Creating an effective corporate credit card policy is crucial for any business that issues cards to employees. Without proper guidelines and controls in place, misuse of company cards can lead to unnecessary expenses, accounting headaches, and potential legal issues.

Fortunately, implementing best practices for your corporate card program helps mitigate risks while streamlining expenses. In this article, we will overview 8 essential best practices that leading companies follow to maximize the benefits of corporate cards while minimizing risks.

By establishing clear policies and procedures around usage, oversight, reporting, and optimization, your business can operate a world-class corporate card program that gives employees needed flexibility while ensuring strong stewardship of company funds.

Read on to learn how to build a corporate credit card policy that meets your business needs while following industry benchmarks.

1. Define Goals and Objectives

You’ll begin by clearly defining the goals and objectives for your corporate credit card program. This ensures alignment across your organization and guides your program policies. Some common goals to consider include:

Reducing fraud and misuse: If controls aren’t in place, the best corporate cards open your business to potential fraud and misuse. Define goals for allowable uses and spending limits to mitigate risk.

Controlling spending: Issue limits on credit lines, transactions, merchant categories, and more to control costs. Enforcing defined budgets at the department or employee level is critical.

Streamlining accounting: Integrating your corporate credit card policy with accounting software and automating reconciliation can significantly improve efficiency. Set goals around consolidated billing, process automation, and reporting.

With well-defined goals and objectives, you can design guidelines and policies that directly support your business needs. The process also makes it easier to measure program success going forward.

2. Set Clear Usage Rules

A well-defined corporate credit card policy should clearly outline appropriate and inappropriate usage. Setting clear guidelines upfront prevents confusion and misuse down the line. When defining usage rules, be sure to cover:

Approved Purchases: Specify the expenses employees can charge to their corporate cards, such as business travel, meals, office supplies, etc. Prohibit personal purchases.

Spending Limits: Set limits on single transaction amounts and monthly expenditures. Choose limits that reasonably accommodate business needs without excessive spending.

International Usage: Decide whether to allow international charges. If so, set guidelines for required approvals and expense limits. Consider extra fraud monitoring for foreign transactions.

Cash Advances: Many companies prohibit cash advances, which carry additional fees and risks. If allowed, set low ATM withdrawal limits. Require documentation on how cash is spent.

Authorized Merchants: Block prohibited merchant categories like casinos, liquor stores, etc., to prevent misuse. Allow charges only from approved suppliers and vendors.

Receipt Requirements: Cardholders must submit detailed receipts and justification for all purchases. Enforce strict receipt collection to enable spending oversight.

Articulating allowed and prohibited uses upfront sets consistent expectations for employees. Periodically reviewing usage policies ensures they remain appropriate as business needs evolve. Following defined usage rules makes reconciliation and oversight more effortless.

3. Choose the Best Business Corporate Cards

When selecting the best business corporate cards for your company, you must carefully evaluate which card features align with your goals and policies. Here are some key considerations:

Individual vs. Company Liability: Some cards make the company liable for all charges, while others hold the individual cardholder responsible. Company liability cards provide more oversight and control, while personal liability may encourage more accountable spending. Evaluate your risk tolerance. 

Rewards/Points Structure:  Many corporate cards offer enticing rewards like cash back, points, or travel miles. Ensure the rewards incentivize spending that adheres to your policy rather than encouraging unnecessary purchases. Too many points can negate savings.

Virtual Cards: Virtual or single-use card numbers provide extra security and control for certain transactions like business travel or online purchases. The virtual card limits are set per transaction. This helps mitigate fraud risk.

Expense Management Integration: Choose a card that integrates seamlessly with your expense management software. The integration automation saves employees time and enhances spending visibility.

Prioritize the best features with your goals, liabilities, and policies. The right corporate card makes it easier for employees to follow spending protocols. 

4. Integrate with Accounting Software 

Some of the best business corporate cards in the market can integrate with accounting software. Integrating your corporate cards with your accounting software streamlines the expense reporting process. When the card and accounting systems are linked, transactions are automatically entered into the accounting system. This eliminates the need for manual data entry and reduces errors.  

Here are some benefits of integrating your corporate cards with your accounting software:

Automating Expense Reports:  Transaction details from the corporate credit card program are automatically populated into expense reports in the accounting system. Employees simply review the expenses, add any additional information, and submit the report. These reports save significant time compared to manual expense report creation.

Data Integration: Charges, merchant details, and other transaction attributes flow directly into the accounting system. The process ensures all card transaction data is available in the accounting software for reporting and analysis.

Real-Time Reporting: With real-time data integration, finance teams can run corporate credit card program reports whenever needed. There’s no lag waiting for data to be manually imported from the card system. Real-time reporting enables finance to monitor spending and catch any issues proactively closely.

Integrating corporate cards with accounting software streamlines processes reduces manual work, minimizes errors, and enables real-time visibility of card transactions. It’s a best practice that yields significant efficiency and financial oversight benefits. 

5. Enforce Approval Workflow

A critical part of any corporate credit card policy is having a clear approval workflow that is consistently enforced. So with the best business coro, every purchase goes through the proper channels before being made. 

Require manager approvals on all transactions: Each cardholder should be required to get approval from their direct manager before making any purchase, no matter how small. This adds oversight and accountability.

Audit compliance regularly: Your finance team should perform regular audits to ensure every transaction has been appropriately approved. Violations of approval workflow should be addressed quickly.

Have disciplinary policies: Make sure your policy outlines the consequences for violations of the approval workflow, such as declined reimbursements or even termination. 

6. Provide Employee Training

A corporate credit card policy is only as effective as the employees who follow it. That’s why every company needs to prioritize proper training on card usage, expense reporting, and fraud prevention. Here are some best practices:

  • Hold mandatory training sessions for all new cardholders. Review the credit card policy in detail, explaining proper and improper uses. Provide real-world examples to illustrate tricky gray areas. 
  • Send periodic refresher training to ensure employees stay active over time. Refreshers are crucial for reinforcing the core principles of your card usage policy.
  • Train employees thoroughly on expense reporting procedures. Explain what documentation is required, how to categorize expenses properly, and the importance of submitting reports promptly. 
  • Educate employees on standard fraud techniques like phishing emails and skimming devices. Share tips they can use to detect and prevent fraud. Employees are your first line of defense.
  • Make training engaging with real-world examples, Q&A sessions, quizzes, and periodic rewards for top performers. Gamification elements can boost participation and retention.
  • Track training completion rates and test comprehension through occasional knowledge checks and audits. Identify any weak points that need further training. 

7. Monitor Transactions 

Getting corporate credit cards in the hands of employees makes it easier for them to make purchases on behalf of the company. However, it also opens the door to potential abuse or fraud if transactions aren’t monitored properly. Here are some best practices for keeping tabs on corporate card charges:

Auditing Charges: Someone in your finance department should review all transactions and receipts regularly. Look for any charges that seem unusual or personal. A clear expense policy and requiring detailed permits can help with auditing.

Fraud Detection: Monitor transactions for any potential signs of fraud, such as multiple charges at unusual retailers or cash advances. Enable text or email alerts on more significant transactions so you can flag anything suspicious. Also, check charges against employee travel records or itineraries.

Budget Alerts: Set alerts to notify card administrators or managers whenever monthly spending in specific categories exceeds defined thresholds. This helps identify potential waste or abuse before it gets too far out of hand. 

Analytics: Use corporate card reporting tools to analyze spending patterns, identify top merchants, track expense categories, and spot changes over time. The insights can help inform updates to your policies.

Automated Reviews: Some card providers have automated systems to flag potentially fraudulent transactions or spending that violates policies. Leverage these tools to make oversight and auditing more efficient. 

8. Review and Optimize

The best business corporate cards are not something you set once and then forget about. It requires regular reviews and ongoing optimization to stay effective. Here are some best practices:

  1. Conduct Regular Policy Reviews
  •  Review your corporate card policy at least annually. Check that limits, rules, and procedures are still appropriate.
  • Involve stakeholders in reviews like finance, accounting, and legal/compliance. Get their input on what’s working and what needs adjustment.
  1. Benchmark Against Other Companies
  • Research how other companies handle corporate card policies. Compare their best practices to identify areas your policy could improve.
  • Connect with peers at conferences or industry events to learn what works for their corporate card programs.
  1. Refine Processes Over Time
  • Identify pain points in your current corporate card processes. Look for ways to streamline approvals, reconciliation, reporting, etc. 
  • Implement new tools or automation to make compliance and oversight more efficient.
  • Continuously gather feedback from employees and card administrators to spot issues early.
  1. Optimize Spending Limits and Controls
  • Analyze card usage and spending patterns regularly. Tweak limits and restrictions accordingly over time.
  • Control spending more tightly during times of budget cuts. Loosen limits when more flexibility is needed. 

Create the Best Credit Card Policy with ITILITE

In conclusion, a well-structured corporate credit card policy is a cornerstone for effective financial management and mitigates risks associated with misuse or unauthorized transactions. Embrace these best practices to streamline processes, strengthen controls, and optimize the utilization of corporate credit cards in your organization.

If you want a solid corporate credit card policy that streamlines travel while supporting cost efficiency, ITILITE is the ideal choice. ITILITE, as a comprehensive travel and expense management platform, is pivotal in helping companies build and enforce such policies. With its features for expense tracking, policy compliance checks, real-time monitoring, and customizable controls, we empower businesses to streamline their corporate credit card usage, ensuring adherence to policy guidelines while enhancing efficiency and financial security.

Book a free demo with our product experts today to know  ITILITE’s advanced features and benefits!