If your employer issues credit cards for business-related purposes, count yourself lucky. Depending on company policy, this provides workers like you with the flexibility to make essential purchases, such as airline tickets and company-related travel. It also relieves employees of the burden of using their own credit cards for such purchases and it eliminates the wait time on company reimbursements. The downside? You need to be careful about how you use the company card because your job could be on the line.
Many employers choose to cover only some expenses with the cards. Check in advance of company policy. And others have decided to stop using them in part because of the need to review expenses.
Elaine Osgood, CEO of Marlborough-based Atlas Travel, said in a recent interview that her company no longer issues cards to employees. The people who travel on company business now use their own cards and Atlas reimburses them for these expenses. She said her CFO found that employees pay more attention when they’re using their own cards.
Among its business clients, Osgood said perhaps half are using company cards to book travel arrangements. Often the companies will split the expense between two payment methods: they'll pay directly for the flights, but leave employees to use their company credit cards to cover their travel-related expenses.
In general, the best advice for employees is to know in advance what the company expects.
David Ossam, Senior Vice President of Human Resources and General Counsel for Hanscom Federal Credit Union, explained some of the advantages and disadvantages of company cards for employees:
Does the employee carry any liability for balances unpaid by an employer?
The answer is generally no, Ossam said. As registered owner of the card, the employer is obligated to repay any charges. “It is the company’s card,” Ossam said. “They’re on the hook.” He used the analogy of a parent adding the name of a child bound for college to their credit card. The new college student can make purchases, but the parent still gets the bill.
One caveat: small owner-operated businesses, in which the company owner is the only employee, will want to make sure that they use their company card only for business purchases, to avoid mixing of personal and business charges.
Will using a company credit card affect my personal credit score or credit balances? Would I be required to release personal financial information to my employer?
Here again, the answer is no. The employee is not co-signing and opening an account. “The company is placing you on the account as a licensed user,” Ossam said. “The expectation when you get the card is that you are going to be using it only for business purchases.”
What happens if you make a mistake and charge something personal?
Mistakes do happen. The best course of action is to inform your employer as soon as you notice the mistake. Typically, a reimbursement can be made that will resolve the problem. This happens frequently, Ossam said. “Your corporate Visa and your personal Visa may look very much the same. They may be issued by the same entity. This happens.”
That being said, once is a mistake. Twice or three times could be seen by employers as a pattern of inappropriate use, and could jeopardize your job. Ossam has seen this happen. “You don’t want to engage in conduct that makes your employer question whether you have … been responsible.” To avoid mistakes, put the company card in a separate place in your wallet or bag, clearly identifiable to you as your company-issued card.
Before you use the card, review company guidelines on what charges are appropriate, and how to handle travel with family or spouses. Some charges are clearly going to be identifiable as employee purchases for work-related purposes. Others may be less clear, Ossam said.
What is the company’s policy on taking a spouse on a work-related trip? It’s easy enough to charge the airline flights separately, but what about meals and hotel accommodations? Is alcohol at meals covered by a company card? Ossam advises to get that guidance from the company before you travel. “At the planning stage, before you book the trip, you may want to ask ‘Is it appropriate for my spouse or this person to travel with me?’” he said.
How do I avoid over-spending?
Make sure you know the financial limit set by the company before you use the card. Is there a per-diem? The employer should provide this guidance. As with most credit cards, there can be a tendency to overspend when using a company charge versus cash, Ossam noted. “What’s the test for the use of the card? Is it that the expense be reasonable?” In that case, find out if your employer’s idea of reasonable is a budget hotel, before you use the company card to book a stay at the luxury hotel. Best to check first.
Responsibility is also key for your personal credit card. We have a new guide that explains the basics of personal credit card use and how it affects your credit score and financial future. The download is free. Get yours here.