Embezzlement is not a word business owners want to hear when discussing company finances. Unfortunately though, our office has seen time and time again that embezzlement has occurred through the use of a company credit card. Credit cards can make purchases convenient for the company, and the idea of a cash rebate sounds enticing in these economic times, but, without proper monitoring, your company could be out tens of thousands of dollars before you know it. Credit card use is easy to abuse as charges can be relatively minor and may go unnoticed. However, properly implemented controls can keep you from becoming a victim. 

If your company does have credit cards, follow these guidelines for use:

• Have a written policy for use – Specify when the cards can be used, what they can be used for, if approval should be obtained before use, any dollar limits for purchases, when receipts are required, as well as penalties for violating the policy. Any individual who has or uses a company card should read the policy and sign an acknowledgement.
• Monitor the statements – If the individual paying the bill has access to a card, someone else should review the statement to determine what is being charged to ensure there are no unauthorized charges. No one should be exempt from having their purchases reviewed or monitored. Fraudulent charges may not be significant amounts, but small purchases add up quickly over time.
• Follow-through – A policy is only as good as the implementation and follow-through. Ensure active and timely participation and protect the use of a card as you would cash.
• Work with your bank – Banks often have programs that provide the opportunity to restrict what categories a card can be used for so you are able to limit it to just the allowable uses (i.e. allow travel but not entertainment, etc.). Other programs allow you to provide cards to employees that work similar to a prepaid card. An administrator can transfer cash to a card before expenses are incurred and an employee is then limited by the balance on the card. A word of caution though – the other guidelines should still be implemented and utilized for good controls or the use of these can be abused as well.

The use of credit cards can certainly make life a bit easier, but without proper controls, your company could be the next embezzlement. If you would like to discuss the internal controls of your business, don’t hesitate to contact us for a consultation.