Corporate Card Spending Policy Best Practices By Jonah Balfour When companies chose a payment method for their expenses, one of the most popular choices has long been the corporate card. This provides the company with a familiar and relatively easy way to pay for the goods and services they need. Corporate cards are cards that are intended for business and business payments rather than personal payments. They often have many of the same features and drawbacks as individual cards. And just like individuals need to control their own personal spending, businesses also need to control their corporate spending made with the card. That’s where corporate card spending policies come into play. These guidelines help companies understand what they can pay for with the company’s corporate card, how much they can spend, who can make and approve payments, and more. Having a clearly defined and easy-to-understand corporate card spending policy is critical for your business. It ensures that employees and teams will be able to pay for the products and services they need, while also ensuring that spending doesn’t spiral out of control. Below, we have provided some best practices to help you understand how to create and implement a spending policy for your company corporate card: Contents hide How to design a corporate card policy How to implement a corporate card policy Tips to improve reporting and spend tracking Summary of key points How to design a corporate card policy When you are developing your company’s corporate card spending policy, the most important factor is making sure that it makes sense for your business. While you can find examples and templates of policies online, no one policy will fit every business. So keep the specific needs of your business in mind as you go through the process. What is the policy for and what spending does it apply to? The first question you need to ask is what kind of spending are you trying to control? What payments do you normally make with your corporate card, and which ones do you make with other means. Does this policy apply to all spending, or do you need a separate policy for travel, or client relations? Ask yourself if you are using your corporate card in the most efficient way and if there are alternatives to certain kinds of payments and consider excluding them from the policy. Clearly define roles Who is responsible for making payments, for approving payments, for reporting them? These are all important questions, and your policy should clearly identify who is responsible for each step in the payment process. If your business requires different approval flows for different categories of payments, the approving employee should be identified in each case. Create spending categories Help employees understand what they can pay for by creating easy-to-understand categories. This can include payments for travel, food, team events, supplies, client entertainment, and more. Obviously, these categories will be specific to your business and its needs. Set clear limits It should be clear how much can be spent using the corporate card. This can apply to individuals, teams, or specific budgets. You may also want to have limits linked to the category of payment, meaning you may have one limit for travel expenses and other for IT equipment. Fraud prevention and abuse Your policy needs to take into account the possibility of fraud and abuse. There should be common sense security precautions in place to prevent the card number from being shared when it is not needed, and clear instructions in place should the card be lost. How to implement a corporate card policy Once the details of your policy are in place and finalized across your team, you now need to do the work of making sure it is implemented and followed by employees. Here are some guidelines to help you in that process. Spending policy should be clear and easily available It’s easy to include every detail that you can think of in your spending policy, and indeed, you want the policy to be specific to your needs. However, it must also be written in a way that employees can understand and act on. If it’s too confusing to understand, your team won’t be able to follow it. Additionally, it’s important to make the policy accessible to all employees. Make sure all of your team has a copy of the policy and ensure they have reviewed it and/or consult it before they make payments with the corporate card. Make corporate card policy a part of training Your corporate card spending policy should be included in onboarding and training materials so that employees can start to familiarize themselves with it from the beginning of their employment. If you update the policy, this should be communicated to the company and you should request all employees to review any changes. Provide clear and easy-to-use tools to track and report spending A good spending policy will only get you so far. If employees don’t have easy-to-use tools to track their spending, and report it to the finance team, the entire process can break down. Make sure your process spells out the tools employees need to use to report their expenses and allocate time for them to learn how to use them. Deadlines for reporting should be clear and frequently communicated Some people love deadlines, some people hate them. But it’s important to enforce expense reporting deadlines otherwise this will come back to haunt the finance team when they try to close the monthly books. Deadlines should be clearly stated in the policy, and the finance team should have processes in place for reminders, follow-up, and other measures to get the info they need, when they need it. There should also be clear steps in place for instances in which reports aren’t filed on time. Dealing with exceptions or out-of-policy expenses Even if the policy is crystal clear, there may nevertheless arise instances in which employees make out-of-policy expenses, either intentionally or by accident. There might be valid reasons for employees to make an out-of-policy expense due to urgency or importance, and employees are human so mistakes will always happen. Plan ahead for these situations by stating a general principle for expenses that can be approved outside of the regular policy and trust in the judgment of your team. For payments made out of policy by accident, set out guidelines ahead of time that are clear and available to all employees. Tips to improve reporting and spend tracking So, you have a spending policy in place for your corporate card and you’re working with your team to make sure it is followed. This is just one part of the challenge of dealing with corporate cards. An additional challenge is making sure that expenses are tracked and reported, helping the finance team control spending. Unfortunately, payments made with corporate cards can often lead to confusion as they aren’t always made in a transparent manner. Here are some general steps you can take. Spreadsheets are not the solution for everything Many businesses still rely on spreadsheets to help them track and report payments made with corporate cards by employees; perhaps it’s time to consider alternatives. Spreadsheets have their role, but they aren’t purpose-built for the task of tracking spending. Provide alternatives to physically handing in receipts If employees are still handing in envelopes of physical receipts, look for alternate ways to collect them. Individual slips of paper are easy to lose, and difficult to organize and track. Consider digital tools to help your teams collect receipts and send them to your finance team. Evaluate expense management software One way to overcome the challenges of tracking and reporting expenses is to embrace expense management software. These platforms can help you automate much of the process and save time for both employees and your finance team.Additionally, these platforms can also help ensure compliance with your corporate card or general spending policies, either by replacing some of the payments with virtual cards or through other means. Mesh Payments, for example, allows you to create unlimited virtual cards that you can tailor to specific payments. That means you can control payments and ensure compliance with the policy before any payments are made. Summary of key points Creating and implementing a corporate card spending policy is an important task that requires planning and investment from your finance team. Making sure employees stick to the policy can help you keep your company spending under control. Key points for creating a policy: Specify what the policy is for Clearly define roles Create categories and set clear limits Key points for implementation: Make sure the policy is easy to understand and available Make it part of training Set clear deadlines Know how to deal with out-of-policy spending If you’d like to find out more about the ways Mesh Payments can help you get your corporate spending under control, sign up for a demo today. Get the latest blogs from Mesh by subscribing to our newsletter Manage Your Payments With Full Control & Visibility Get Started Jonah Balfour Jonah Balfour is a Content Manager at Mesh Payments. He has experience creating content for multiple tech companies, and previous experience managing PR campaigns for emerging startups. Originally from Los Angeles, Jonah chose to leave the ample sunshine of Southern California to study at the University of Wisconsin. He is an avid fan of both Star Wars and Star Trek, and spends most of his time chasing after his two young daughters.