How to handle employee misuse of corporate credit cards?
There is a very thin line between spending and splurging, and when your employees start to splurge, it could spell disaster for your business. Employees are provided with a corporate employee credit card to equip them with the ability to make work-related purchases such as buying office supplies, SaaS subscriptions, paying vendors, etc.
A company credit card is an essential part of a business to maintain accountability, and security and eliminate financial bottlenecks. But when employees start running up huge bills on work-related expenses or use the corporate card for personal use, that essentially comes under the misuse of credit cards.
In this article, we discuss how you can prevent misuse of credit cards and steps to take when employees are abusing company credit cards.
We know that implementing proper protocol when credit card misuse is still ongoing might seem difficult, but don’t be disheartened. Putting these practices in place can help you avoid employees abusing company credit cards in the future, while you deal with current defaulters:
To prevent misuse of company credit cards you must make it mandatory for employees to submit proof of purchase whenever they make a purchase using company cards. Without proof of purchase, it will be virtually impossible to determine whether the purchase details submitted are actual or fabricated.
From capping hotel room costs and overall trip expense to setting certain days and even time slots for expense categories, emphasize spending limits wherever reasonable and possible. Setting clear limits within your business employee credit cards can avoid misuse.
Keep a constant check on employee spending to detect any expense report abuse right away. More importantly, keep a close eye on the purchase of goods and services bought for personal use on the company credit card which the employee might try to reclaim through employee reimbursements.
Create an expense approval workflow where supervisors and managers are required to approve transactions or funding requests. You may also require a compliance controller to oversee and ensure that your expense policy is being implemented properly.
While not all credit card providers allow you to set alerts, completely customizable Volopay corporate credit cards allow you to set alerts in case of suspicious or fraudulent transactions. Moreover, you can set alerts when cards are being used outside of their intended expense category and when they go over the limit.
Setting verbal expectations is not enough, your business needs to have an ironclad expense policy in place with a card user agreement for a specified period. Mention the proper process of using the company credit card, employee’s responsibilities, the approved list of expenses, and how to submit the receipt for each expense.
Are you seeing expenses on card history that don’t make sense, or coming across values that simply don’t add up? It could be due to your employees’ misuse of credit cards. Company resources are precious to keep the business running, however, pointing fingers at your employees without proof can sour your relationship with them indefinitely.
Once you have witnessed a pattern, it’s time to gather all the evidence for investigation. Statements, receipts, and a ‘back-end’ transaction report on the corporate credit card. Doing so will reveal the POS on these transactions so you can have concrete proof in case the employer claims that the card got stolen, lost, or misused by someone else.
A one-off incident of going over budget could be an accident, but a repeated pattern is a deliberate misuse. You have to comb through credit card statements, receipts received from employees, and expense reports every week. If you find a regular streak of violations, immediately freeze or block that corporate credit card.
Once you have collected relevant documents, conduct an internal investigation for low-range employee credit card misuse. In case credit card abuse is committed by a senior-level executive, it is wise to hire an external investigation to maintain transparency and decorum and eliminate any bias or misuse of their position in the company.
Sometimes, when companies suspect employees abusing company credit cards it could simply be a genuine confusion on the employees part. Some employees might be struggling with a vague expense policy, others might not be aware of the expense reporting process. Either way, we have listed some best practices that employees can follow to always stay away from any expense that could be misconstrued as misuse:
Retain receipts of any purchase you make using a company credit card. By doing so, you are saving yourself and your employer from figuring out what the expense is for. So when the time comes for the employer to ask you about your credit card spending, you have all the information necessary to justify the purchase.
Business employee credit cards aren’t just a rectangular plastic card you are carrying around in your pocket, they essentially contain a part of your company’s resources and therefore must be treated with the same security as you would practice for your personal credit cards. In case of theft or loss, report to your company ASAP so that the card can be blocked.
Companies using business employee credit cards have an extensive expense policy in place to prevent and penalize credit card abuse. Knowing about your company’s expense compliance regulations in advance can help you spend more conscientiously than before.
It’s great if your spending is well within compliance standards already, but you can still use your judgment to see which expenses are worth your company’s money and which aren’t. Exercising your better judgment will help you simplify and streamline your spending and earn your employer’s trust even more!
In case an employee misplaces or has their company credit card stolen it is best practice to immediately block or freeze that card. If you don’t do this at the earliest it will be extremely easy for fraudulent individuals to practice misuse of company credit card.
In an ideal world, all employees would keep a perfect record of all their purchases and maintain a scrapbook of 30 days’ worth of receipts before the credit card statements arrive. But keeping receipts for so long is cumbersome and (let’s be honest) an unfair ask. Instead of just relying on an expense policy, choose Volopay corporate credit cards with built-in, customizable spending limits that come with real-time alerts and notifications for overspending.
Volopay offers physical and unlimited virtual corporate credit cards, just load in the Volopay credit onto a card, set the cardholder and spending limit and that’s it! Our cards can be linked to multiple departmental budgets or a single one according to your need. Receive card-wise spend break up and set up to 5-level approval system per card.
That’s not all, Volopay physical cards are VISA authorized and data protected so you never have to worry about security ever again. In case of theft or loss, freeze or block physical/virtual cards directly from the app.
Saving the best for last — make a vendor payment or fund transfer via Volopay corporate credit cards and earn a cashback of up to 5% on every FX transaction!
Its common for businesses to struggle with employee expense management. Volopay can help manage employee expenses efficiently.
Security, flexibility, adaptability & cost, are some of the key things you need to look for while choosing the right small business cards.
With corporate credit cards, businesses can manage their accounts and track expenses more efficiently.