Corporate credit card policy: Components and best practices

The new era of business travel is here in full force, with employees 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.

What is a corporate credit card policy?

Company credit cards can help eliminate the need for reimbursements and make it easier to track business transactions. But when left unchecked, employee expense 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.

Employee credit card agreements vs. corporate credit card policies

While both an employee credit card agreement and a corporate credit card policy are related to the use of company-issued credit cards, they’re not exactly the same.

A corporate credit card policy is a broader document that outlines the overall guidelines for the company's credit card program, and covers topics like eligibility, spending limits, expense reporting procedures, and security measures. It applies to all employees who are eligible to receive a corporate card.

An employee credit card agreement, meanwhile, is a more specific document that outlines the terms and conditions for an individual employee's use of a corporate card. It often includes details like the specific cardholder's responsibilities, spending limits, and consequences for non-compliance and is typically signed by both the employee and the company.

» Download our Employee Credit Card Agreement template

Key components of a strong corporate credit card policy

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:

• Purpose
• Eligibility requirements
• Cardholder responsibilities
• General use policy
• Allowable and prohibited expenses
• The approval workflow
• Expense reporting and reimbursement procedures
• Card security and fraud prevention
• Consequences of policy violations
• Exceptions
• How the policy will be reviewed and updated

Let’s take a closer look at them so you can learn how to write a company credit card policy quickly.

Eligibility requirements

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.

Cardholder responsibilities

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.

General use policy

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 for business credit cards around using personal funds to make company 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.

Acceptable expenses

This section clearly defines both allowable and prohibited expenses, including what the company will cover and up to what amount.

These rules typically vary based on the card user. A salesperson, for example, might be authorized to use their card for client entertainment, while a department head might be authorized only to manage vendor or supplier payments.

Defining the controls allows you to communicate specific, allowable spending limits for each transaction, overall spending caps for individual employees or teams, and restrictions on specific merchants or categories of purchases.

The approval workflow

This is a step-by-step overview of how and when cardholders need management approval for their purchases.

Expense reporting and reimbursement procedures

Include expense reporting and reimbursement policies, including the required documentation—such as receipts—the deadlines for submitting expenses, and the process for receiving reimbursement.

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.

Card security and fraud prevention

A strong corporate card policy includes measures to improve the card’s data security and monitor for fraud. Be sure to outline the procedures for handling lost or stolen cards.

Consequences of policy violations

What disciplinary actions will be taken for employees who knowingly violate the corporate card policy?

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 from unusual spending or unique situations that aren’t explicitly covered in the policy.

How the policy will be reviewed and updated

Let employees know how static or dynamic this document is, and how any changes will be communicated to them.

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Free credit card policy template

Note: This is a general credit card usage policy template and should be customized to fit your specific company's needs and industry regulations. Consult with legal counsel to ensure compliance with local laws and regulations.

1. Purpose
‍

This policy outlines the guidelines for the use of company-issued credit cards. Its purpose is to ensure responsible and efficient use of company funds, maintain financial control, and prevent fraud.

2. Eligibility Requirements

• Eligibility Criteria: Only employees authorized by [Department/Manager] may be issued a company credit card.
• Card Issuance: Cards will be issued based on job responsibilities and business needs.
• Approval Process: Card issuance requires approval from the appropriate department head or finance manager.

2. Cardholder Responsibilities

• Responsible Use: Cardholders must use the card solely for authorized business expenses.
• Security: Cardholders must protect their card information and report lost or stolen cards immediately.
• Expense Reporting: Cardholders must submit accurate and timely expense reports, including original receipts.
• Policy Adherence: Cardholders must comply with all terms and conditions outlined in this policy.

3. General Use Policy

• Point of Contact: Any questions about spending can be directed to [company point person].
• Spending Limits: Individual spending limits will be assigned to each cardholder based on their role and responsibilities.
• Expense Approval: Certain expenses may require prior approval from a designated authority.
• Regular Reviews: Regular reviews of spending patterns will be conducted to identify potential issues and ensure compliance.
• Currency Exchange: Foreign currency transactions should be minimized and approved in advance.
• Emergency Purchases: In case of emergencies, cardholders may exceed spending limits, but must obtain approval as soon as possible.

4. Allowable and Prohibited Expenses

• Allowable Expenses:
  
  • Airfare
  • Hotel accommodations
  • Rental cars
  • Meals and incidentals
  • Client entertainment
  • Office supplies and equipment
  • Professional services
• Prohibited Expenses:
  
  • Personal expenses (e.g., groceries, clothing, gifts)
  • Cash advances
  • Gambling
  • Illegal activities
  • Alcohol (except for business meals)
  • Entertainment expenses exceeding company guidelines

5. The Approval Workflow

• Low-Value Transactions: Transactions below a certain threshold may be approved by the cardholder.
• High-Value Transactions: Transactions exceeding a specified amount require prior approval from a designated authority.
• Corporate Travel: Corporate travel arrangements should be made through the company's preferred travel agency to ensure compliance with travel policies.

6. Expense Reporting and Reimbursement Procedures

• Timely Submission: Expense reports must be submitted within [number] days of the expense.
• Receipt Requirements: Original receipts must be attached to the expense report.
• Expense Report Format: Expense reports must be completed accurately and in a timely manner.
• Reimbursement Process: Reimbursement will be processed according to the company's reimbursement policy.

7. Card Security and Fraud Prevention

• Lost or Stolen Cards: Cardholders must report lost or stolen cards immediately to [the company's designated contact].
• Data Security: Cardholders must protect their card information and avoid sharing it with unauthorized individuals.
• Secure Transactions: Cardholders must use secure methods of payment, such as online portals or chip-and-PIN technology.
• Fraud Monitoring: The company will monitor card activity for signs of fraud and take appropriate action.

8. Consequences of Policy Violations

• Disciplinary Action: Violations of this policy may result in disciplinary action, including but not limited to:
  
  • Written warnings
  • Suspension
  • Termination of employment
• Financial Liability: Cardholders may be held financially responsible for unauthorized charges or fraudulent activity.
• Reporting Violations: Employees are encouraged to report any suspected policy violations to [Department/Manager].

9. Exceptions

In exceptional circumstances, deviations from this policy may be permitted with prior approval from [Department/Manager]. Any exceptions should be documented and justified.

10. Policy Review and Updates
‍

This policy will be reviewed annually to ensure its continued relevance and effectiveness. Any necessary updates will be communicated to all employees.

» Why startup finance leaders should give every employee a corporate card

What to look for in a corporate card

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.

And that starts with choosing the right corporate card for your business. Here's a full list of features you should look for in a corporate card to help you enforce your business credit card policy.

» Learn what is a corporate card

Smart automation‍

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, speeding up your month-end close.

‍Easy card approvals for employees

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.

Real-time receipt and note collection

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.

Customizable spending limits

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.

Category and merchant controls

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.

Spending alerts

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.

Card templates

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.

How Ramp simplifies enforcing your corporate card policy

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.

Improve your corporate credit card policy adherence

By implementing a well-defined corporate credit card policy and leveraging the right tools—including full-suite corporate card programs, like Ramp—a business can efficiently manage expenses, mitigate risks, and ensure compliance.

A clear and concise policy, combined with robust monitoring and enforcement mechanisms, empowers employees to make informed spending decisions while safeguarding the company's financial interests. Download our company credit card policy example if you want a shortcut to building a strong policy for your company.

Remember, a strong corporate credit card policy is not just a document; it's a strategic tool to optimize your business's financial performance.