As business travel begins to pick back up and many workers return to the office, they’re dusting off their corporate credit cards and getting ready to begin spending again. One thing they may not be looking forward to, however, is the hassle of filing their expense reports and requesting reimbursement after their trips.
That presents an opportunity for companies to re-examine and update their corporate credit card policy guidelines, and to remind employees of expectations around expenses. Maintaining discipline and efficient policies around employee spend are among the most important steps management can take to control overall 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 use—are even more important. If you’re re-evaluating your corporate credit card policy or creating one for the first time, keep the following in mind:
Five components of a corporate credit card policy
A good corporate credit card policy is easy for employees to understand, easy for you to enforce, and flexible enough to facilitate changing business needs. Employees should sign a written copy of the corporate card policy before they start using their card, indicating that they agree to the parameters it sets forth.
Each company’s policy will differ, based on their individual needs and the size and maturity of the business. Still, most corporate credit card policies will serve as a bridge between the finance team and company employees, and will cover the following:
Cardholder duties
This outlines the responsibilities of any employee who gets a corporate credit card. The clearer you can be about the duties of a cardholder, the more employees you can empower with their own card. These responsibilities typically include following the rules outlined in the corporate credit card policy, taking reasonable measures to protect the card and its information, and expeditiously filing for expenses, as necessary.
The general expense policy
Here’s where the policy discusses the overall rules associated with expenses, including whether employees can use personal cards for business expenses (they shouldn’t), who employees should contact if they have questions about spending, and which employees should have access to corporate cards. It should also contain guidance on documentation requirements and the process to follow when mistakes happen.
Allowable or prohibited 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 have authorization to use their card for client entertainment, while an office manager might be authorized to purchase business supplies.
The request-and-approval workflow
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.
Exceptions
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 for unusual spending or situations not explicitly covered in the rest of the report.
How to ensure employees adhere to your policy
The best corporate credit card policies take a fit-for-purpose approach, making it fast and easy for employees to record expenses and for managers to approve them—and that means moving away from old school approaches and implementing technology.
Finance teams should lean on automation that digitizes and enforces card policies. The means looking for cards that allow for organizations to do the following:
Minimize reimbursements by making it easy for employees to request cards
Giving all employees a corporate card, allowing them to request virtual cards, and strongly discouraging the use of personal cards makes expense reconciliation much more efficient. It also minimizes the impact of business expenses on the personal cash flow of employees.
Automate approval routing for new card requests
The required approvals for card requests may vary depending on the department or level of the employee asking for the card, and the desired card limit. Routing such requests to go directly to the appropriate manager—or line of business leader or finance team, if necessary—speeds up the process and allows the end users to make purchases more quickly and turn their attention to activities that actually add value.
That’s particularly important in today’s hybrid work environment when dispersed teams are often still working across multiple time zones or on asynchronous schedules.
Implement real-time receipt and memo collection
Best-in-class cards allow employees to submit receipts in real-time via text or email—or by uploading them to an expense platform. They can email online receipts to a designated address or use photos of physical receipts for in-person purchases. For purchases over a certain threshold, such as $75, employees can also submit a short memo with expense details.
Fast, seamless expense entry also provides finance teams with better views into how and when departments or individual employees are spending money.
Set daily, monthly, and one-time spending limits
By putting these limits in place on cards, managers can reduce the potential for out-of-policy spending and all the hassles that come along with reconciling them. Modern corporate cards also enable managers to scale such limits up or down as business needs change or as employees take on different projects or roles within the company.
A flexible, tech-enabled card can even allow for payments to suppliers who have not historically accepted credit card payments, providing more flexibility to scale and increase working capital, and decreasing the amount of time spent devoted to bill payments.
Implement category and merchant controls
By pre-approving certain expenses (and implementing limits) by category or by vendor, managers can authorize cardholders to make purchases while still maintaining specific expense restrictions. This empowers workers to make their own spending decisions, improving morale and facilitating more seamless workflows.
Bonus: Categorizing expenses can not only give you additional control over employee spend, but it can also make record collection easier at tax time or when building out a P&L. By requiring certain fields and documentations upon submission, you can easily generate detailed spend reports when you need them later.
Establish spending alerts
In traditional spend management workflow, the finance team may not see expenses until weeks or even months after a purchase. That can make it difficult to correct mistakes or enforce the policy. The finance department can create their own rules for such alerts, getting the information they need without being bombarded by notifications.
A better corporate spend solution automatically reviews each transaction 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.
Use card templates
For frequently used cards, such as those for new employees, wellness reimbursement, or company lunches, card templates allow for mass rollouts with minimal work for the finance team. Each card’s template can have embedded limits and spend rules that make sense for its use case.
Make it easy with Ramp
Establishing or revamping your corporate card policy can feel overwhelming, but by working with the right partner—and the right technology—you can improve spend management, price transparency, and policy adherence. Getting the right corporate card can not only enable better expense management, but it can also facilitate growth.
Ramp’s savings-focused corporate card, for example, comes with software that easily allows finance teams to digitize and enforce their corporate card policy. For example, the card allows companies to block out-of-policy spend as it’s happening, reducing the potential for mistakes 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 prevent or minimize off-policy spend. Ramp is technically a charge card (not a credit card), which means you never have to worry about interest or late fees. Plus, it offers unlimited 1.5% cash back and additional spend management solutions, such as bill pay, accounting automation, and integration with your other tech tools.
