Set some ground rules
When issuing a business credit card to an employee, make it clear that you aren’t handing over a blank check. A written policy can go a long way towards giving your workers clear guidelines and responsibilities when handling company credit cards. For example, if your sales team takes potential clients out to lunch, consider imposing spending limits or guidelines on how much your employees can spend. You may also want to consider making a list of qualifying and non-qualifying expenses, so your employees can make an informed decision before they swipe that credit card. Forbes contributor Dia Adams explains business cards have strict rules that restrict cardholders from using them for personal purchases, so it’s always better to inform your employees before a problem arises.
Limit access to business credit cards
Your employees have their own personal lives — and it could be easy for their company credit card to get lost in the mix. It only takes a moment of carelessness for your worker to lose their wallet or accidentally charge a personal purchase. Erroneous charges on a company card can be a serious headache to sort out, so consider physically limiting access to company credit cards. The Federal Trade Commission suggests cardholders only carry the cards they need, so consider making it company policy for employees to only carry their business credit cards when running errands or going on work-related trips. When the cards aren’t immediately needed, you can reduce the risk of theft or fraud by keeping them locked up rather than letting them remain in your employee’s wallet.
Designate a spending limit
Business cards tend to come with much higher credit limits than personal cards. Therefore, when issuing a business credit card to an employee, many lenders allow business owners to set a spending limit on each card, explains Adams. That way, even if your employee makes charges that are out of line, you’ll be able to limit the damage.
Have procedures in place for lost or stolen cards
Whenever an employee is carrying a company credit card, it’s possible it will be lost or stolen. If this situation arises, the FTC recommends reporting the incident to the card-issuing financial institution as quickly as possible. The FTC warns delaying your report could lead to your company being on the hook for fraudulent charges, so be sure that your employees understand the benefits of acting fast in the case of a lost or stolen business credit card.
While your company’s policies may vary, you can establish the boundaries of being a company cardholder by having your employees sign a contract that lays out the rules in a clear and enforceable manner. Consider having your lawyer look over the draft of the contract before having your employees sign on the dotted line.