Employees increasingly off the hook for travel card expenses

By  |  Published: May 30, 2017

Sabrina Karl
Personal Finance Writer
Data whiz and visual storyteller

 

Before a company issues travel expense credit cards to any of its employees, an important decision takes place. Will the company assume liability for all the charges made to the card, and handle the card’s repayment every month? Or will the company put the onus on its employee to carry liability for the charges and handle the monthly payments? Still another option is a hybrid of the two.

Over the past decade, the decision corporations are making on this front has been shifting. Though one might expect companies to be pushing liability to employees in an era of cutting costs and employee perks, the opposite is true. Data from RPMG Research Corp. shows that in 2007, approximately 6 in 10 companies (59 percent) carried all of the liability for their employee travel cards. By 2016, that figure had grown to 80 percent.

Even within the 20 percent of individuals who still held some liability in 2016, about half shared the liability with their company employer. Only 11 percent of 2016 employees carried the liability completely alone.

Why the shift? Richard Palmer of RPMG explains that technological changes have dramatically improved the expense tracking process, while still allowing companies to retain sufficient control over expense payments.

“Organizations are always looking to improve efficiency and simplify processes,” said Palmer. “An individual liability-individual pay arrangement can entail thousands of reimbursement payments to employees, while corporate liability-corporate pay requires a single payment to the card issuer.”

This aim for greater efficiency has been helped by improvements in both expense management and card technology. For instance, “individual liability was a particularly strong option in an era of paper receipts,” said Palmer. “But in today’s environment, receipts are electronic, or can be made so with a phone snapshot, so it’s little problem for the traveler to document charges in a timely fashion.”

At the same time, companies’ expense management software has advanced, further facilitating the efficient and timely handling of receipts. Combine these two improvements and an organization can now easily reconcile and streamline payments to their card issuer.

“Meanwhile, card issuers also have advanced their technology, improving real-time reporting and alert systems that help protect companies against employee misuse and abuse of the cards,” said Palmer.

Still, individual liability is not dead for travel cards. Palmer notes that, “Some organizations, particularly large ones, still prefer the control-intense idea of seeing all documentation before an employee is reimbursed.”

RPMG Research Corp.’s findings are based on survey responses from 1,311 travel card-using organizations across the U.S. and Canada. The report of its analysis was released in mid-2016.

See related: Infographic: 'Us' cards versus 'me' cards, Not all travel qualifies for rewards bonus points, Corporate cards go virtual, offering added securityMore infographics

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Updated: 10-23-2017

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