5 costly corporate credit card mistakes employees should avoid

With the advancement of technology, the use of corporate credit cards is rapidly expanding nationwide. This has led to incidents of credit instrument misuse. Key pitfalls in this include mixing of personal and business expenses, improper and inadequate documentation, along with failure to follow established spending policies.

Furthermore, lax oversight can result in mounting unauthorised transactions, a trend that has called for stricter controls and transparent communication within organisations.

Saurabh Puri, Chief Business Officer, Zaggle, says, “A common mistake with corporate credit cards is mixing personal and business expenses or overspending due to unclear company policies in place. Companies issuing corporate credit cards should establish clear guidelines, implement spending limits, and regularly monitor card usage to ensure complete compliance and avoid misuse of any kind.”

Blurring boundaries and overspending

One prevailing pattern followed by employees in corporations is the use of corporate credit cards for meeting personal expenses, blurring the financial boundary between work and home. Furthermore, professionals caution that permitting unchecked, reckless spending can expose businesses to financial risk. Key issues include:

1. Marking personal expenses on corporate cards, deliberately or accidentally.
2. Exceeding permitted spending limits set by company policy.
3. Delaying or omitting expense reports, bills, and receipts.
4. Neglecting to check and review monthly statements for unauthorised charges.
5. Failing to stay informed about individual card guidelines and reporting procedures.

Best practices to prevent and detect errors

To counter these problems, organisations are focusing on a robust mix of clear policy, proper rules, the use of technology efficiently to manage data, and oversight:

• Enforcement of a written credit card usage policy, clearly defining permitted and prohibited expenses.
• Setting individual spending limits and using automatic alerts for large or suspicious purchases.
• Mandating consistent and timely submission of receipts and detailed expense reports. This helps in keeping financial fraud in check.
• Conduct regular audits and reconcile all credit card statements promptly to ensure that the finances of the company are in proper order.
• Provide ongoing training to ensure every credit card holder understands their obligations, responsibilities, and duties.

Strengthening financial responsibility

In FY 2023-24, the total number of banking frauds in the country surged by 166% year-on-year to 36,075 cases, according to the recently released annual report by the RBI.

Still, the total amount involved dropped by 46.7% to ₹13,930 crore. The vast majority of these frauds by number took place in the digital payment segment, i.e., card and internet transactions.

Whereas, the public sector banks faced higher value fraud in loan accounts. Experts note persistent gaps in timely fraud detection and the sharing of information with the appropriate authorities. Nearly 89% of the total reported fraud value originated from previous years.

Hence, keeping the above factors in mind, boosting technological safeguards, improving reporting timeliness, and targeted fraud awareness continue to remain crucial priorities for the regulatory agencies as the nation continues with its rapid shift towards digital transactions, heightening exposure to diverse fraud risks.

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