All Articles Finance Should your small-business employees have a company credit card?

Should your small-business employees have a company credit card?

4 min read


This Spotlight on Business Credit Cards is brought to you by American Express OPEN, the leading issuer of small-business credit cards and charge cards in the U.S. OPEN offers business owners products and services to help them run and grow their businesses.

As your small business grows, you will undoubtedly encounter more expenses for necessities ranging from office supplies to travel costs. While handling your business’ expenses with one card and petty cash may have been easy when you were first starting out, it may prove more difficult now that there are more things to pay for and more employees who need to need to pay for them.

When one small-business credit card just isn’t enough, it may be time to think about getting company credit cards for some of your employees. Here are a few important things to keep in mind when you are deciding who gets a card.

How often will it be used? The employee who is constantly turning in a stack of wrinkled receipts for regular supply orders or travel expenses could definitely benefit from a company card. But the employee who goes on one business trip per year or hands in the receipt for a rare client lunch is not a top candidate for a card of his own.

For workers who have infrequent expenses, it makes sense to simply stick with petty cash or reimburse them for charges made on their personal card, rather than give them a card that rarely gets used and could end up costing you money for nothing, especially if the card has an annual fee. Some credit card companies will close a cardholder’s account if  it has been inactive too long, which can have a negative effect on his or her credit score, according to PT Money’s Philip Taylor.

What are your employees’ spending habits? If you’re considering getting a business credit card for your employee, you probably have a good idea of what his or her spending habits are. Look over spending history and use that as a guide for the card’s credit limit.

“Credit limits should be calculated as indicated by previous expenditures of employees, and should not be over what are the normal employee’s monthly expenses,” according to a blog post by Ally Tobias for Daily Biz Solutions.

Make sure they know the responsibilities. Just as you researched all your options when picking the right kind of card, you should have your employees familiarize themselves with the ins and outs of having a company card before they decide to apply for one.

Small-business credit cards can be issued in a company’s name or the name of name of the owner, but they can also be issued under the employee’s own name. If this is the case, the “employee’s credit rating will affect the interest rates, and credit limits. The benefit to this though, is that if a company credit card is misused, the responsibility to pay for that misuse lies in the hands of the employee. Using this method is safer for a company, but a lot more detailed recordkeeping is required,” Tobias writes.

Make sure any employee receiving a company credit card is responsible when it comes to filing expense reports on time, or the consequences could be devastating to his credit score.

Define the rules. Once you give an employee a company credit card, make sure they know what expenses they can charge.

“Narrow down your list as much as possible. For example, you may feel employees should spend company money on subway tickets but not on taxis. Or that buying drinks for a staff party is okay, while paying for dinner is not,” Alyson Krueger writes on American Express OPEN Forum. “The more specific details you can include, the easier it will be for your employees to follow your procedures.”