How to Create an Internal Corporate Credit Card Policy Agreement

Cody Cromwell
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What a Corporate Credit Card Policy Is

Every company has credit cards issued to various employees for their convenience in everyday purchases. But if your company does not have a Corporate Credit Card Policy in place, you are putting yourself and your company at risk. Until now, most companies have only provided guidelines for use of the credit cards.

But a Corporate Credit Card Policy can include more than guidelines – it’s an organized internal policy that defines specific guidelines for the credit cards issued to company employees.

A corporate Credit Card Policy can establish the responsibilities of the company and the employees. Most importantly, it defines a credit card’s usage, terms, return, and refund policies. You will want to make sure that your company has Credit Card transaction monitoring as well if your policy is to be successful.

Why a Corporate Credit Card Policy Is Important

Checklist for Creating a Corporate Credit Card Policy

Once you’ve considered the needs of your cardholders, you’ll need to draft a credit card policy agreement. This document will ensure that every cardholder understands the terms and conditions of use and what their responsibilities are.

The agreement should be in the cardholder’s language of choice and should have the cardholder’s signature on it.

Remember that your cardholders are business people and that they are using the card for business purposes. Always ask the cardholders to write their own agreement and sign it.

To make things easier for them, you can give them a template agreement to use. The document should contain all the basic information about the agreement, and the cardholder’s signature should be clearly visible. Figure out the information that needs to be included in the template agreement:

  • The names of the cardholder and the company
  • Card expiration date
  • Code number required to use the card
  • The cardholder’s signature
  • An overview of the terms and conditions
  • The cardholder’s responsibilities

Set Corporate Credit Card Policy Start Date

One of the first items in a new account’s initial point of contact is to establish that the business accepts credit cards. One of the policies that should be established during initial credit card policy requirements is when a new account’s credit card policy is effective.

Setting the effective date either as a specific date such as 01/01/2014 or as the first day of the month provides consistent and reliable guidance for employees to know when credit card usage can begin.

One of the most common questions that I’ve asked over the years is ”What was the answer to a new policy whether it included new points of contact, a policy that a new account needed to be enrolled in or a new requirement to provide more information. This set a date that was enforceable and provided for a future determination of reasonableness.

Understanding and setting the effective date of the new policy quarterly helps you in not only the assessment phase of the new policy, but also the measurement and continual improvement process required to sustain a credit card program.

Identify the Type of Corporate Card You Own

Corporations (or "Limited Liability Companies") typically are limited in the number of credit cards and cc's they are allowed to have.

Those quotas may include as few as three and as many as six credit card accounts, depending on the type of credit card you carry. Note that credit card purchases with one of these cards may count as multiple card use, so be sure to see Credit Card 101: Multiple Card Use to learn how multiple card use might affect your credit score.

If you are unsure whether your particular credit card exceeds your company’s credit card count, you can contact your corporate Human Resources department for clarification. If you are still uncertain, you may need to seek permission from your Finance department before making any purchases with your corporate card.

If allowed, you may choose to have your corporate credit card sent to your home address. By choosing to have your credit card mailed to you, you will have sole control of the card. You can also grant other family members or company employees that you trust the ability to make purchases on your credit card. No one else can make purchases on the card without calling into your company’s Finance department. And you will always be the one responsible for monitoring and paying the bills on the card.

Corporate cards are a great and convenient way to pay for your items online, make routine purchases at the local market, and pay bills online.

Determine Who’s Eligible for a Corporate Credit Card

A credit card is primarily used by employees of a company. A common question is whether the credit card program is open to any employee or just the ones that work directly for the company that issued the credit card. While internal credit cards differ if the company is a sole proprietorship or a corporation, it’s a shared policy between both entities. Many businesses will outline what the specific eligibility requirements are for the credit card program or even require that every employee sign a separate agreement document to become part of the credit card program.

Are they confidential?

When you receive an employee credit card, you’ll likely have some employee identification numbers, card numbers, and employee names; all of which are confidential and safe from disclosure. This is true whether the agreement is open to everyone or just employees of the company. When you sign the credit card agreement, you’re giving your approval and consent to the agreement being signed under penalty of perjury.

Set Corporate Credit Card Spending Limits

In the absence of rules and procedures, employees are less likely to overspend on corporate credit cards.

Establishing a spending limit on a credit card can allow you to allocate the card’s benefits and services appropriately and more effectively.

Setting a spending limit allows you to require clients to spend a certain amount of money to be eligible for the corporate card.

Specify Travel and Entertainment Guidelines

You can also specify travel and entertainment guidelines to prevent spending that is not work related.

This helps employees understand how to use corporate credit cards wisely, and it can also serve as a reminder that the card is meant to be used for business purposes only.

The guidelines can include requirements such as prohibiting personal expenses and establishing a nominal penalty for late payment, returned payment or insufficient funds.

Restricting Trade Transactions

Make sure you specify any trade transactions that the credit card cannot be used for.

Reducing Usage

Eliminate expense-related requests from outside vendors.

Set up a PayPal Account to Use as Your Official Electronic Payment Method

Consider the benefits of using an electronic payment system to avoid bringing cash or making personal bank transactions.

Establish an Account Receivables Program

Register your company’s corporate credit card as a receivables account.

Establish Expense Report Expectations With Employees

Designate someone as a point of contact for expense reporting. Develop clear policies and guidelines for employees. This person will act as a go-between or middleman for the business’s internal audit section and your employees. You will also need to decide who you want to have charge of your reimbursement policy and the corporate credit card in question. Keep in mind that the person in charge of the expense report will receive 25 to 30 percent of the reimbursement for any expenses incurred (this applies to the employee who pays the expense first).

The receipts should be paired with the expense report so that the total amount of the expenses (including travel time/gas) can be calculated by the middleman in the internal audit section. In addition to the expenses, employees should also report any miscellaneous income as well. This will help you avoid an audit on various fronts if you have employees who receive a large number of reimbursements each month. Employees who wish to receive reimbursement will have to ask for their receipts from the middleman and have them attached to the expense report.

Name the Consequences for a Corporate Credit Card Policy Breach

Corporate credit card abusers, known as “corporate card fraudsters,” have a serious addiction and like any other addicts, they need instruction on how to properly recover from their cravings.

One of the first things that comes to mind when you talk about corporate card abusers is your anti-fraud department, and more specifically the employees who work in that department. Security is the most important part of any credit card policy agreement and operational procedures. Let’s make that a little more clear – the first part of any credit card policy agreement is how you accept your cardholder’s money.

Accepting money for anyone is a great way to attract money-hungry bank robbers and other financial criminals. The most important thing to remember here is that internal corporate credit card policies are very similar to any other credit card policies. They are usually not written on paper and not even distributed to employees, but only an outline of the policies are handed down from the top management within the organization.

Define Who’s Responsible for the Policy

Before talking about the new policies, it’s important to understand who’s responsible for creating and implementing the policy. In other words, who is responsible for signing off on and agreeing to the policy? To a certain extent, it’s a function of how many employees work in the same office location.

If your business is small, and everyone who works there is within a reasonable commute of each other, it makes sense to create a policy that can easily be implemented and signed off on by just a few people. However, if the number of employees is large or if people work remotely, it’s recommended to set up a credit card policy meeting where multiple people can sign off on it.

Also, if your credit card policy is released to every employee at the same time, there is an opportunity to gather feedback from the employees, both in terms of procedure and content, to make sure the policy is solid.

Do Employees Have to Sign off on the Policy?

Corporate Credit Card Policy Template

Credit cards are the preferred method of payment in the business world today. Companies are increasingly using credit cards to make it easier and faster for their employees to pay for all their expenses.

Parents often give their children credit cards to encourage spending within their budget and in addition to parental monitoring. Businesses are allowed to give their employees credit cards as well.

While there are many benefits to using corporate credit cards, there are also risks. Credit cards are not ideal for paying debts every month as they rack up interest charges. So it’s important to establish policies for credit card usage.

The Credit Card Policy Agreement template explains the varied types of risk associated with credit cards and how to prevent them. It does give information about what to do if the employee does not meet the official terms of the credit card.

Employees need to understand that although the credit card may be free to use, there are some responsibilities and financial risks associated with it. The employees needs to understand that they are expected to pay all their bills and expenses on time. They need to become comfortable with the fact that they will be accountable for their spending as well as their expected income from the company. If they fail to meet these obligations, it could result in additional interest charges or even a lawsuit against their company.


Post-Sale Credit Card Returns

Incorporate all the Corporate Credit Card Policy Elements

You can incorporate contract terms from internal policies into your merchant account agreement and the merchant transactions, where you expect your company to pay for a chargeback. This document should clearly state the circumstances under which your company will be liable for a chargeback, how long you’ll have to fulfill the chargeback and how you’ll handle dispute resolution.

This guide, above all, should support your merchant account’s fees and may be used in addition to or in place of the agreements.

You can make these more or less specific to the particular situation, but it’s important to keep all of the important details in one document so that you’ll always have it available.

Further, you can use this document to explain the responsibility allocation for chargebacks that your company incurs, and provide instructions for handling disputes.

A Corporate Credit Card Policy can also refer to the specific information a bank knows about your company’s specific corporate policies, should the bank request that information.

Eligibility & Approval

In the corporate credit card usage policy, your credit card company will clearly spell out the eligibility and approval requirements to qualify for the card. These requirements will strictly determine which employees can access the card and what purchases can be made with it.

That said, in most cases, there is a minimum employee requirement for a card, and you will need to have at least a few cardholders to qualify. These are also guidelines, but they are generally the very basic requirements to qualify for an employee credit card.

Use & Financial Responsibilities

As you grow as a company or organization, it is important that you continue to build processes that support your business objectives. And one of those process is the credit card policy.

But the credit card policy is only as effective as the way it’s implemented.

And your credit card policy is only as effective as the way it’s implemented.

Even though the bulk of your credit card policy is the written and documented policies, it’s important to identify the activities that should be covered in the policy. The areas you should ensure are covered in the credit card policy include:

  • Credit card agreement procedures
  • Supervisory approval
  • Disbursement of credit cards
  • Credit card transactions
  • Meeting credit card processing and settlement requirements
  • Cash (and wire) advance procedures and approvals
  • Reporting and accounting
  • Responding to chargebacks

In most organizations, the credit card policy is just one of several policies for managing credit card assets. And although the credit card manager is typically responsible for monitoring and administering the credit card policy, there is usually an independent compliance team available to monitor for potential compliance issues. It’s important to meet with your compliance team and trade off duties for both groups.

Receipts & Expense Reports

Internal Card Use Process

Receipts & Expense Reports: Internal Card Use Process

Including this template when you are writing the Credit Card Policy Agreement will help you to:

Establish internal controls for your card program.

Guarantee that your card users are following the company’s rules and policies.

Ensure you have accurate records of merchant fees charged.

Control potential cash flow issues.

Show your company’s commitment to compliance with compliance regulations.

Help you ensure that your card program is in compliance with applicable laws and regulations.

Provide transparency and accountability.

Create a solid foundation from which you can build your internal compliance program.

The credit card agreement template will be addressed in detail in an upcoming post, but this section covers three of the main questions you should address when creating a Credit Card Policy Agreement.

Receipts & Expense Reports

Writing a policy that prohibits the use of a credit card without a written approval can be challenging, otherwise your company may be forced to purchase additional insurance to cover the risks associated with unapproved card use. The expense reports section in the agreement will help you by providing your company policies to ensure that employees are utilizing company business cards with appropriate documentation.

Define and describe the company’s internal controls.

Credit Spending Limits

A Balance of Risk

How much, when, and where you spend can really add up.

Whether it’s the daily coffee, lunch at work or a shopping spree, spending the same amount of money on your credit card each week can leave you with a serious balance from one to two weeks’ worth of purchases. So what can you do?

Understand your credit limits, and use them.

A credit card with a spending limit is the ideal way to get the most out of your credit cards by limiting the damage if you get into credit card debt.

Specific card features that set off alarms when you get bills are not so important if you leave them well within your credit card limits.

Credit Card Violations & Consequences

There are many disadvantages to using a credit card, especially for company purchases, at your business, or in your small business.

One of the most common ways to increase your bottom line is to create an internal credit card policy agreement that requires all credit card expensing to be approved by an appropriate corporate officer or official.

The type of credit card review you need will depend on several factors, including but not limited to:

The type of transaction; Occurrence and instances; Person requesting the credit card; Person submitting the request.

We will provide a review and suggestions on these areas so you can select which credit card violations are the most important and should be pursued. Let’s look at each of these area…

"The type of transaction; Occurrence and instances; Person requesting the credit card; Person submitting the request."

Because this year, 2016, is a year of both the next presidential election and potential computer hacks, it also could be a year of credit card policies and violations.

Furthermore, new credit card policies and new credit card violations could potentially exist, whether intentional or unintentional.

For example, if you are allowing employees the opportunity to use their corporate credit cards without any formal or personal additional chargeback protection visa signature, you greatly increase the risk of a new credit card policy violation.

Disputed Items

As the credit card debt recovery industry has grown and credit card litigation has become more popular, disputes among consumers regarding uncollected credit card debt have increased.

Debt settlement agreement clauses are fairly common in the smaller credit card debt recovery contracts. Most often, the debt settlement agreement clauses are so-called "agency" clauses. Agency clauses typically provide that the debt settlement company can collect the debt directly from the debtor's assets (i.e., garnish wages, attach bank accounts, revoke mortgages).

The regulators have not taken specific enforcement action to date against credit card debt collection companies for having such clauses in their contracts. In fact, the credit card debt settlement companies have argued that they were not bound by the agency clause and that they would not violate the law (e.g., FTC's Fair Debt Collection Practices Act) if they collect the debt from the debtor directly. The argument is that they would be acting as agents of the agreee, not the debtor.

In the past, regulators had suggested that agencies are a violation of the Fair Credit Practices Act. In the FTC's and Federal Reserve's standard-setting dispute resolution services, the credit card debt settlement companies argue that there is no violation of the Act. But whether agencies are not a violation of federal law is an open question, and a good question to ask when you settle a credit card debt with a debt settlement company.

Ownership & Cancellation of Credit Card

Issuer-Specific Policy Requirements to Consider

Action/Reaction: The credit company needs to be able to report the policies and actions to all its affiliates. By requiring that the initial requester actually take the action, embedding further requirements to act also helps clarify that the credit company is not creating the credit. For example, a card cannot be requested by the first party unless a second party (such as a spouse, parent, sibling, or children) requests it. Obligation and Use: The credit firm may require that the initial requester assumes an obligation to pay the credit card bill by a specific date or at least be able to demonstrate proof of ability to repay it. Obligation is implied in qualified card programs, but in most instances it should be negotiated into the agreement. For example, when a college student uses a card to pay for school or a start-up business’s shopping for office supplies, the card company may require that the student or business agrees to pay the minimum payment as provided by the credit company. The company may also require that the card user/grantor attend a seminar or purchase a debt management plan to reinforce the duty to repay. Use is also a critical part of the agreement. If the credit company requires that the card be used only for certain types of purchases, the credit card company is working to manage the risk that the cardholder will misuse the card, such as when someone buys a home, car, or vacation using the card.

Payment Terms

Policy ” A Payment Terms Policy (also known as a Payment Terms Agreement) is a written agreement between a cardholder and a merchant/business specifying how payments will be accepted.

The Payment Terms Agreement is effective once it has been signed and initialed by both parties. This document covers all aspects of how a merchant provides payment services to a cardholder.

The Payment Terms Agreement typically contains:

  • The merchant’s business name
  • The cardholder’s name
  • A definition of the transaction basis and the type and amount of goods, services and long term rental
  • Where and when the transaction will occur
  • The applicable card brands
  • The type and conditions of the transaction, including the date, place and time as well as the appropriate card brand or scheme and applicable keys, passwords, and other unique security or account identification numbers
  • The applicable card brand’s complaint resolution procedures
  • Name, function, date of birth and contact information of the merchant’s personnel authorized to receive complaints
  • The merchant’s privacy policy
  • Special terms and conditions for cheques, Internet purchases, pre-authorized payments, and purchases with a gift card
  • The merchant’s security policy

Credit Limits

The credit limit is the maximum amount that your company can spend each month on your company corporate credit card. The capacity to charge is clear in your corporate credit card agreement. It is the amount of money that your company is permitted to spend each month on their company corporate credit card. Your company must keep their expenditures under or at the credit limit in order to be able to make purchases at all, and preferably under your credit card agreement limit as well.

The principle is that your company must operate on a budget as its credit card expenditure limit from global finance is just that.

When your credit card company is holding a corporate credit card with your company, it is in the company’s interest to keep their expenditures to or below the credit card limit.

If they overspend the limit then their company credit card is suspended and cannot be used by your company to make purchases until the limits were redrawn. A useful tip is to express the company credit card limit as a percentage of available cash at the beginning of a financial year in order to keep a track of how far away they are from running out of funds and stopping payments.


Corporate credit card use has skyrocketed over recent years due to the importance of travel, the cost of failure to comply, and the potential loss of sensitive data that could occur. As a result, companies have moved to centrally manage and control the use of their corporate credit cards with a credit card policy agreement. This policy agreement sets out the terms and conditions of use for all corporate credit cardholders.

The credit card policy agreement needs to cover the following aspects:

Liability and responsibility. This section should clarify the parties’ responsibilities for controlling the use of the credit cards, otherwise it can create open-ended liability in the event of a breach, which is unnecessary. If the parties are going to agree to share responsibility, make sure you also the right to terminate the credit card agreement in writing.

This section should clarify the parties’ responsibilities for controlling the use of the credit cards, otherwise it can create open-ended liability in the event of a breach, which is unnecessary. If the parties are going to agree to share responsibility, make sure you also the right to terminate the credit card agreement in writing. Credit cards. This section should identify the corporate cardholders and allow them to use the credit cards. It should also state whether a corporation is allowed to use the card or if its use is limited to a single cardholder.

Example of a Real Corporate Credit Card Policy

Benefits of a Corporate Credit Card Policy

You should consider including an internal corporate credit card policy in your credit card policy agreement. Usually, a well-drafted credit card policy agreement is the minimum requirement for issuing credit cards to employees. However, a corporate credit card policy included within the credit card policy agreement is more formal and may be required by most banks and credit card companies. A corporate credit card policy and credit card policy agreement should, at a minimum, include the following:

A description of the terms under which the credit card will be issued.

Your company’s written approval of the loan and the credit card.

Processing fees and terms and conditions regarding approval.

Terms for reimbursement.

A time schedule for reimbursement.

Complete details of the credit card approval process.

How to amend the corporate credit card policy agreement:

In the event that you wish to amend the corporate credit card policy, whether in part or in whole, you should amend the agreement by sending a letter to your company’s Corporate Credit Card Manager, who will forward the letter to the appropriate representatives also identified in the letter. This process is very similar to the process described above for approving a new credit card.

Drawbacks of Creating a Corporate Credit Card Policy Yourself

Creating your own corporate credit card policy isn’t something to take lightly. A task like this requires timing and forethought. If you rush and overlook important details, you could find yourself faced with regulatory fines and penalties that can affect your business or personal finances.

Although the advice we provide throughout this post is general in nature, it’s important to note that the law is constantly changing. It’s imperative that you make sure you fully understand what you’re signing before you finalize your credit card policy agreement.

Smooth and Easy Credit Card Approvals

One of the benefits of a strong credit card policy is that it allows you to seamlessly process credit cards for your customers. If you feel the need to review the information on any of the credit cards that are approved, then it’s important that you’re able to quickly and easily move through the approval process. If you have to spend more than a few extra minutes in order to approve each credit card, then you’ll be setting yourself and your business up for failure.

For your own credit card approval process, following a few basic rules will ensure your approval time is minimal.

Corporate Credit Card Policy Frequently Asked Questions (FAQs)

Why have a Corporate Credit Card Policy in place?

Corporate Credit Card Policies have a variety of benefits. It helps the company to stay in control over their credit card spend, as well as track their spend over a period of time. It helps your business to create a detailed report of all your expenses towards each employee under the different parts of the policy.

What are the different components and parts of the policy?

There are three ways that your company is required to decide on with their corporate credit card policy. The first component is the authorized user of the card. The second component is the corporate cap. Then there is a yearly maximum annual limit.

What are the benefits of a Corporate Credit Card Policy?

A corporate credit card policy has many benefits if properly setup. The main benefit of a corporate credit card policy is that it helps your business to track your spend, as well as the process of authorizing the card for your staff members who have been hired on as an employee.

How long does a Corporate Credit Card Policy take to implement?

You can implement a corporate credit card policy in as little as 24 hours. If your company already has an existing policy, it can usually be revised in the exact manner as to how you want it to work.

How are payments made to employees under a Corporate Credit Card Policy?

Preferred methods of payment include ½ of the payroll per month and an additional basis rewards commission.

Are corporate credit cards based on personal credit?

Corporate credit cards are separate from a personal credit card issued by a bank. They are specific to a single company and, in large part, cannot be used anywhere else, although some companies have their own credit card rewards program that can be used with a company corporate card. The reason for issuing a corporate credit card is to have a tool that simplifies the process of purchasing large quantities of products in bulk. Dozens of companies have corporate card programs to enable bulk purchases of all sorts of products, from office supplies to logo apparel.

The card issued by a corporate card company can be used to pay for anything with the company name and logo on it, such as airline tickets, hotels, car rental, and so on. The corporate credit card company is in charge of vetting the purchasing activity for a business and works with the company to manage the accounts and prevent fraudulent activity. Personal credit cards are issued by banks and are traditionally personal accounts, not business accounts. A personal credit card can be used for anything, and the credit limit is typically set at a low amount that will be as close as possible to the personal income available to the card holder. Typically, a personal credit card for business use has a credit limit several times higher than the personal limit.

Corporate credit cards are not the only type of credit cards available, but they are by far the most popular choice for business-to-business purchases.

Can I use a corporate card for personal use?

A corporate credit card is similar to a personal credit card but issued by a corporation for company use. Some companies may issue their employees a corporate credit card for various reasons, including card management and the ability to track and report on expenses, and reward users with points or other incentive-based benefit programs. These cards can help create a more professional image for the company, may increase productivity, and demonstrate a company or organization’s overall commitment to credit management.

However, it is critical for management’s to consider the legality of using corporate credit cards for personal use. Using a corporate credit card for personal purchases may violate a federal statute or your company’s credit card policy. It is also important to be aware that using the corporate card in an illegal manner may result in a violation of various federal and state laws, including the Travel Act, False Claims Act, the Hobbs Act, and the Racketeer Influenced and Corrupt Organizations Act (RICO Act).

As the owner and manager of your company, you have an obligation to ensure that your company’s credit cards are used appropriately. There are several considerations to take into account when determining whether or not your company’s corporate credit card policy allows for personal use.

Detailed information can be found in the Federal Trade Commission's brochure Credit and Debit Card Consumer Protection.

What is a corporate credit card?

A corporate credit card is a credit card issued to each employee of your business by the bank on your business’s behalf.

Most types of corporate credit cards have similar eligibility requirements but each credit card comes with its own set of terms and conditions. If you have several employees with different business spending habits, you can establish your own credit card policy agreement to govern how those cards are used and manage financial risk.

If you’re selling a business to your employees one day, they need to know how …and who… is responsible for managing any outstanding balances. By having your employees sign a credit card policy agreement, you ensure you can maintain full control over your credit cards.

This contract can also allow you to remove your employees’ credit card privileges if you feel they’re not living up to your agreement. If you choose to do this, make sure to educate them on the company’s new credit card rules. Otherwise, if they still owe you money, they may end up working off that balance at a great expense.

Bottom Line

The purpose is to protect the credit cardholder and the company by defining the circumstances under which a corporate credit card must be returned or cancelled and to define which transactions are permitted and which may be rejected.

An important consideration is that the corporate credit card must be able to be used only for the purposes proscribed by the policy. In order to prevent the possibility of fraud, it must be possible to identify the business purpose of each purchase and to record those details. The policy must also address the use of the credit card by working employees who are not the owner of the business or officers of the company.

It is acknowledged that in many cases the employee may be authorised to make a purchase in the normal course of business. However, if the company wishes to make a one-off purchase in anticipation of subsequent sales, it must be possible to identify the business purpose for the purchase and record those details. The policy must address what happens if the employee no longer works for the company and what to do with an expired credit card.

It is also important that the policy clearly details the consequences for signing up for a corporate credit card and for incurring late fees and other charges. That way, the employee is informed before they register for a corporate credit card. The policy should include details as to what the employee may and may not do with their corporate credit card.