How to manage employee credit cards

Quick insights

• Employee credit cards allow authorized users to make purchases on behalf of your business.
• These credit cards could save you time and streamline your expense management.
• It may be helpful to limit card usage to essential users and set up guidelines to govern how the cards should be used.

If you've got a business credit card, you may have access to employee credit cards. The cards could potentially benefit your business, from the ability to earn and redeem business card rewards to making purchasing more efficient, but you'll likely want to manage how employees use them.

Here's what to know about managing employee credit cards.

How employee credit cards work

Some business credit cards offer employee credit cards, which allow your employees to make purchases on behalf of your business. When you request an employee credit card, the credit card company can issue a card in the designated employee's name, and any charges to the card are the responsibility of the company to pay.

Employee credit cards help streamline your expense management compared to manual reporting methods. Since business credit cards sometimes offer comprehensive reporting tools, you may find that the cards make it easier to track and categorize when employees make business-related purchases.

You may also appreciate that some business credit cards have the option to set credit limits for an individual authorized user or a group of employee cards. Additionally, employee spending on an individual card may also be impacted by the overall business credit card limit on the account.

While employee credit cards are typically a complimentary feature, some card issuers may charge a fee if you exceed a certain number of employees.

When to give my employee a credit card

Business owners generally limit employee credit card use to essential users. Generally, that means employees who make frequent purchases. For these employees, the card may save time because they won't have to use their personal card and submit a reimbursement request every time they need to make a purchase. 

You'll typically find that employees who have been issued company credit cards frequently perform these job duties:

• Traveling for business
• Entertaining clients
• Purchasing equipment or supplies

One reason to limit card use to essential users is the potential for employee credit card abuse. You can help protect your business from card misuse by setting up clear written guidelines—sometimes called an “employee credit card use agreement”—to govern the use of these cards. In these guidelines, companies often create policies around:

• User eligibility
• Spending limits
• Approved and prohibited expenses
• Expense reporting requirements
• Repercussions for policy violations
• Rewards usage

It's common to ask employees to read and sign the guidelines before they get access to their credit card. You may wish to update the guidelines as needed and ask employees to sign off on any new or updated policies.

How to manage my employee's credit card usage

If you're considering employee credit cards, it may be helpful to create policies to ensure employees use the cards appropriately. Here are some guardrails business owners often put in place to manage company credit cards.

Set employee spending limits

Your account likely has an overall business credit card limit, but you may be able to set limits on each employee card. Sometimes it's also possible to limit purchases within specific spending categories.

Additionally, your policies around credit card usage can help you control spending. Guidelines may lay out which expenses you will and will not cover, and it may stipulate that purchases over a certain limit require advance approval. Purchases within these spending categories are commonly allowed by businesses:

• Hotels
• Flights
• Entertainment
• Dining
• Equipment
• Supplies
• Utilities
• Digital marketing

Outline employee expense report requirements

For accurate bookkeeping, you may need to require employees with credit cards to submit expense reports to your accounting department.

It may be helpful to establish specific guidelines for expense reports. Your policy could lay out what information to include and when the reports should be submitted. Typically, employees are asked to submit receipts, invoices or other documentation for purchases.

Other employee credit card management tips

Here are some other quick tips you may want to follow if you provide your employees with credit cards:

• Decide who gets any rewards from the card. Business owners may keep them, or they can give them to employees, which may boost morale. Alternately, business owners can split them with employees.
• If you're still researching which business credit card to apply for, you may want to look for certain time-saving features, such as the ability to generate reports for each card on the account, categorize purchases and freeze cards.
• Flag reporting inconsistencies by comparing employee-generated expense reports and the reports provided by the credit card issuer.

If you're interested in features like employee credit cards, rewards and more, compare these business credit cards to find the right one for your business needs.

In summary

Employee credit cards may make it easier and more convenient to make, track and control business-related purchases. Establishing policies around the use of these cards could help ensure that employees understand how to use them properly.