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Manage the risks of your corporate credit card programs

Part 2 of a three-part series on credit cards.

Issuing corporate credit cards to your employees can be a boon to your business, helping save employees’ time and helping keep corporate expenses in check. But there’s always a chance your employees will use these cards to make unauthorized charges. What’s more, if you don’t detect inappropriate or fraudulent card use soon enough, your business could be liable for those charges.

So it’s important that businesses take steps to ensure that corporate cards are used only for legitimate business expenses. By setting strict policies on purchasing procedures, internal credit limits, reimbursements and more, you can keep your liability in check and protect your bottom line.

Types of corporate credit card fraud

The types of corporate credit card misuse and fraud are as varied as employees. Most commonly, employees inappropriately use their company-issued cards to pay for personal expenses, like gas, meals or groceries.

Businesses that reimburse employees for personally paid business expenses must beware of fraudulent double-dipping. This happens when employees use their corporate cards to make purchases, then also submit documentation for these expenses for personal reimbursement.

Even employees who’ve not been issued a corporate credit card can participate in fraud. For instance, business owners or executives who provide all of their card information to “trusted” assistants might someday discover their card is being misused. Or an accounting employee without a corporate card might team with an employee who has one, and approve for payment fraudulent charges being made by the other employee.

Protecting your business

To ensure that the credit cards you issue to your employees are used properly, there are several steps you can take:

  • Track cards issued – Provide distinctly numbered corporate credit cards to employees, with firm instructions against loaning these cards to others.
  • Retrieve cards quickly – When employees with corporate cards leave your business, retrieve and cancel these cards immediately.
  • Set strict card limits – Set and enforce spending limits, based on your appraisal of your users and their spending needs. Set low or no ability to obtain cash advances.
  • Separate review and payment functions – Ideally, you should have separate people reviewing and paying your business credit card statements.
  • Thoroughly review statements – When reviewing charges, watch for unknown vendors, odd amounts and duplicate payments. Be sure to receive the original copies of statements and all pages, and review statements for signs of tampering.
  • Quickly report unauthorized use – Your liability for unauthorized use may be limited by how quickly you report misuse to your card issuer.
  • Establish and review firm policies – Inform employees of their card use responsibilities and the penalties for misuse, up to and including termination and criminal prosecution.

A valuable resource

As a credit card issuer and business lender, California Bank & Trust has the experience and insight you need to help you build a quality corporate credit card program. Please let us know how we can assist you.

Next up in this three-part series, we’ll share more about how your corporate credit card use helps contribute to your company’s creditworthiness, as well as a few other ways of gaining business credit.

 
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The information contained herein may not represent the views and opinions of California Bank & Trust, a division of ZB, N.A. or its affiliates. It is presented for general informational purposes only and does not constitute tax, legal or business advice.
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