For the longest time, expense reimbursement has always been the default method of managing company expenditure. But corporate business cards have changed the game. In most countries, founders in larger companies would distribute cards to key employees of the firm to spend on authorised business expenses.
If you’re an individual employee, this may not be the best time for you to get a corporate card just yet. But if you’re at the stage of your business growth where you’re ready to scale and expand, now may be the best time.
To build a policy around corporate card expenses, we need to understand the purpose and benefits of corporate cards for startups in the first place. For founders who have expanded their business exponentially, it’s impossible for them to handle each and every transaction for the company, considering the greater responsibilities they have to take care of. That’s where corporate cards come in.
Business credit cards for startups can be used for just about any and every business expense (as long as they’re approved, of course). From transportation costs, business lunches, recurring software subscription fees, equipment upgrades—you name it. Since these cards are issued by the employer, the company’s name will be displayed on the card along with a designation for the approved cardholder.
Typically, not all employees are entitled to a business credit card. Only those with high-level roles in the organisation such as managers, directors, or executives will be issued one. This ensures that employees no longer have to spend out of their own pockets and go through the tedious reimbursement process.
Having a policy in place for employees issued with their own corporate business card safeguards the company’s business expenses against fraud and abuse. It ensures that it will not be used for personal expenses and will only be used for official business on the company’s behalf. This will apply to all corporate business card holders and approvers of the cardholder’s acquittals.
When creating an effective and concise policy, the following information should be included (but not limited to):
Choosing who has access to your corporate credit cards is the first step in this process. Policy managers have the liberty to choose from the following options:
Decide on the policy option that works best for you and your business and ensure that it ultimately meets your needs.
The next step in developing your corporate card expense policy is setting spending limits for employees. In every organisation, there won’t be a one-size-fits-all spending limit. Again, it’s all about finding what works best for your business and team members. For instance, you can set tiered limits based on seniority, or perhaps on a per-item or cumulative basis.
Along with setting spending limits, your company’s expense policy should also define corporate card usage exceptions on a case to case basis. Expenses like client entertainment, corporate travel or emergencies may need additional approvals from policy managers—ensure that your policy specifies these exact circumstances.
Do you need certain employees to seek higher-level approval before using their corporate cards? This is just one of the few questions you need to ask yourself when defining the approval process. Although the approvals generally lower the risk of card misuse, they may also slow down the flow of purchases.
Besides the approval process, companies need to set out claims processing for reimbursable expenses as well.
To prevent out-of-policy purchases, make use of spend management software to manage and track non-payroll business expenses. This includes everything from marketing expenses, software subscriptions, logistical equipment, and so on.
By collecting and analysing data spend in real-time, these tools allow policy managers and key personnel to gain insights into company spending across the entire business. Besides tracking business expenditure, such management software helps companies avoid overspending as well.
To get started with your initial draft, here’s a simple template to follow.
Laying down all the groundwork in black and white may seem like a lot of work. But this is an essential step for those who wish to explore business credit cards.
Once you’ve created your expense policy, all that’s left is to share this with your key employees. If you still haven’t found the ideal corporate business card for you, why not give the Aspire Virtual Card a go?
Explore a variety of features that will streamline the way you manage your business finances and experience cohesive corporate banking for teams. From multi-user access to maker-checker workflows, rest assured all your needs will be met.