Can you set a limit on corporate credit cards?
How do corporate credit card limits work?
Corporate credit cards make it easy for businesses to manage employee purchases and track expenses. But many corporate card issuers require a minimum of 15 authorized cardholders per corporation, and it can be challenging to oversee all transactions.
Employee misuse of corporate credit cards could result in unauthorized purchases and missed repayments. Employees may also mix personal and professional expenses. Companies can avoid this by adopting the right measures to limit spending as required.
Many card issuers allow account holders to set spending and transaction limits on both the entire corporate account and on individual cardholders. Businesses should also ensure they have clearly set out their corporate credit card policy for employees.
What are the requirements for a corporate credit card?
In addition to a minimum of 15 cardholders, many issuers require businesses to have annual revenue of $4 million or more to be approved for a corporate credit card. Other requirements include a good business credit score and minimum annual expenses of around $250,000.
Corporate credit cards don’t typically charge interest as the balance must be paid in full each billing cycle, although annual card fees may apply. Liability on corporate credit cards can be held solely by the company or jointly with the authorized cardholder. It’s important that employees understand who is responsible for payments and fees before being issued a card.
| Annual Revenue | Annual transactions | Number of cardholders | Business credit score | | ---------- | ---------- | ---------- | ---------- | | $4 million+ | $250,000+ | 15 or more | Dun & Bradstreet: 80+, Experian: 76+, Equifax: 90+, FICO SBSS: 140 + |
Companies that do not qualify for a corporate credit card can still set spending limits on employee cards with a business credit card account.
Setting limits on corporate credit cards
Employers can control spending on corporate credit cards with monthly caps, frequency limits, and restrictions on individual expenses. Each cardholder may also have a custom rule set. For example, senior managers may have higher limits than sales staff to allow for expenses such as business travel.
All businesses should outline clear policies when issuing corporate credit cards for employees. This allows each cardholder to fully understand the rules and regulations, liability, credit limits, and expense procedures.
Eligibility of employees
One of the first sections of a corporate credit card policy should outline which employees are eligible to become authorized cardholders. It should also provide details on how employees can be approved for a card. They should know whether they are required to apply themselves or if the company will issue one directly to them.
Corporate credit cards should fund approved businesses expenses only. Employees, therefore, need to understand what counts as an allowable expense and which charges are prohibited. (You probably don’t want every employee automatically upgrading their flights to first class if they don’t need it.)
Liability for the repayment of corporate credit card balances can lie with the company or be shared with cardholders. Joint liability requires employees to make payments for their transactions and receive reimbursement through expense reports. This can keep employees accountable for their purchases.
Regardless of liability, the policy should include information on who is responsible for repayments and replacement of lost cards, along with the company’s right to suspend and cancel individual cards at any time.
Expense reporting procedure
Employees will need to know how to submit expense reports to receive repayment if they have joint liability for payments on their corporate credit cards. The policy should inform them of the required receipts, as well as the monthly dates for expense report submittal, approval, and reimbursement.
Businesses should set out their spending limits, including any frequency limits or restrictions on certain expense categories like travel and entertainment. The policy should also explain if employees are subject to different spending limits on their corporate credit cards.
Consequences for violations
Unfortunately, employee misuse of credit card funds does happen. This can occur in the form of overspending, unauthorized transactions or erroneous expense reports. To discourage this and to outline the consequences, businesses should be sure to state their disciplinary policy for corporate credit card violations.