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Play Your Cards: How to use a corporate credit card wisely

Company credit cards can be efficient and economic options for paying the bills—but there are a few things to keep in mind.

Develop a strategy

To start with, companies need to figure out where a credit card would fit into a larger corporate money management process, says Crystal Low, executive vice president and director of corporate services with Zions Bank. Cards can be used to pay everything from vendors and utility bills to corporate travel and entertainment, Low says, and can give companies a layer of protection from some financial risk.

“[Many companies] think of a card kind of as a transactional thing. The way I look at cards is you really have to look at your entire payable process. The best practice would be try to tie everything to the card program that you have. It takes a little work for a business up front to do that,” she says. “Not only does the card protect them from risk, but it works for them—there are rebates and other things that you can get through a card.”

Companies should think about their likely use to get the kind of credit card that will work best for them. There are options for every kind of use, whether a company needs the ability to hold a balance and interest for short-term use, or whether it plans on paying in full each month and using the card as a consolidated means of payment that brings perks like rewards or airline miles along with it.

The best person to help with that is a company’s banker or financial advisor. “Your banker will understand and will have the conversation and talk through the nuances and options,” says Low. “As you look through all your payment options, a card should be part of that. Have the critical conversation with your banker, who can help you navigate through that.”

While most vendors accept credit cards, there are still some holdouts in some industries that still prefer check or automatic credit, Low says. Finding out whether all of a company’s vendors take credit cards—or if they don’t, if they can negotiate a change of payment options with vendors to credit cards—is an important consideration.

“It’s not just putting money on the card, it’s the terms—you can negotiate with the vendor and say you can pay them early with a card,” Low says. “You can negotiate: ‘If you let me pay by a card, I’ll pay you 10 days earlier.’ And then you get the rebate, you get the cash incentive.”

Put protections in place

The layer of risk protection is particularly crucial when working with employees and expenses. In addition to streamlining finances, credit cards can give managers greater control over and insight into what employees are buying on the company’s dime, Low says.

“From a company perspective, cards are so much more protective than letting employees make checks on behalf of the company,” she says. “From a pure risk standpoint, cards are the way to go. Cash is scary, checks are scary—there’s a lot that can be done by issuing checks.”

An administrator can also issue controls on cards such as turning cards “on” or “off” remotely if cards are needed for emergencies or lost, setting and adjusting limits in real time, and limiting at what types of vendors the card is allowed to be used, she says. For example, a card can have controls placed on it to allow employees on the road to eat at fast food joints or fast casual spots, but not four-star restaurants.

“We have scenarios with customers where maybe somebody was out with a client and they bumped up against the limit for one reason or another, they can contact the administrator and the administrator can change it—say give them another $5,000—and they can put that on the card. You have that flexibility,” Low says.

Credit cards can also help companies keep track of their finances better, she says. Instead of having expenses tracked in Excel spreadsheets, purchases are tracked on an expense module, and employees can upload images of their receipts from their mobile devices.

Of course, even the most high-tech means of monitoring and control can’t prevent all unexpected employee expenses or unauthorized uses. Low thinks people are generally decent and won’t try to abuse expense privileges—but laying out what things are acceptable card uses and what things aren’t is important.

“I don’t think an employer should wait until the employee uses the card—[be] upfront establishing a policy about employee use,” Low says. “I think most people are good people [but] if we give them any gray area, most people will use the gray. It really protects the employee from that, so it’s a win-win on both sides.”