What Not to Do with Corporate Credit Cards

What Not to Do with Corporate Credit Cards

Overspending, fraud, and compromised accounts are just a few of the problems that traditional corporate credit cards frequently run into. And when they do, it creates unnecessary headaches for finance managers.

Here are some of the most outrageous and shockingly common nightmare scenarios that we’ve heard about over the years — and some tips to avoid the same fate.

Travel expenses adding up fast

Travel is an essential part of work for many businesses — which is why most companies have firm travel policies in place when it comes to booking and paying for flights, hotels, transportation, and meals. Unfortunately, despite all of these safeguards, outside forces can still come into play. 

In one event, an employee was staying at a hotel that was flagged as compromised by the credit card company and the card was cancelled. So, in the meantime, the employee was stranded in Indonesia with no way of paying for anything except out of his own pocket. 

On top of the inconvenience for the travelling employee, a card getting compromised during travel can also have a huge impact on the business back home. If you’re booking trips with the same corporate card that pays for your cloud hosting services or office utilities and the card gets put on hold by the issuer, everyone back home is going to get left in the dark — literally.

Canceled cards aren’t the only problem that businesses run into when it comes to travel costs. Over the years, numerous employees and executives have run up ridiculously high tabs for family vacations disguised as business trips. 

To avoid getting stuck with an outrageous bill under false travel pretenses, it’s imperative to have and enforce a clear travel policy. Lay out what are considered reasonable charges for flights, hotel rooms, transportation, and meals (this may vary based on the destination), and make it clear which add-ons are allowed or not (i.e. flying first class, or ordering room service at a hotel). It’s also crucial that the accounting department goes through expense reports line-by-line and flags any out-of-the-ordinary charges.        

Employee leaves the company (but still has corporate credit card)

Hell hath no fury like a fired employee who still has access to a corporate credit card.

Finance departments and HR should work together to ensure that revoking credit card privileges is a standard step in offboarding. Corporate card transactions should always be monitored closely, but it’s probably worth keeping an extra close eye on employees in their final weeks with the company or once they’ve left. 

Some horror stories include on-the-way-out employees racking up expensive office equipment bills (that were not previously approved) or having an extravagant night out on the town on the company’s dime. 

Other examples are less sinister, like forgetting to cancel LinkedIn subscriptions or not transferring SaaS payments to someone else after leaving a business. Nevertheless, these slips can still cause huge inconveniences for the company, which take time and money to correct.

Personal shopping sprees

There have been many instances of employees accidentally swiping their corporate card instead of their personal one while shopping or out for dinner. Ideally, they would come clean as soon as they realized the mistake and reimburse the company. Some have tried to cover up expenses with doctored receipts, while others genuinely believe that mani/pedis are company expenses and try to justify the spending.

Then there are examples of people who didn’t even bother trying to justify shopping sprees as work expenses, but nevertheless charged $25,000 to the company card as a down payment on a car.

The best defense against any of these outrageous employee expenses is a clearly defined expense policy. Ensure current and new employees are provided a copy and trained on the policy, so there’s no confusion as to what is or isn’t a valid business expense. Having software that can automate expense management, notify account owners of suspicious activity, and implement pre-approved budgets can also ensure that employee spending doesn’t snowball out of control. 

DIY projects (Really?!)

As if personal shopping sprees and car purchases weren’t brazen enough, there have been reports of employees dropping thousands of company dollars on home improvement projects. We’re not talking about a desk and a chair to comfortably work from home. We mean adding additions to houses, giving your living room furniture a $5,000 update, and pool installations.

We can’t think of a job where these would be legitimate business expenses, so once again, be sure to have a clear expense policy in place and monitor spending… the cost of a pool installation really shouldn’t be going unnoticed by your finance department. 

Forgetting to renew domain

You probably paid good money to buy and register your domain name, and the brand name recognition that comes with it is invaluable. So imagine if something as simple as forgetting to renew the subscription to the domain provider means that your competitor can swoop in and steal your domain name. It’s happened before. And the worst part? It cost millions of dollars to buy it back.

Luckily, software like Mesh Payments allows you to lock a virtual card to single vendors, ensuring that crucial payments like domain subscriptions aren’t solely dependent on one person or card. You’ll be notified of upcoming automated payments and renewals, so that your business never has to miss the mark (especially not to the tune of millions of dollars).

Hidden vendor spends

It’s not just employees that can get you into credit card trouble. Vendors provide helpful, and often mission critical, services for businesses of all sizes. But when they’ve been a company expense for years, are you really sure what you’re paying for? Sure, prices rise over time, but are you aware of any excess or double charges? Do you even need all of the services you’re paying for?

Know who at your company actually needs SaaS subscriptions, and what programs only need a few paid user accounts. Know how much you agreed to pay, and ensure that there aren’t multiple or extra hidden charges. 

In addition to managing your SaaS subscriptions and payments, Mesh can also let you know if there are redundant software vendors in your tech stack. This lets you consolidate your SaaS subscriptions, downsize your software spend, and easily view comparable options.

Final thoughts

A lot can go wrong with traditional corporate credit cards, but there are some simple steps you can take to keep your company’s spending in check.

A firm and clear expense policy is necessary so that employees and employers both understand the limits and stay within them. Automated expense management software, meanwhile, can give you visibility into every transaction and provide layers of added security.

If you’re ready to see how Mesh Payments can help CFOs avoid nightmarish corporate spending, book a demo today.

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