Managing Business Credit or Charge Cards

If you need to issue a business credit or charge card to certain employees, be sure to have a clear policy on the proper use of the cards.

Business credit or charge cards should only be used for legitimate business expenses. Issuing of cards should be limited to only those employees who absolutely need one for their specific business function or role.

That said, business owners may want to consider issuing a card to a member of the management team like the Head of Accounting or Finance (CFO, Controller, Director of Finance, Accounting Manager) or Head of Operations (COO, EVP/SVP/VP Operations, Director of Operations, Operations Manager) so the company doesn’t rely solely on you, the business owner, for the company card.

Employees need to have and provide receipts for all charges and should complete an expense report that reconciles those charges against the monthly statement including identifying any charges that may be billable back to a client. Employee cardholders should understand that card issuers typically require joint and several liability even with business credit or charge cards meaning if the company does not pay the bill or defaults with payment, the employee may be liable for the charges placed on their company issued credit or charge card.

With business credit or charge cards, you may want to check with the card issuer on how statements will be issued. Card issuers typically provide a consolidated monthly statement to the primary account holder with a breakdown of each card and the respective charges incurred on each card. Some card issuers may also offer an option for individual statements to be issued to each respective cardholder.

Some businesses will prefer the first option which is centralized and consolidated. This works best when all cardholders responsibly use and manage their card use. The latter option offers businesses an added layer of protection to minimize card misuse and abuse. Individual cardholders will receive a monthly statement for their charges and the company can decide whether to pay those statements directly or require the individual cardholders to pay their respective statements directly then expense those charges back to the company for reimbursement. This helps to minimize card misuse and abuse as the employee must pay out-of-pocket first then expense those charges back to the company. The company can assess whether the charges are legitimate and authorized business expenses before issuing reimbursement to the employee.