Corporate credit cards are a vital part of the entire operations and procedures that make up running a corporation.
No matter what kind of business you run, developing a foolproof system for monitoring employee spending on your behalf is critical. While most firms still rely on conventional employee reimbursement schemes, it might be time to experiment with corporate credit cards.
Corporate credit card programs have improved, allowing them to respond to the specific demands of business owners. Some features include setting smart controls or credit limits and issuing virtual cards.
A corporate card can often help streamline employees' purchasing process by eliminating the need to sift through expense reports or seek advice from upper management. Corporate credit cards are also helpful because they help reduce unnecessary purchases while keeping reports organized.
Top 7 Corporate Card Management Tips:
Once you decide to utilize corporate credit cards for your business, you must set expectations and communicate responsibilities to the cardholder.
Here are several best practices for efficiently handling corporate credit card usage in your organization.
1. Make A Protocol On Company Expenses
Before issuing even a single corporate card to your employees, creating a company credit card policy and protocols for your business is crucial. The expense policy should clearly state expectations and communicate the cardholder's obligations.
Aside from regulating the expenses in your organization, a detailed expenditure procedure is essential in case your company undergoes an audit sometime soon.
2. Maintain A Record Of Employee Spending Habits
When monitoring employees' expenditures and spending habits, it's best to maintain a proactive approach. Generally, it involves setting alerts and monitoring all transactions regularly. Remember that this is especially important for early-stage startups and entrepreneurs with limited operating capital.
Corporate cards record employees' transactions, allowing you to keep track of their spending with their credit and bank statements. Doing so will enable you to filter out any possible discrepancies. You can also determine if any employee is indulging in overspending so you can take early measures immediately.
3. Set Spending Restrictions
Set spending limits as a priority if you want to keep corporate spending on track.
It's best to decide on an overall budget involving all the teams in your organization and allow managers to allocate funds accordingly. Your company can actively manage corporate credit card expenditures when spending or usage limits are set at the team and individual levels.
4. Simplify The Expense Reporting Process
A simple expenditure reporting process should be prioritized so that your workforce is more likely to adhere to it. Consider investing in a finance management tool to streamline and eliminate conflict from your expense reporting process.
5. Synchronizes Directly With The Accounting Software
If you use a modern corporate credit card program, it should be able to save the finance team time and paperwork.
Today, you'll find programs that offer credit card integration with your accounting software. It operates by automatically retrieving receipts and transaction categorization information.
Doing so can save the organization significant time reviewing corporate cards with statements and manually documenting them.
6. Implement Purchase Categories
Corporate card programs today typically include a feature that allows businesses to restrict the categories in which employees can spend.
Essentially, it turns corporate credit cards into a powerful tool for controlling what employees can and cannot buy.
Employees may be discouraged from using credit cards for personal expenses if this is done. Additionally, companies can also take advantage of the rewards and benefits. Setting up purchase categories may be the key to getting the most out of your corporate card.
7. Observe Proper Documentation
Documenting every purchase made is crucial. Remember that documentation plays a key role, especially when dealing with finances. Generally, it's best to require employees to save all receipts and fill out any necessary expense reports promptly. Meanwhile, the company should keep track of all purchases made with a corporate card.
The main factor will always be documentation. Even if the cards come with quick and accurate statements, make documentation a priority and note the expense, the purpose, who is responsible, and many other details.
Since you can change how your firm spends, the practice will help you save money. Proper documentation will stimulate consideration of those costs and what may be done to reduce them. In the long run, it may lower the likelihood of employees engaging in fraudulent transactions, reducing the need for costly audits.
Managing corporate cards might seem daunting, but it's a crucial process that'll help save time and money. Knowing the best practices for managing corporate credit cards will significantly streamline the financial aspect of your business operations and increase overall efficiency over time.