What to do if an employee uses a company credit card for personal use

When an employee uses a company credit card for personal expenses, it could be a mistake or a deliberate act of misuse. In either case, it's important to take action to address the situation and implement measures to prevent future card misuse.

Steps to take if an employee uses a company credit card for personal use

Here’s a step-by-step guide on how to handle such situations effectively:

1. Verify the misuse

First, confirm whether the charges were indeed for personal use. This involves reviewing the expense receipts and transaction details. Employees should provide purchase receipts for all card transactions, as stipulated in your company’s expense policy. If discrepancies are found, contact the vendors for transaction records to cross-verify the purchases.

2. Understand the circumstances

Engage with the employee to understand the context of the misuse. In some cases, the misuse might be accidental, especially if employees carry their personal and company cards together. Clarifying whether it was an intentional act or a mistake will guide your next steps.

3. Document the incident

Keep thorough records of all findings and communications related to the misuse. Documentation is critical for potential disciplinary actions and to maintain transparency and accountability within the company.

4. Decide what actions to take

Depending on the severity of the misuse and company policies, immediate actions may include:

• Requiring repayment: Ask the employee to reimburse the company for the personal expenses.
• Disciplinary measures: Issue warnings or take disciplinary action as per company policy. In severe cases, consider termination of employment.
• Legal action: For significant or repeated misuse, it may be necessary to involve legal authorities.

5. Review and reinforce expense policies

Revisit your company’s expense policy to ensure it clearly defines permissible uses of company credit cards, the process for reporting and rectifying misuse, and the consequences of policy violations. Ensure all employees are aware of these policies and consider conducting refresher training sessions.

6. Improve monitoring and controls

Implement stronger controls and monitoring mechanisms to prevent future misuse. This can include setting spending limits, requiring pre-approval for certain transactions, and using expense management software to get real-time updates and oversight of card usage.

7. Leverage technology

Use expense management tools and corporate card solutions that offer real-time tracking and automated approval workflows. These tools can significantly reduce the risk of misuse by providing immediate visibility and control over all transactions.

By taking these steps, you can address incidents of personal use of company credit cards promptly and effectively, thereby safeguarding your company’s financial integrity and promoting a culture of accountability and transparency.

Is an employee using a company credit card for personal use considered embezzlement?

Using a company credit card for personal expenses can be considered embezzlement, but it depends on the context and scale of the misuse. If an employee accidentally uses the company card for personal purchases once or twice, it may be a genuine mistake, especially if they promptly report and rectify the error.

However, if an employee consistently uses the company card for personal expenses, especially with the intent to deceive or without any attempts to reimburse the company, it could be considered embezzlement.

Embezzlement involves the unlawful taking of property by someone in a position of trust, and repeated, intentional misuse of company funds falls under this category. It's important for companies to have clear policies and monitoring mechanisms in place to prevent and address such issues.

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How to prevent employee misuse of company credit cards

1. Assign corporate credit cards to employees

Corporate business credit cards come with built-in expense management software and more spending controls than traditional business credit cards. These features allow for better tracking and management of expenses, reducing the likelihood of misuse.

2. Upload your expense policy

Some corporate credit cards allow you to upload and distribute your expense policy directly through their platform. This ensures that all employees are aware of the guidelines and limits regarding company spending. For reference, see the Ramp support page on how to upload expense policies.

3. Set custom spending controls to keep purchases within policy

Custom spending controls can be set to ensure that all purchases made with corporate credit cards adhere to company policies. These controls can include spending limits, approved vendor lists, and transaction types, helping to prevent unauthorized expenditures.

4. Use virtual cards to further control spending

Virtual cards offer an additional layer of control over spending. They can be issued for specific transactions or vendors, with predefined limits and expiration dates, making it easier to monitor and restrict spending to only what is necessary for business purposes.

Set custom spending controls on employee cards with Ramp

Prevent company card misuse before it happens by assigning Ramp corporate cards. You can issue employee cards with built-in limits and restrictions, so only approved expenses go through. And with custom spend approval workflows, you can define who needs to approve what expenses and when.

Learn how Ramp can help you automate your expense policy. Don't have one? Use our free expense policy template to get started.