What You Should Know About Giving Credit Cards To Your Employees
If your company is growing and you find that reimbursing employees for their business purchases is becoming a hassle, it may be time to look into getting your employees business credit cards.
These bits of plastic can help streamline your employees’ workflows when it comes to making business purchases. Plus, you may find it’s easier to track your business’s spending habits via a card issuer’s money-tracking tools.
Of course, it’s not going to be all smooth sailing if you do end up adding employee cards to your spending arsenal. There are plenty of nitty-gritty details to go over when it comes to this type of credit card.
Are you ready to get an in-depth look at what employee cards are and how they work? Let’s delve on in!
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How Employee Credit Cards Work
Employee credit cards are often offered in conjunction with business credit cards. Many issuers include employee cards as a free benefit. However, some may limit the number of employee cards you can request, or you may incur charges when requesting employee cards.
Once you’ve been approved for a credit card with employee cards as a benefit, you’ll be able to contact your issuer to receive additional cards.
When an employee uses their employee credit card to make a purchase, their purchase will go on a primary account. This primary account will then need to be paid off every month. Additionally, if your card has a rewards program, you’ll earn rewards whenever your employees make purchases.
In many cases, employees can take advantage of the additional benefits a credit card provides. These benefits could include features such as car rental insurance, roadside assistance, Global Entry/TSA PreCheck waivers, and extended warranty on purchases. Some more premium cards even include benefits such as hotel credits, complimentary access to airport lounges, and free hotel or flight upgrades.
If you run a larger company, corporate cards may be a better option than a basic business card. These cards are designed to work with a large number of users and are often customized to best fit a company’s needs. To learn the differences between corporate cards and business cards, take a deep dive with the Merchant Maverick comparison.
The Benefits (& Pitfalls) Of Giving Credit Cards To Your Employees
There are plenty of reasons to hand out employee cards. Here are a few of the top benefits to doling out plastic to your employees:
- Management Tools: With a business credit card that offers employee cards, you can often manage spending through your issuer’s website or app. These tools usually include spending limits, ability to control which categories are available for purchases, and quarterly/year-end spending summaries.
- Simplified Spending: Because employees can just put purchases on their credit cards, they won’t need to waste time filling out expense reports or requesting reimbursement.
- Rewards Programs: Many business credit cards have excellent reward schemes. By matching your business’s spending profile with the right card, you’ll be able to save money every time an employee buys something.
- Extra Benefits: The numerous benefits that come with business credit cards could help your employees with purchases, travel, and more. From car rental coverage to purchase protection to travel waivers, credit card benefits can make many points of an employee’s work life easier.
Of course, there are a couple of cons to watch out for. Here are a few things to consider before giving employees credit cards:
- Increased Fraud: If you don’t properly keep tabs on what employees are buying, it’s possible they may use their cards for personal purchases. Additionally, the more cards you hand out, the greater the chance someone outside the company will steal a card or data associated with a card.
- Extra Fees: When using credit cards, it’s important to stay on top of your monthly payments. If you don’t, you may be hit with late payment fees and interest.
How To Get Credit Cards For Your Employees
To hand out employee credit cards, you’ll need to find a business credit card that offers employee cards as an option. Plenty of issuers deliver cards that include free employee credit cards. If employee cards are a primary concern for your business, it may be in your best interest to look for a card with complimentary employee cards.
Issuers that offer free employee credit cards include:
- American Express
- Bank of America
- Capital One
- Wells Fargo
Note that in some cases, issuers will charge extra fees for each employee card you request. Additionally, there may be instances where you can only request a limited number of employee cards. Amex, for example, only allows 99 employee cards to be issued, while Wells Fargo places their limit at 100 for the Business Platinum Card and 200 for the Business Elite Card.
How To Manage Employee Use Of Credit Cards
Creating clear outlines is an important step to giving your employees credit cards operated by the business. This means they should understand that the cards are only to be used on business-related purchases (and not on that 65-inch 4k TV they’ve been eyeing). On top of this, make sure guidelines on what is and isn’t a business expense are clearly articulated.
For your part, as an owner, plan to review charges employees place on their cards on a frequent basis. Every time you give an employee a credit card, the chance of fraud increases. By regularly monitoring where those within your business are placing charges, you may be able to catch fraud before it gets out of hand.
Many cards also offer spending limits. This means you can limit employees to a set allowance every month. This is helpful in cases where employees make consistent monthly purchases. It will also help prevent potential fraud because employees won’t be able to go on crazy spending sprees.
Some cards additionally will notify you when a purchase is made outside of certain set categories. If your card has this tool, you may be able to spot a spend-happy employee more easily.
Finally, recommend that employees save their receipts. This way they (and you) can have a written record in case anything goes amiss.
Employee cards can help your company function more smoothly when it comes to making purchases. By adding them to your business’s purchasing arsenal, you’ll be able to streamline spending, track employee purchases, and take advantage of credit card benefits.
To get started finding your business’s next credit card, visit our complete rundown of the best business cards out there. Or, you can check out the dos and don’ts of business credit cards to kick-start your credit card journey.