When you read “corporate credit card reconciliation” you might wonder, “What is credit card reconciliation?” Well, we’ve got you covered. Put simply; it’s the process of ensuring that the charges on your corporate card match what’s on the books for the business. And it’s a process vital for any business to do. This process ensures that all corporate credit card charges are accounted for and accurately reflected in the company's financial statements. So you can be sure there’s no money missing or charges gone unpaid.
We’re going to provide you with a step-by-step guide on how to reconcile corporate credit cards. We’ll cover everything from setting up a system to track corporate credit card expenditures to reconciling discrepancies. With the right tools and knowledge, you can be sure that your corporate credit card reconciliation process is accurate and efficient.
Why is corporate credit card reconciliation important?
Corporate card reconciliation is matching corporate credit card transactions with supporting documentation, like receipts and invoices. Organizations rely on corporate credit cards for business expenses like travel, entertainment, and office supplies. So there can be a lot of expenditures to track and manage each billing cycle.
But, no matter the size of your business, credit card reconciliation is an essential part of financial management. In addition to ensuring the finances are in order, reconciling credit card expenses can help businesses catch errors and prevent fraud.
Without accurate and efficient reconciliation, businesses can face serious consequences, including inflated expenses, inaccurate financial reporting, and fraud.
3 reasons corporate credit card reconciliation is critical to your business:
- It helps you track and manage expenses. Accurate reconciliation makes it easier to know how much money is spent on corporate credit cards. This can help to eliminate inflated costs and wasteful spending.
- Reconciliation ensures accuracy in financial reporting. An accurate reconciliation can lead to real financial reporting. In turn, it can impact the decision-making process.
- It helps prevent fraud. Without proper reconciliation, businesses are at a greater risk for fraud because it can be difficult to identify fraudulent charges if no system is in place to track and monitor corporate credit card expenditures.
It’s clear that proper credit card reconciliation is important, and making that process as easy and streamlined as possible will make it even better.
8 steps to reconcile corporate credit cards
There are a few key steps that organizations should take to reconcile their corporate credit cards. These steps include the following:
Step 1: Set up a system to track corporate credit card expenses.
The first step to reconciling your corporate credit cards is to track all card expenditures. This can be done manually, with each employee keeping track of their expenses. But that can leave room for error and creates more work for your employees. A more efficient way to track card expenditures is through an expense management system. Expense management systems automate the monitoring of corporate credit cards by integrating with corporate credit card providers and syncing data regularly.
Step 2: Obtain documentation for all charges.
The next step is to obtain documentation for all charges made on the corporate credit card. This documentation can include receipts, invoices, or financial statements. Keeping track of this documentation is essential to reconcile expenses and identify any inconsistencies.
Physical documentation can be stored in a central location or scanned and uploaded to an expense management system. In addition, many automated systems allow employees to submit digital documentation directly from their mobile devices. Which can then be routed to the appropriate approver, simplifying the process further.
Step 3: Reconcile discrepancies.
Once all expenditures have been documented, you can then reconcile any discrepancies. To do this, match documentation with transactions and identify any errors. An expense management system will typically match transactions with supporting documentation automatically. Another way these systems make it easier and faster to reconcile corporate credit cards.
Some common errors to watch out for when reconciling discrepancies are duplicate charges, incorrect prices, and unauthorized charges. You can easily miss these errors without a system to track and monitor corporate credit card expenditures.
Step 4: Identify and report any fraud.
Fraudulent charges can be difficult to identify, but there are a few red flags to watch out for. Look for charges exceeding normal spending limits, in unusual locations, and without documentation. If any fraudulent charges are found, report them to the proper authorities and the credit card company. By reducing such risks, organizations maintain better corporate credit card usage control and improve their bottom line.
Step 5: Review and approve the reconciled statement.
After resolving any issues, it’s time to review and approve the reconciled expenses. The financial manager or controller typically completes this step. Once all errors have been corrected, the reconciled statement can be reviewed and approved. Then you and your organization can use the negotiated costs to generate financial reports or make decisions.
Step 6: Generate financial reports.
After the reconciled statement has been approved, you can use it to generate financial reports! These reports can help you track spending, identify trends, and make decisions about future corporate credit card usage. Step 7: Make decisions about future corporate credit card usage.
After reconciliation and reviewing financial reports, you can use what you’ve learned to make decisions about future corporate credit card usage. For example, you might consider setting spending limits, changing the type of cards used, or issuing cards to new employees. By making informed decisions about corporate credit, organizations can better control their spending and improve their bottom line.
Step 8: Implement a corporate credit card policy.
To effectively manage corporate credit cards, it is imperative to have a clear and concise policy in place. When writing the policy, outline the procedures for corporate credit card use, including who is authorized to use them, how the cards should be used by staff, and what documentation is required to use them. Having a policy in place will help to ensure that corporate credit cards are being used appropriately and will help to prevent fraud and abuse.
A corporate credit card policy should be reviewed regularly and updated as needed. Organizations can better manage their corporate credit card usage and improve their bottom line by having a well-designed policy.
By following these eight steps, organizations can streamline the reconciliation process, improve their financial reporting, and make better decisions about future corporate credit card usage. In addition, they can improve their bottom line by taking control of their corporate credit cards.
3 tips for streamlining the corporate credit card reconciliation process
Because reconciliation is so important, it seems like a no-brainer to streamline the process. Businesses need to track spending, prevent fraud, and maintain financial control. Following these tips can streamline the process and ensure accuracy while streamlining corporate credit card reconciliation.
Set up a system to track corporate credit card expenditures.
You can track corporate credit card expenditures manually or through an automated system. But mechanical systems are typically more accurate and efficient, but manual tracking can be just as effective if done correctly.
Reconcile expenses regularly.
Reconciling expenses regularly will help to ensure that all charges are accounted for and will help to prevent errors. Generally accepted accounting principles, or GAAP, require businesses to reconcile their corporate credit cards monthly, if not more frequently.
Generate financial reports.
Generating financial reports is essential for maintaining control of corporate credit card spending. Reports can be used to track spending, identify trends, and make decisions about future corporate credit card usage. In addition, finance automation software can help to streamline the reporting process.
Challenges in the reconciliation process
The corporate credit card reconciliation process isn’t always a smooth one. But being aware of some of the most common problems can help you avoid them.
One of the most challenging aspects of reconciling corporate credit cards is tracking all costs, especially for large organizations. This can be incredibly complicated if there are multiple cardholders. Automated expense tracking systems can help to make this task easier with real-time updates and reporting.
Loss of receipts and invoices
Receipts and invoices can get lost or misplaced, and mistakes happen. But it can make tracking expenses and reconciling discrepancies difficult when they do. Therefore, having a system in place for storing and organizing receipts and invoices is crucial.
Manually reconciling corporate credit card expenses can be time-consuming and introduces room for error. Inaccurate reconciliation can lead to financial problems and damage financial reports' credibility. So automating it can remove this potential challenge.
Outdated or inaccurate information
Outdated or inaccurate information can lead to corporate credit card reconciliation errors. This can be caused by incorrect data entry, corporate credit card account changes, or other factors. So it's essential to keep information up-to-date and accurate to avoid problems.
Duplicate charges can occur when the exact expense is charged to multiple corporate credit cards. This can happen if there are numerous cardholders or if payments are made in different currencies. Automated expense tracking systems can help to prevent duplicate charges.
Unapproved or unauthorized charges
Unauthorized or unapproved charges can occur when corporate credit cards are used for personal expenses or when employees make purchases without prior approval. Having a corporate credit card policy in place can help prevent these charges.
How to automate your corporate credit card reconciliation process
Consider automation if you want to streamline your corporate credit card reconciliation process. Finance automation software can help to automate many of the tasks involved in reconciling corporate credit cards, including:
- Expense tracking: Automated expense tracking systems can help track all expenses, even with multiple cardholders. This can make it easier to identify discrepancies and prevent duplicate charges.
- Generating reports: Finance automation software can generate reports on spending, which businesses can use to track trends and make decisions about future corporate credit card usage.
- Reconciling discrepancies: Automated reconciliation systems can reconcile discrepancies quickly and accurately. This can save time and prevent errors. Finance automation software can help businesses to automate the corporate credit card reconciliation process by pointing out anomalies.
Finance automation takes the pain out of reconciling corporate credit cards by automating expense tracking, report generation, and reconciling discrepancies. By utilizing finance automation, businesses can save time and ensure accuracy in their corporate credit card reconciliation process.
4 benefits of automating your corporate credit card reconciliation process
- Improved accuracy: reconcile discrepancies quickly and accurately.
- Reduced time commitment: save businesses time and resources.
- Improved fraud prevention: help businesses track spending, identify red flags, and prevent fraud.
- Greater financial control: help companies gain greater insight into spending and to make more informed decisions about corporate credit card usage.
Let Ramp simplify your corporate credit card reconciliation process
Small businesses and finance teams may find the process of reconciling corporate credit cards to be difficult and time-consuming. This is often due to the challenge of manually tracking expenses and reconciling statements.
Your organization can eliminate these challenges by using an automated expense management system. Automated systems simplify the process of tracking corporate credit card expenditures and can automatically match transactions with supporting documentation. This makes reconciling corporate credit cards more manageable and faster, freeing your time to focus on more significant tasks.
Ramp is a finance automation platform that offers corporate cards, expense management, bill payments, accounting automation, and reporting. And using Ramp can help your business streamline reconciling corporate credit cards by automating expense tracking. By integrating with accounting software like Xero and QuickBooks, Ramp can also help companies automate the entire accounting process. This can save businesses time and improve accuracy.
Visit Ramp.com to learn how Ramp can simplify your corporate credit card reconciliation process.