Misuse of company credit cards can bring serious legal consequences

These limitations only applied to the disputed payment, not other charges made during the same billing cycle, which can still accrue interest and be reported as late if not paid. According to the Fair Credit Billing Act, consumers have 60 days from the time they receive their credit card bill todisputea charge with a card issuer. They may be unauthorized, display an incorrect date or amount, or contain calculation errors. If a good or service was not delivered, that charge can be disputed. In today’s digital world, credit card fraud and ID theft continue to rise. In fact, according to Experian, one of the three main credit monitoring companies in the U.S., credit card fraud is the most common form of identity theft. The good news is that consumers are not typically responsible for the amounts lost in cases of credit card fraud.

In what is reportedly the largest case of embezzlement in Wake County, the manager purportedly charged more than $5 million for personal use on a company credit card over a five-year period. He pleaded guilty to eight counts of making purchases by false pretenses and faces over ten year’s incarceration. Corporate cards accompany countless benefits, but if business owners are not careful enough, it might leave businesses vulnerable to misuse of the corporate cards. With this, they’ll have to undergo huge business losses and even put their clients at risk. Your accounting department should closely monitor all the expenses charged to the card. Require employees to submit a receipt for every purchase they charge to the credit card. Startups and established companies are increasingly ditching the standard company credit card in favour of dedicated expense management systems.

What is a Corporate Card?

Company resources are precious to keep the business running, however, pointing fingers at your employees without proof can sour your relationship with them indefinitely. With automated expense management software, you can put controls in place that will automatically alert you to duplicate transactions. This way your finance https://quickbooks-payroll.org/ department doesn’t have to sift through paper statements or old spreadsheets. Numerous credit card companies have also adopted a zero liability policy, which means the consumer is not held responsible for any fraudulent charges at all. The terms and conditions of your cardholder agreement often spell out the details.

Usually, corporate card issuers give you access to set terms for every employee so that they gain access only to those funds that they require. Going for corporate cards with joint liability encourage employee accountability.

How to Consolidate Business Debt

Corporate procurement cards — which for a small business is more often a business credit card — is a solution that provides benefits beyond ensuring the business complies with GAAP guidelines. A strict credit card management policy and both regular and random audits are vital to ensure that issuing procurement or credit cards remains a smart business decision. Nevertheless, the employee is still responsible for reporting those charges. The credit card issuer checks the company’s credit history before issuing the employee this card. Not every company opts for issuing Corporate cards for their employees.

Corporate liability might disincentivize employees from spending rationally. They are likely to spend more than what they would have paid with their own card, as they are not liable for the debt.

Benefits and drawbacks of a corporate credit card

Managers who have not provided adequate oversight of purchases may be subject to disciplinary action. If a cardholder is unclear as to why a P-Card transaction is declined, the cardholder may contact either the Issuing Bank or Corporate Card Services for more information. The transaction amount exceeds the card’s allowable limit; and/or the cardholder is attempting to use the P-Card with a high-risk merchant.

• EnKash introduces the country’s first corporate card to manage all your expenses.
• It is essential for your company to be explicit about the use of the company credit card.
• Learn what these policies cover, why they are important, and how you can create a comprehensive policy for your own company.
• By doing so, you are saving yourself and your employer from figuring out what the expense is for.
• Although Brex Treasury does not charge transaction or account fees, money market funds bear expenses and fees.
• Some employees who prove their capabilities and their loyalty to the company through their exemplary performance are often given incentives, such as cash bonuses, all-expenses-paid trips, or company credit cards.

If you apply for a credit card, the lender may use a different credit score when considering your application for credit. For instance, if you run an auto-parts store, it would be highly unusual for an employee to make business purchases at a grocery store on a routine basis.

Discipline in the Public View – Credit Card Misuse VI

Any duplicate expenses or mismatches are detected and indicated to the employees for rectification. We’d love to hear from you and encourage a lively discussion among our users. Refrain from posting overtly promotional content, and avoid disclosing personal information such as bank account or phone numbers.

Issuing P-Cards to students should be done only when essential on a very limited basis. What if Gerald was disciplined for credit card misuse in the third month of the appraisal cycle and didn’t commit any further misconduct for the remaining nine months. In the meantime, if he did misuse the card, you might consider canceling his card and covering future expenses related to the repair and cleaning of his truck What To Do If An Employee Misuses A Corporate Card yourself. If he needs gas money, ask him to submit receipts for reimbursement in an expense account. Ask your employment attorney or human resources manager for guidance on how to handle the termination of the card in a way that does not embarrass him in front of colleagues and prevents legal problems later. See the online credit card applications for details about the terms and conditions of an offer.

Why should your business opt for a corporate credit card?

There are different options to choose from when deciding on a business credit card. Some credit cards offer rewards programs, while others offer a 0% annual percentage rate , meaning you don’t have to pay any interest on purchases made within the specified timeframe. You’ll need to compare rates and perks to decide which credit cards offer better benefits to fit your business needs. Entrusting a corporate credit card to some employees empowers your staff. Likewise, it is a better way to manage and control expenses, and setting guidelines and limits will prevent misuse. So if you’re going to use company credit cards, fraud will always be a concern.

Create an expense approval workflow where supervisors and managers are required to approve transactions or funding requests. You may also require a compliance controller to oversee and ensure that your expense policy is being implemented properly. One way to do so might be to educate the employees and train the managers approving the reports. Look at spending trends over time and how they correlate with your ROI. Ideally, if you see higher spending trends, those charges should be coming from a high performer who understands the best way to make your dollars count. Bento for Business debit cards, this is easily achieved through the MyBento account management app. For construction companies looking to streamline budgeting and expense management processes.

Moreover, you must clearly acknowledge all the business members with the corporate credit card policy so that they have a fair idea of which transactions are authorized and how much they can spend every month. You must outline the outcomes of misusing and be aware that those who are in violation often get dismissed and prosecuted. While corporate credit cards do offer a ton of benefits, they can leave businesses vulnerable to employee misuse of credit card funds. Employees may overspend, make unauthorized transactions, or submit erroneous expense reports. Businesses can mitigate these risks with clear policy implementation and reporting procedures. In an ideal world, all employees would keep a perfect record of all their purchases and maintain a scrapbook of 30 days’ worth of receipts before the credit card statements arrive. But keeping receipts for so long is cumbersome and (let’s be honest) an unfair ask.

Although, there is still a higher penetration opportunity in India for business expense cards. The market is highly under-penetrated with the options available in corporate payments cards that can be used in several customized ways. Make sure you have a policy in writing that clearly states what the cards may be used for and what purchases are not covered.

TheFair Credit Billing Actlimits the liability to $50, and oftentimes, there’s no cost at all. No matter how you organize your expense policy, it’s important to keep track of who is spending on each individual purchase.

Employees are responsible for paying credit card transactions themselves. The company then reimburses them upon the submitting and reviewal of expense reports. Make sure employees include original receipts and submit expense reports by a monthly deadline. Due to the ease of use and availability, most of our transactions today have become cashless.

Some card issuers even offer electronic expense reporting facilities to accelerate the process of submitting reports. Corporate card expenses are recorded on the company’s card statements instead of the employee’s statements.

State that reimbursement for returns of goods or services must be credited directly to the card account. Your decision will affect how expense reports are generated, how reimbursements will work, and how you will hold people accountable for their spending. Corporate credit cards are an effective way for employers to trail their employees’ card expenses.