The provision of company credit cards to employees is a common practice designed to streamline business-related expenditures, such as travel, supplies, and client meals. For UK businesses, establishing a clear and comprehensive policy is essential for financial control, accountability, and legal compliance. This guide synthesises information from available policy templates and resources to outline the key components and considerations for implementing a company credit card programme.
A company credit card policy serves as a foundational document that sets out the rules and expectations for employees who are issued with a card. Its primary purpose is to ensure responsible use of company funds, reduce the risk of fraud and unauthorised spending, and simplify the expense reporting process for both employees and the finance department. The policy should be tailored to the specific needs, culture, and risk tolerance of the organisation, and it is advisable to consult with legal or financial counsel before finalisation.
Key Components of a Company Credit Card Policy
When developing a policy, several core elements should be addressed to create a robust framework. These components establish the scope, responsibilities, and procedures for card usage.
Policy Purpose and Scope
The policy should begin with a clear statement of its purpose. This typically includes ensuring employees use company funds responsibly, complying with company guidelines, reducing financial risks, and streamlining accountability. The scope defines who the policy applies to, which generally includes all employees eligible to use a company card and those with approval authority for team members' expenses.
Eligibility and Issuance
Determining who is eligible for a company credit card is a critical step. Eligibility is often based on job responsibilities that require frequent business purchases or travel. Common roles that may qualify include executives, sales personnel, field staff, and employees in procurement or operations. The process for issuing a card usually involves an application and the signing of a credit card agreement, which acknowledges that the card remains company property and outlines employee responsibilities. The company typically retains the right to revoke or reassign cards based on role changes, misuse, or business needs.
Permissible and Prohibited Uses
The policy must explicitly define what expenses are allowed and what are not. Permissible uses commonly include: * Travel costs (e.g., flights, trains, accommodation) * Client meals and entertainment * Office supplies and services * Other work-related purchases directly supporting business activities
Prohibited uses are equally important to specify and typically include: * Personal purchases * Cash advances (unless explicitly permitted for business reasons) * Unauthorised expenditures
Spending Limits and Controls
To maintain financial control, the policy should outline credit limits and any category-specific spending restrictions. These thresholds are set by the employer and can vary based on the employee's role or department. The policy should also detail the process for seeking approval for expenses that exceed standard limits or for large, one-off purchases.
Expense Reporting and Documentation
A clear procedure for submitting expenses is vital for transparency and audit purposes. Employees are generally required to retain receipts for all transactions and submit them along with an expense report within a specified timeframe. The policy should specify the documentation required, the submission deadlines, and the approval workflow for these reports.
Consequences of Policy Violation
The policy must state the consequences for misuse or violation of the rules. These can range from having to repay unauthorised charges within a set period to the loss of card privileges and may include disciplinary action. Having clear, pre-defined consequences helps enforce compliance and deters improper use.
Practical Implementation and Management
Beyond drafting the policy, successful implementation requires clear communication and ongoing management.
Employee Agreement and Training
Before issuing a card, employees should sign an agreement that confirms they have read and understood the policy. This document typically reiterates that the card is company property and outlines the employee's responsibilities. It is also recommended to include the credit card policy in employee handbooks and conduct training sessions to ensure all cardholders are aware of the rules and procedures.
Centralised Storage and Accessibility
The policy document should be stored in a centrally accessible location, such as a shared drive or the company intranet, so that employees can refer to it whenever needed. This promotes consistency and ensures that everyone is working from the same set of guidelines.
Role of Approval and Finance Teams
For employees who do not hold a company credit card but need to incur a large business expense (e.g., plane tickets), the policy should outline a clear process. This typically involves seeking manager approval and having the finance team or office manager make the payment using the company credit card on the employee's behalf. This ensures all significant transactions are tracked and controlled through the central card system.
Considerations for UK Businesses
While the provided sources offer a general framework, UK businesses must ensure their policies comply with relevant UK laws and regulations. As noted in the source materials, the templates are for reference only and do not account for all national or local laws. It is essential to consult with a legal professional to ensure the policy is compliant with employment law, financial regulations, and data protection requirements (such as GDPR). Furthermore, businesses should consider their specific industry risks and accounting procedures when customising the template.
Conclusion
A well-structured company credit card policy is a vital tool for UK businesses to manage employee expenses effectively. By clearly defining eligibility, permissible uses, spending limits, and reporting procedures, companies can protect their financial resources, prevent misuse, and streamline operations. The process begins with selecting a suitable template, customising it to the organisation's specific needs, and ensuring it is communicated clearly to all employees. Regular review of the policy is also advisable to adapt to changing business environments and maintain financial control.