Company Credit Cards: Why a Clear Policy Matters

Charis Torrance

As an employee, getting the company credit card can feel like finding a Willy Wonka Golden Ticket in your chocolate bar – but for the finance department it can lead to plenty of headaches, which is why Chantel Loedolff, Senior Manager at The Accountary, an accounting practice in Cape Town, explains that having a policy in place is so important.

Where Companies Go Wrong

Loedolff says the biggest mistake they encounter in their work almost always comes down to policy. “Either companies don’t have a clear policy, employees don’t understand or follow the policy if there is one, or the company doesn’t enforce its own credit card policy.”

When There Is No Policy

If you don’t have policies in place, how are employees supposed to know when it’s okay to use the company credit card? “Company cards are meant to reduce the admin around expense claims and payment approvals. But if employees don’t know what the card is for, the admin burden stays the same – they still end up asking for approval before making purchases.”

The Invoice Problem

And without a clear policy, employees may not know what’s required with every purchase, like submitting an invoice. “Instead of simply approving an expense claim, the accounts department has to chase after invoices,” says Loedolff. And missing invoices can land you in trouble with SARS.

“Without valid VAT invoices, purchases are captured without VAT, and the company loses money. With SARS audits becoming sharper and more detailed, they’re asking for more invoices and supporting documents. Without an invoice, legitimate tax-deductible expenses are added back.”

Clear Rules Reduce Mistakes

For Loedolff, the principle is simple: a thorough policy reduces mistakes. The permitted uses must be clear, easy to understand, and not open to interpretation.

“Limits should be clearly defined and correctly set up with the bank. Consequences of misuse should be made clear and enforced. Reconciliations should be done monthly, and any misuse must be addressed immediately.”

Policy Must Be Signed and Applied

A policy should be understood by everyone and signed by each employee using the card, says Loedolff. After that, consistency in implementation is key.

“If the policy states that reconciliations will be done monthly, then they must be done – and consequences for misuse must follow,” she emphasises.

A Simple Rule for Employees

As an employee, before you tap the card, ask yourself: Would I make this purchase if my boss were standing next to me? Loedolff explains: “For example, if you’re with a client, you’d pay for your own coffee and the client’s coffee. But if you’re alone, you wouldn’t use the company card for your coffee.”

The Real Purpose of the Company Card

And above all, remember that the purpose of the company card is to reduce the admin burden on the accounting team. “If the card isn’t achieving that,” says Loedolff, “it shouldn’t be issued. If employees are still asking for approval before making purchases, there’s a problem. It’s also a problem if the accounts team has to chase after invoices.”

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