Should I give more employees company cards?
Your Business Credit
Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of 200kfreelancer.com, a website for independent professionals. She writes "Your Business Credit," a weekly column about small business and credit, for CreditCards.com.
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Dear Your Business Credit,
offer credit cards to a few key executives at my small company, a professional
services firm. I'm considering adding more accounts for mid-level people, but
I'm not sure whether that's a good idea. Any advice? -- John
It's a good question. At many larger companies, it's common
to provide corporate cards to many employees, but in a small business, handing
out cards to everyone can create headaches. As the owner of the business and
the signer for the cards, you'll typically share responsibility with the
business entity for the charges on the cards. You won't be eligible for the
types of corporate card programs that big companies get, in which the company
may bear all of the liability. That means you'll want to be especially careful
about handing out cards.
Whatever card you choose, you'll first want to make sure
you're getting a really good deal. If you're going to increase the number of
cards -- and presumably the spending -- on your account, you may be able to more
easily benefit from any rewards program that comes with the account.
Next, I'd take a look at each employee's situation individually. If you're asking particular employees, such as sales
representatives, to make large purchases such as airline tickets on their personal
credit cards and wait for reimbursement, this could be burdensome for them, especially
for those with moderate salaries. They may appreciate having a separate card
for business use.
Even if employees don't travel, it may be helpful for them
to have a corporate card. For instance, if your office manager often runs to
the office supply store to restock, offering a corporate card to cover these
purchases is a good idea.
This isn't just helpful to them. It'll be easier for you to
keep track of expenses at tax time if you have opted for a card that offers
thorough spending reports. You'll have a clear record of each employee's business
purchases, without having to ask them to cough up missing receipts.
At the same time, there's no point in offering business
cards to staff members who make purchases on behalf of your company only once
in a while. It's easy to forget they have a card, and if it goes missing, no one
may notice until it's been misused. You can contest fraudulent charges, but
that takes valuable time and can take a while to get
It's also possible that employees will misuse a corporate
card. Most won't, but of course, giving cards to people who don't really need them
increases the likelihood that someone will be tempted to buy rounds of drinks
for friends who have nothing to do with the business -- or go on a spending spree
at the mall. Setting a clear, written policy explaining how the cards may or
may not be used can help prevent this scenario, but there's no guarantee that
everyone will follow it.
Mark Faust, principal of Echelon Management, a growth consultancy
in Cincinnati, says that if you've taken pains to hire people you trust, card
misuse should not be a big concern. He finds that many employers aren't quick
enough to empower staff with cards, sometimes because they're so lost in the
weeds in their businesses that they're micromanaging things such as which office
paper to buy. Faust notes that if employees make improper purchases, you can
always require them to reimburse you when you're reviewing monthly expenses -- or
For some business owners, that may be
too much drama. My suggestion is to consider your own tolerance for dealing
with a situation like this if it crops up. Ultimately, you need to find a volume of employee cards that works for your business -- the one that makes life easier for the greatest number of people, including you.
See related: Small-business credit card comparison chart, How to pick the best rewards card for your business, Getting the card with the most travel perks for your employees,
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Published: May 27, 2013