7 Questions to Ask Before Giving Business Credit Cards to Employees
By Michael Grace | American Express® Freelance Contributor
6 Min Read | June 30, 2021
Summary
A business owner faces questions every day. Some from employees, some from customers, some from vendors. Those immediate-attention questions need resolution in the short term.
But then come bigger-picture questions, such as if and when to consider giving business credit cards to employees. For some, that answer is easy. Others, not so much. For business owners in the latter camp, it can help to explore the following seven questions before extending business spending access to employees.
1. Should I Give Business Credit Cards to My Employees?
Employees using their own credit cards for business-related expenses can lead to added stress in both the workplace and at home. If they frequently go on the hook for work expenses, then wait to get reimbursed – and perhaps incur interest fees on their personal cards because of it – it may lead to unnecessary tension and a dip in employee morale. One way to help alleviate that is to give business credit cards to those employees.
The bottom line: If there are employees who regularly must spend on behalf of the business, employee credit cards may be a good idea.
2. Which Employees Need a Business Credit Card?
Giving cards to every employee may not be the best decision for every business owner because it can introduce risk and complicate expense tracking. To figure out which employees would benefit most from a business credit card, analyze the nature of your business. Is there someone who does most of the spending for overhead and supplies? Do you rely on a team to help grow the business with new client acquisition, often by taking prospects out to lunch? From there, you can begin to decide who should receive a business credit card. This might include office administrators, key upper-management, and sales executives, to name a few. For infrequent spenders, consider sticking to reimbursement.
The bottom line: Consider giving business credit cards only to employees who would use them regularly, such as purchasing managers.
3. How Many Business Credit Cards Should I Get?
Once you know which types of employees need a business credit card, you can decide how many cards to get. For example, you may have several individuals in charge of procuring and purchasing materials, but does each employee need a card or can the department get by with one shared business credit card? Small businesses with employees who work closely together might only need a few cards, but larger companies – and those with remote workers – might benefit from more cards. In addition, consider factors like your trust level with employees. Remember that you can always add more cards in the future, whereas having to take cards from employees can be a blow to morale.
The bottom line: Assess factors like employee trust level and whether departments can share a credit card before determining how many business credit cards to extend to employees.
4. What Protective Procedures Should I Implement?
To get the most out of business credit cards, employees generally shouldn’t be given free rein to spend. It’s important to put measures in place to limit employee spending to only the necessities. A good practice is to be clear and upfront about policies governing business credit card use. The employee should know exactly what types of purchases can be made freely, which need prior authorization, and whether there are spending limits.
For example, you may want employees to clear airfare pricing before purchasing a ticket for business travel. For employees to take advantage of last-second hotel deals, consider establishing a company-wide maximum hotel room price. Other things to consider: Are meals with clients allowed on the card? What about meals when on assignment for the day? Are there financial caps to the different types of meals? The more specific you can be with these decisions, the clearer the guidelines for employees to follow.
The bottom line: Clearly establish employee credit card use guidelines that allow employees to make necessary purchases while protecting the business from superfluous spending.
5. Should I Monitor Their Activity?
Monitoring employee business credit card activity can be a shrewd decision for a few reasons. If you’re on the fence about issuing a business credit card to someone, monitoring their spending may ease your mind. From a macro standpoint, it enables long-term spending analysis that can be used to discover savings opportunities and make more informed purchasing decisions. For example, is the office manager frequently buying reams of paper in small batches? Perhaps the company can save money with less frequent bulk orders instead. Just be sure to let employees know that you’ll be checking transaction history on a regular basis.
The bottom line: Monitor employee spending activity to shed light on savings opportunities. Just be sure to let them know their transaction history is supervised.
6. Should I Set Spending Limits?
Most business credit cards offer the ability to set spending limits, which can help minimize costs and control finances. Depending on the card issuer and the nature of your business, it’s feasible to have different limits for different employees. An employee who travels frequently may need a higher limit than an in-office employee who uses the card occasionally for supplies or to pay the monthly cell phone bill, for example.
The bottom line: Set customized spending limits for different employees to help prevent uncontrolled spending, save money, and stay on top of finances.
7. Who Gets the Rewards?
One of the perks of employee business credit cards is the power to quickly earn rewards, be they rewards points, cash back, frequent flyer miles, or hotel points. But business owners must ask themselves who gets to use the rewards? The business or the employee? Depending on the card, business owners might want to use cash back as statement credits to help reduce payments, or they might want to redeem points for office supplies or other materials. On the other hand, employees who must travel frequently might benefit from redeeming points or miles toward future travel. Other companies might strive for the best of both worlds by redeeming points for year-end employee perks, such as gift card bonuses or even a free trip.
The bottom line: Consider whether the business or the employee gets access to the rewards earned with employee credit cards.
Business Credit Cards done right
From travel benefits to cash flow management, we've got a Card for you.
