cut individual checks for each employee to reimburse them for company payments. Instead you just make one payment on the master credit card account, saving you time on processing individual rebates. Secondly, it provides an extra level of security in that you can match your employee’s receipts with the transactions on the account, helping to avoid any major discrepancies.