Business Credit Cards for Employees: Pros and Cons

Erica Sandberg When You Need New Credit Cards Apply Online
In this Post:
  • How They Work
  • Helpful Tracking
  • Streamline your Paperwork
  • Controlling Card Use
  • Cards for Employees or Departments?
  • Enjoy the Rewards

You get business credit card offers every day. We know you do. And employee credit cards can provide a host of benefits to your business, such as streamlining your paperwork and reducing the need for employees to wait for reimbursements on purchases they make with personal cards. Employee cards can also create a number of problems, not the least of which is misuse of the cards. Knowing the pros and cons of employee credit cards can help you decide if this payment option is right for you, and how to set up your policies and procedures for their use.

Business Credit Card Offers: How They Work

Many business credit cards allow you add one or more authorized users to your account once it’s established. This is often as simple as filling out a short form with the employee’s name, birth date and social security number and the signatures of your authorized representative and the employee. Employees can then use the card for business, but not personal charges. If a business card issuer sees that your cards are being used for personal shopping, the card company might restrict or cancel your card.

Helpful Tracking

When you have multiple employees using corporate cards, your card issuer provides you with reports that show your spending by type of purchase, such as office supplies, travel and dining. In addition to keeping track of spending categories, you can track the spending of all of your employees as a group, and/or individually. Business credit card offers can make it easy to track your spending.

Streamline your Paperwork

One of the benefits of employee credit cards is that it reduces the amount of paperwork both you and your staff members need to create when making purchases. Without employee cards, staff members might have to submit purchase orders and wait to get them approved. Your office must then review the purchase orders and ask employees one or more questions before the finance department makes the purchase. When employees use their own credit cards for company purchases, such as when traveling on business, they must submit post-purchase reimburse requests. This can cost the employee interest charges if you don’t reimburse them on time. Allowing employees to make purchases with a company card eliminates these steps.

Employee credit cards won’t eliminate all paperwork, however. It’s important to put in place some policies and procedures to prevent unauthorized charges and avoid running over your credit limit.

Controlling Card Use

To avoid problems with employee credit cards, work with your credit card issuer and your finance department to set limits on how the cards can be used. Some credit card issuers let you set up individual employee profiles that limit the amounts on purchases an employee can make. Some let you set a specific credit limit for each employee. Your company should have a written policy for how and when employees can use cards. Include a list of acceptable charges, as well as examples of charges you don’t want employees making. Make it clear no one can make any personal charges.

Set up virtual card numbers for your employees so that the credit card number they use to make online purchases differs from the main account number on your physical card. This will help decrease the potential for hackers stealing your card number and running up charges.

When employees submit expense reports, have them provide receipts, not credit card statements, to reduce fraud. For example, a credit card statement only shows the total of a hotel expenditure. A room receipt shows the employee’s individual charges, which can include mini-bar and gift store items, personal phone calls, extra room service and in-room movies.

Cards for Employees or Departments?

One way to control your cards is to issue employee cards only to the heads of different departments. This allows your HR, marketing, IT or production departments to make purchases they need. This can reduce issues of hurt feelings or mistrust if your corporate policy is to provide cards only to department heads who make purchases for their departments and not themselves.

Business Rewards Credit Card:Enjoy the Rewards

The more your employees charge on their cards, the more you can earn in rewards. Your employees can also earn and keep personal rewards. For example, when your employees travel, you might earn cash-back rewards on total company spending, while your staff members earn airfare and hotel points if they have frequent flyer or traveler accounts. Discuss with your card issuer how to handle company vs. employee rewards to get the most benefit from issuing employee cards. Consider accepting some of those business credit card offers today!