A company credit card can be defined in several ways. It can be a card available for use for all members of the company, especially small companies. These cards can be used as the main means of purchasing things on a day-to-day basis. Alternately, a company may issue a credit card to a few employees, especially those who must travel for business and need to pay for expenses covered by the business along the way.
The business is responsible for paying bills for both types of company credit cards, provided that their use is strictly for approved business expenses. This can create some problems and people do need to pay attention to keeping careful receipts and records when they use the cards. An employee may be responsible for charges that are not truly business expenses, and purchasing things on the card that really aren’t business-related can be cause in some cases for termination from a job.
It is true that some employees will abuse a company credit card, but with advances in detailed statements, this is likely to be discovered quickly. Sometimes accidental abuse occurs. When people are used to paying for things with cards, it’s very easy to pay for things with the wrong card. If an employee notes an accidental purchase with the company credit card, he or she should inform employers immediately and be prepared to compensate the company right away.
A more complicated issue arises when employees purchase things that are legitimate business expenses at the same they purchase things for personal use. Again, detailed receipt keeping is the key to making sure the company is not buying things unrelated to its business. One way to avoid this is to ask for separate transactions when making a purchase that includes business and personal expenses, and then using the company credit card and a personal card to pay for these transactions.
Sometimes people who have a company credit card issued in their name, wonder if they may be able to take advantage of perks offered with the card, like frequent flier miles. Decision to allow the employee to use perks or gift points must be up to the employer. When this is unclear, employees should verify with their employer prior to using up any perks. The company might want to accumulate these to give gifts to employees or to save money on air travel.
One way to avoid using a company credit card is to create a reimbursement method for business expenses made by employees. This also involves employees turning in receipts, but it gives companies less ability to investigate charges. Many find that a company credit card offers greater convenience than the receipt/reimbursement method. Another advantage to credit cards over the receipt/reimbursement method is that employees with little available personal cash or credit won’t be placed in an embarrassing situation where they cannot cover legitimate business expenses.