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How to handle employee misuse of corporate credit cards?

Having the right corporate credit card policy in place is a critical step before handing cards out;
Find out how they work, and why you should use them.

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.

Preventing employee misuse of company credit cards

Businesses should only issue corporate credit cards to trustworthy employees. Issuers usually have minimum requirements of 15 cardholders, but it’s a good idea to limit the number as much as possible. Only employees who make frequent business transactions need one, and they should never give them to anyone else.

Communicate corporate credit card policy clearly to all employees. They should understand which transactions are authorised and how much they can spend each month. Outline the consequences for misuse and be clear that those in violation may be dismissed and prosecuted.

You can reduce misuse by setting spending limits and restrictions on expense categories. Corporate credit card issuers allow you to set terms for each employee so they only have access to the funds they need.

Choosing corporate credit cards with joint liability encourage employee accountability. 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.

Organizations can identify suspicious activity by regularly reviewing corporate credit card usage. Credit card issuers may also offer to notify the company and set alerts of unusual or substantial transactions.

What to do if you suspect misuse of credit cards

Even when companies have taken all the preventative steps, corporate credit card misuse can still happen. If you suspect an employee is violating the terms of their corporate credit card, act fast.

Check statements, receipts, and expense reports for regular violations. Remember that a one-off incident may just be a misunderstanding or accident, so be open-minded and fair in your approach. If these confirm your suspicions, immediately suspend or cancel the credit card.

Gather any documentation you need to conduct an investigation, including statements, receipts, and a ‘back-end’ card transaction report from the credit card issuer. This confirms the point of sale and PIN usage on transactions. It can challenge any claims by the employee that the card was lost, stolen, or skimmed.

You may decide to launch an internal investigation for smaller incidents of misconduct. If the company has insufficient resources or the investigation is against a senior member of staff, it may be worth hiring an external investigator. If the fraudulent activity is more serious, report it to the police.