Ali Mercieca is a Finance Writer and Content Editor at Ramp. Prior to Ramp, she worked with Robinhood on the editorial strategy for their financial literacy articles and with Nearside, an online banking platform, overseeing their banking and finance blog. Ali holds a B.A. in Psychology and Philosophy from York University and can be found writing about editorial content strategy and SEO on her Substack.
https://www.linkedin.com/in/ali-mercieca-4443b3121 York University
-p-500.webp)
After a long downturn due to COVID-19, business travel is back in full force. Employees are swiping company credit cards for meals, rental cars, lodging, and more as they get back into the swing of making and reporting business expenses.
That presents an opportunity for companies to re-examine their corporate credit card policy and to remind employees of expectations around both business and personal spending. Clear and comprehensive company credit card policies are crucial for finance teams or small business owners looking to control business expenses and protect the company’s bottom line.
Following corporate credit card policy best practices can also reduce the potential for confusion and appropriately set expectations for all parties. Of course, establishing a strong corporate credit card policy is important, but the software you use to implement that policy—and the cards that you select—are even more important.
A corporate card policy is a set of guidelines that governs employee use of company-issued credit cards. It aims to control employee spending by defining what is and isn't an authorized expense.
Company credit cards can help eliminate the need for reimbursements and make it easier to track business transactions. But when left unchecked, corporate cards could potentially lead to unauthorized spending and expense fraud. A strong company policy, and the right card to enforce it, can mitigate both of these risks.
A good corporate credit card policy is easy for employees to understand, simple to enforce, compliant with internal and external regulations, and flexible enough to meet your needs as your business grows. Employees should sign off on your corporate card program's policy before they start using their cards so you can be sure they understand the rules.
A corporate card policy should include the following components:
The first step is to lay out who’s eligible for an employee credit card and the criteria for approval. Many companies only offer cards to certain departments, like sales or purchasing, or to employees at or above a certain level of seniority. You might also decide to run a credit check before issuing cards, in which case you should let your employees know in this section.
This outlines the employee credit card agreement—in other words, the responsibilities of any employee handling a corporate credit card. The clearer you can be about duties and expectations, the safer and easier it is to issue cards teamwide.
These responsibilities typically include following the rules outlined in the business credit card policy, taking reasonable measures to protect the card and its information, and promptly filing necessary expenses.
Who's responsible for repaying a company credit card?The responsibility for repaying a corporate credt card lies with the company. This relieves pressure on employees to use their own funds to make business purchases and wait for reimbursement. With a corporate card, the company pays for all approved transactions.
These are the rules tied to the corporate credit card account, including who employees should contact if they have questions about spending, guidance on documentation requirements, and a contingency plan in case of mistakes.
It should also include rules around using personal funds to make business purchases. In an ideal world, corporate cards eliminate the need for expense reimbursements since employees shouldn’t have to use personal credit cards for business expenses.
This section covers which expenses the company will cover and up to what amount. This typically varies based on the card user. A salesperson, for example, might be authorized to use their card for client entertainment, while an office manager might be authorized only to purchase business supplies. This breakdown should also define the processes associated with prohibited credit card purchases.
This is a step-by-step overview of how and when cardholders need management approval for their purchases. The simpler and more seamless you can make this process, the less time employees will spend on expense reporting, and the more time they can spend focused on doing their job.
Even the most comprehensive policy can’t cover everything. This section of your corporate credit card policy will instruct employees and managers on how to resolve issues that arise from unusual spending or unique situations that aren’t explicitly covered in the policy.
Discover Ramp's corporate card for modern finance Learn more
Your corporate card policy should be simple and clear so employees know which expenses they’re allowed to make and how to report them, if necessary.
Ideally, your corporate card should use automation to enforce your expense policy. This means setting up custom card spending limits and category or merchant controls. You'll also want a card that automatically tracks expenses by category and reports them to you in real time.
Here's a full list of features you should look for in a corporate card to help you enforce your expense policy:
Giving all startup employees a corporate card, allowing them to request virtual cards, and strongly discouraging the use of personal cards makes enforcing your expense policy much easier. Look for a card that allows unlimited physical and virtual employee cards.
Your card should let employees submit receipts in real time via text or email—or by uploading them to an expense platform via mobile app. That way, they can email e-receipts to a specified address or use photos of physical receipts for in-person purchases. Employees can also submit a short note with expense details for certain purchases.
By specifying credit limits on employee cards, you can reduce the potential for out-of-policy spending and all the hassles that come with reconciling them. Modern corporate cards also enable managers to scale these limits up or down as business needs change or employees take on different projects or roles within the company.
By preapproving certain expenses and implementing limits by expense category or vendor, you can authorize cardholders to make purchases while still maintaining specific expense restrictions. This empowers team members to make their own spending decisions and minimizes the fear of disciplinary action due to out-of-policy spending.
Categorizing expenses also makes record collection easier at tax time or when writing a P&L statement. By automating expense categorization, you can easily generate expense reports when you need them later.
The right corporate card will automatically review transactions in real time, alerting the appropriate managers to suspicious charges, price increases, or other expense-related discrepancies. It can also identify potential areas of waste, such as duplicate subscriptions or opportunities for rate negotiation.
For frequently used cards, such as those for new employees, wellness reimbursements, or company lunches, card policy templates allow for mass rollouts with minimal work for the finance team. Each type of card can have embedded limits and spending rules that make sense for its use case.
Building and polishing your corporate card policy can feel daunting, but by working with the right partner—and the right technology—you can improve spend management, price transparency, and policy adherence.
Ramp’s corporate card comes with software that easily allows finance teams to digitize and enforce their corporate card policies. Among our features is the ability to block out-of-policy spending before it happens, reducing unauthorized use or fraud.
With Ramp’s real-time visibility into all transactions and customizable spend controls, you’ll always have insight into employee expenses—and the ability to minimize out-of-policy spend. Plus, Ramp offers other features like accounting automation and integrations.
Learn why companies that use Ramp save an average of 5% a year.
