If you issue employee credit cards on your business account and fail to monitor spending and establish policies for card use you leave yourself open to employee credit card abuse.
There are countless horror stories of employees using business issued cards to pay for vacations, gamble, dine out and purchase personal stuff and expensive gadgets. This should prompt business owners to sit up and take notice and put things in place to ensure the proper use of the company’s credit card. Below are a few guidelines to help you along the way.
1. Your Credit Card Company Is Your Best Friend
Partner with your credit card company to find out what options are available for built in protections on the business credit card. Most credit card companies can make use of Merchant Category Codes to block the use of the card at certain locations. This will limit the use of extra cards at places such as retail stores, nightclubs, casinos and high end restaurants. Business owners should know that this protection is available and making use of it goes a long way in the prevention of unauthorized purchases.
Another way credit card companies can help is by providing preset limits on the card that is much lower than the overall account. There could also be a restriction on the amount that is charged daily. If the employee needs to use the card for a purchase that is larger than the card allows a supervisor can easily step in and approve the purchase.
Your business credit card should include features like no cost employee credit cards with credit limits that you can control, reports that categorizes employee purchases and built in Employee Misuse Insurance Protection. The reports should be categorized the way that you need including by merchant, user, date and more making it easier for you to spot unusual spending.
2. Establish A Clear Card Use Policy
Sit with an attorney and your human resource management to establish a clear policy that dictates how the company credit card should be used. You will also need to outline what the penalties are for breaking the rules. Once you have this established every employee that you issue a card to must read the policy and sign. This way when you must enforce the penalties you will have evidence that the employee understand the terms of usage.
This policy will help employees understand what they can and cannot use the card for. A lot of companies fail to provide guidelines of usage and the dangers that they face with this oversight can potentially ruin the business reputation.
3. Be Diligent
Having the policy outlined is only half the equation. It must be enforced and someone should be designated to make sure that employees abide by the rules. There should be a continuous effort towards the enforcing of the policy and several senior administrators should review the work of the person assigned to monitor employee credit card usage.
4. Make No Assumptions
A lot of business owners make the assumption that because an employee is a senior employee or have been with the company for some time it means that the employee can be trusted. This is not a good assumption to make since no one should be above suspicion. Employees who believe that their seniority places them above the radar are more likely to abuse their privileges. The key is to place the spending of all employees under scrutiny and don’t exempt anyone from the process.
5. Stick To Your Guns
Big and small incidents of card abuse should be treated in the same way. An employee should not be made to feel that if he makes small purchases that violate the policy he will be exempt. These small incidents are what lead to greater instances of abuse if the employee feels that he can get away with it. Once someone violates the policy enforce the penalty even if it means that you have to lose an otherwise good employee. This will send a signal to the corporate body that you mean what you say and it will definitely minimize or altogether stop the chances of future abuse.