The Pros and Cons of Issuing Company Credit Cards


Here’s something most people can’t agree on. Should business owners issue company credit cards for employees to use them for business expenses? In most cases, company credit cards tend to be more like a pain in the neck. Still, as in the case of anything in the world, there are several pros and cons for issuing them.

A lot of entrepreneurs and business owners bang their heads against the wall thinking whether they should provide their employees with company credit cards or not. Most of them usually ask themselves several questions to determine whether this is in their favor or if they are going into a mine field.

The first thing they ask themselves is whether issuing business credit cards will actually help their company see more profit.  After figuring this out they will start to assess the risks of issuing credit cards. Also, they consider whether company credit cards will actually save up time.

If you are a business owner that is seriously considering issuing your employees company credit cards, you absolutely need to take into account all these three aspects. Also, if you’re a small business owner, by now you’ve probably received countless offers and applications for a small business credit card. According to the National Small Business Association, 44% of small business owners have said they used credit cards for financing needs in 2007 to 2008, which exceeds any other funding source. Yes, a business credit card is pretty convenient time-wise, but it has to be handled carefully.

In some particular circumstances, issuing company credit cards is justifiable. Take into account the following two situations:

Charges that need to be assigned to specific accounts

If this is the case, issuing company credit cards may prove to be problematic to say the least. Consider a scenario in which the company frequently passes through charges on the company credit card to clients. And employees will be required to indicate which charge must be allocated to which client.

Yes, there are a lot of ways companies are able to do this, but if experience has shown us anything is that, motivating employees to offer this information on a tight schedule is challenging to say the least. And I kind of understand that, as they have other things on top of their priorities list. In most cases, turning in expense reports on time is certainly not up there on the list. And while the accounting department truly cares about these pesky expense reports, employees tend not to share the same level of care.

And this puts your accounting department in a tough spot. They will be required to non-stop bother employees to be able to get the required information. In turn, this costs your company both time and money you could put in developing a new product or service, for example. Yes, you could implement Draconian measures. On the other hand, if you were to fire a valuable asset for not turning in his or her expense report, how would you be able to cultivate a positive company culture within the office? What does that say about you and your company? Will people really be able to think that you cultivate an inclusive workplace environment?

Here’s a thought and a different approach to this problem. Consider asking your employees to use their own credit cards for company expenses. Employees will then turn expense reports in order to receive reimbursement. If you think about this, this could be the perfect incentive for your employees to provide expense reports on time. When this takes place and the company is quick on its feet and reimburses really fast, the employee will get his or her money back before the credit card bill is due.

Charges that do not need to be assigned to specific accounts

In some instances, all charges could be assigned to just one account. This means that employees are not required to communicate which charges go to which account. In this scenario, issuing company credit cards prove to be less problematic. Still, some problems may still arise if employees will charge things inappropriately.

And when business owners confront employees about a specific inappropriate change, the employee will say that the charge must be a mistake. And maybe, just maybe, it was. But when employees are required to use their personal credit cards and turn in expense reports for reimbursement, they tend to make fewer “mistakes”.

The fact of the matter remains that there has to exist a balance between the risks of making “mistakes” and the cost of dealing with expense reports. Companies may decide that the employees are trustworthy and that expense reports will definitely exceed the risk of mistakes. If that is the case, company credit cards can be warranted.

Still, it is my belief that issuing company credit cards is not something business owners should do. Carefully consider both the costs and benefits before deciding whether to offer company credit cards to your employees.

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