Possible misuse of business payment cards
The use of business payment cards can bring a range of benefits, but you should also be aware of the possible pitfalls. It’s a good idea to set clear company policies or internal usage agreements with reference to using company facilities, such as business payment cards.
Even though you can usually set maximum spending limits on business payment cards you provide to your employees, remember that you’re giving them the opportunity to spend company money. There is always the risk that they could purchase unsuitable or unnecessary items which can’t be returned.
Once employees have a business card, you’re giving them licence to make decisions on company purchases and to authorise the payment. You may also be liable for any fraud committed as a result of employee negligence in keeping card details confidential. You will find, however, that some business card issuers offer Cardholder Misuse Insurance, to protect against the unlikely event of employee misuse.
With the convenience of a plastic card and the time lapse between purchase and payment, it can be tempting to ‘over-extend’ your business expenses and build up debts for the business. If you make purchases with a credit card and don’t pay-off the bill in full, you’ll incur interest charges, which could mount up if they go unchecked.