If your business provides credit cards for employee spending, you might need an employee credit card agreement. This serves as a way for you to define employee responsibility and accountability, control spending, prevent misuse, and streamline reporting and reconciliation.
In this article, we give you a template to get you started and discuss the best practices that can help you create the best employee credit card agreement for your business.
Key Takeaways
- An employee credit card agreement is a document that establishes clear guidelines for the appropriate use of company-issued credit cards.
- Most employee credit card agreements include information about the purpose of the document, who is eligible to use the cards, authorized and prohibited expenses, spending limits, documentation requirements, card security standards, and consequences for non-compliance.
- Best practices for writing an employee credit card agreement include defining clear eligibility, establishing specific spending limits, outlining permitted and prohibited use, detailing the documentation and reporting procedures, providing training to employees, and putting the agreement through a legal review before publishing.
Employee Credit Card Agreement Best Practices
Define Clear Eligibility Criteria
One of the first things you should do in your employee credit card agreement is define the eligibility criteria. Not every employee needs a business credit card, so take into account factors such as job role and responsibilities.
Establish Spending Limits
Another important part of every good employee credit card agreement is establishing spending limits and other restrictions. These vary based on the employee’s role within the company, the department in which they work, and the nature of their responsibilities.
Depending on the card you use, common limits include:
- Maximum for a single purchase
- Maximum limit per card or user
- Merchant category (e.g., liquor store, casino, etc.)
- Transaction type (e.g., cash advances/cash back prohibited)
Outline Permitted And Prohibited Use
Regardless of the level of detail you choose to include, all agreements should outline permitted and prohibited use.
For example, your permitted spending may include business travel, client entertainment, office supplies, software and subscriptions, fuel, fuel taxes, professional development, and project-specific goods and services.
Your prohibited spending may include personal expenses, cash advances, unreasonable or extravagant expenses, and illegal activities.
Within each of those general categories, list specific items that are and aren’t permitted.
Detail Documentation And Reporting Procedures
This part of your agreement should also be as detailed as possible and include information about:
- Necessary documentation (e.g., itemized receipts)
- Submission deadlines and procedure
- Approval workflow
- Consequences of late or incomplete submissions
The more detailed you can be — even providing step-by-step instruction — the smoother and more efficient the submission and reporting process will be.
Put The Agreement Through A Legal Review Before Publishing
Before publishing your employee credit card agreement, have it reviewed by a lawyer familiar with your business and the area in which it operates. Doing so helps ensure the agreement complies with all applicable laws and regulations.
Provide Training
Once your employee credit card agreement is complete, provide training (or retraining) to those who will be using the cards in the field.
Distribute the policy to all qualified employees, and then conduct training sessions to explain the rules, answer questions, and ensure that everyone understands.
Regularly Review And Update The Agreement
Any number of inside and outside forces can affect the needs of your business as it applies to your employee credit card agreement. Review the document at least once a year and update it as necessary to ensure accuracy, compliance, and transparency.
Employee Credit Card Agreement Template
Details
Date
Employee name
Employee ID
Card number issued
Purpose
The purpose of this policy is to control expenses, prevent misuse, streamline expense reporting, clarify employee responsibilities, and ensure compliance with relevant regulations.
Eligibility
Eligibility is subject to management approval and is determined based on factors such as job role, spending authority, and frequency of business purchases.
Authorized Use
Authorized use includes:
- Business travel (airfare, accommodation, meals, transportation)
- Client entertainment (meals, events, gifts within budgetary guidelines)
- Office supplies
- Fuel
- Business-related software and subscriptions
- Professional development (training, conferences)
- Small business purchases directly related to work responsibilities
- [Add or subtract authorized use as necessary]
Prohibited Use
Prohibited use includes:
- Personal expenses (groceries, clothing, personal entertainment)
- Cash advances (unless specifically authorized)
- Excessive or lavish spending
- Expenses for illegal activities
- [Add or subtract prohibited use as necessary]
Spending Limits
Spending limits are set and controlled by management for each cardholder.
Documentation And Reporting
- Documentation: Original receipts or invoices are required for all credit card transactions.
- Submission Deadline: Expense reports and all supporting documentation must be submitted to the Accounting Department no later than the 15th of each month.
- Method of Submission: Expense reports must be submitted using the attached form.
- Approval Workflow: Expense reports will be reviewed and approved by the Accounting Department. Discrepancies or missing documentation will be returned to the cardholder for correction.
- Late or Incomplete Submissions: Failure to submit a complete expense report by the submission deadline may result in suspension of card privileges.
Card Security
Unauthorized use and lost or stolen cards must be reported immediately to your immediate supervisor.
Card Cancellation And Return
Upon termination of employment, transfer to a position that does not require a company credit card, or upon the Company’s request, employee must immediately return the physical credit card to their immediate supervisor. Failure to do so may result in disciplinary or legal action.
Consequences Of Non-Compliance
Violations of this policy may result in disciplinary action, up to and including termination of employment.
Specific consequences may include:
- Verbal or written warnings
- Suspension or revocation of company credit card privileges
- Requirement to repay unauthorized expenses
- Other disciplinary measures as deemed appropriate by management
Agreement And Acknowledgment
By accepting and using a company p-card, corporate card, business card, or fuel card, the cardholder acknowledges that they have read, understood, and agree to comply with the terms and conditions of this employee credit card agreement.
Employee name (printed)
Employee signature
Date
Approved by
Date approved
Manage Employee Spending Better With Coast
Once you have your employee credit card agreement in place, it’s time to think about how you’re going to manage the whole process.
Coast can help. With Coast, you can bring all your spending “under one roof” with a single, easy-to-use program.
Employees can purchase whatever they need to get the job done, and management can take advantage of advanced tools, including:
- Digitized expense policies: Replace your paper spend policies and enforce them automatically as employees spend. With Coast, you can easily control what your employees can purchase. Choose the categories and merchants where they can shop, and determine precise spend limits.
- Mobile receipt and job code capture: Employees take a photo of the receipt and enter a job code right when they make a purchase.
- Real-time reporting and notifications: Get instant visibility into transactions, monitor spend as it happens, and spot issues before they impact your budget.
- Seamless accounting integrations: Coast connects with systems like QuickBooks Online, so you can quickly review, categorize, and export transactions without manual entry.
Coast doesn’t just help you manage credit card spending — it helps you take control of it. To learn more about how Coast can help your company, visit CoastPay.com today.
Frequently Asked Questions
Does the employee credit card agreement supersede the general company expense policy?
No. An employee credit card agreement does not supersede the general company expense policy. Instead, it serves as a supplement to the expense policy by providing specific details related to employee credit card use.
How do I determine spending limits for each employee?
The best way to determine spending limits is to examine what an employee does in the course of their job. Factors may include the employee’s role, department, travel frequency, and typical business spending they need to do.
For example, a mechanic’s assistant whose main job is to pick up parts at the nearby auto parts store may be able to operate under a spending limit of a few hundred dollars. On the other hand, a traveling salesman may need a spending limit of a few thousand dollars.
What documentation is required for each transaction?
The documentation required for each transaction depends on company policy, but common options include original receipts, itemized receipts, digital receipts, scanned receipts, expense reports, and invoices.
It can also be helpful to include notes, job codes, and other defining information on the documentation for future reference.
