Rather than handing cash out to employees who make purchases for your business on a regular basis, you may have considered giving them their own business credit cards that they can use instead. But you may also have some reservations about handing over a large credit limit to an employee and hoping they don’t end up overspending or being reckless with your hard-earned funds.
So should you give credit cards to your business employees, or is this a bad idea that you should avoid? Continue reading to learn more.
Be Careful with the Employees You Entrust with a Company Credit Card
There are several benefits that can be derived from giving your employees their own business credit cards to use. But in order to really reap these benefits, you have to be diligent about which employees actually get the card.
Generally, if you run a small business and you have a few employees that you really trust who are always getting reimbursements for purchases that they’ve made with their own money, you can reward them with their own credit cards. This will benefit both you and your workers because they’ll be able to make purchases whenever and wherever they need to in order to get their jobs done, and you’ll also have a really simple way to track all of the money being spent.
Just make sure you don’t overdo it and give credit cards to too many people. Stick with those workers who have proven themselves, put in their time, and earned your trust. They should have high positions within your organization, and they should be great with handling money responsibly.
The Benefits of Handing Out Business Credit Cards to Your Employees
There are several benefits of employee credit cards:
1. When an employee has a credit card with a high spending limit, they can make big purchases without having to worry about depleting a petty cash fund.
2. If you give your employee a credit card to use, they won’t have to use their own personal credit or cash to make purchases, which means they won’t have to wait for reimbursements either. This is a lot less stressful for them.
3. Using company credit cards makes it easy to keep your financial records in order. You can track all of your credit card expenses accurately, make payments on time and in mere minutes by using online payment methods, and revoke credit card use if you see anyone abusing the privilege.
4. Many business credit cards also come with great rewards programs, such as cash back or airline miles. This means that you can really make the most of every dollar you spend and get something in return.
A Few Negatives to Consider
Despite all of the benefits of giving your employees the right to use a business credit card to make important purchases, there are a few cons that you need to consider:
1. Whenever you hand out employee credit cards, you have to trust that they won’t end up accidentally losing the card or causing it to get stolen. And you have to trust that they won’t steal the information and misuse it, or give the information out to someone who will make fraudulent purchases.
2. Because of a credit card’s high spending limit, your employees may be tempted to make more expensive purchases even when it isn’t really necessary to do so. This can quickly lead to overspending.
3. If you don’t closely monitor the expenses incurred on every employee’s credit card, they could end up using the card for their own personal expenses, such as dining out or purchasing supplies for their home office.
Making the Choice That’s Right for Your Business
Ultimately, as a business owner, you really need to weigh the pros and cons of giving credit cards to your employees. It will depend upon the size of your company, what your employees usually need to spend money on, and how much you can trust your workers to always use the credit in the most responsible manner. It will also depend upon your ability, or another manager’s ability, to closely track expenses to ensure there isn’t any fraudulent activity going on.
As you can see, there are some pros and cons that you need to consider when it comes to using credit cards in the workplace. For many, the pros outweigh the cons, which is why many companies are opting to switch from petty cash to credit.
