Amador County Chamber News

Business Advisor

Print this Page

Corporate Credit and Debit Card Programs: Managing Risk

By Jim Wilmarth

Corporate credit and debit cards are a cost-effective and convenient solution for many business purchases. However, it's important to take steps to ensure that corporate credit and debit card use is restricted to legitimate business expenses.

Setting up your own credit limits and purchasing procedures, and heading off misuse and fraud internally can protect your bottom line and keep your liability in check.

Draw the Line

In many cases, key corporate expenses made by employees are pre-authorized and pose minimal risk. A company's unique purchasing demands and the extent of travel and entertainment transactions made by individual employees may trigger the need for certain rules. Consider the following when defining your purchasing card procedures:

Develop a companywide T&E policy with rules for acceptable amounts and types of travel and entertainment purchases. Screen employees to be issued cards and be vigilant about who is given purchasing power.
Define credit limits for card users. Corporate card programs are built with credit limits, but you can set specific limits for individual users. Doing so helps mitigate credit risk by limiting spending opportunity where it's not needed.
Monitor individual card activity periodically to make sure spending is legitimate.
Communicate the risks and reasons behind your purchasing card limitations. When employees and management are aware of the risks, they are more likely to take card misuse seriously.

Minimize Liability

With access to detailed transaction history, you can easily track spending activity and streamline accounts payable record-keeping. Even more important, careful documentation of business spending is essential for tax purposes.

Jim ilmarth is a Commercial Loan Officer at Bank of Amador with over 21 years of banking experience. For more information, contact Jim at (209) 223-7237 or jwilmarth@bankofamador.com.