How can policies help in the corporate credit card reconciliation process?
October 5, 2019
Does your company have a strong policy that eases out your corporate credit card reconciliation process?
For most companies, the corporate credit card reconciliation process is a long, slow, and painful but necessary activity. Implementing a clear and concise policy can smoothen the entire ordeal. It can help detect errors and prevent fraud while leading your team to be audit-ready. That’s achieving multiple goals with one successful execution.
Policies are a set of rules and regulations defined by the owners and the leadership of an organization. It can sound off-putting, but it is merely explaining the preferred method for getting things done. It is the framework within which an individual and group function for the collective good of the business.
In this blog, we will discuss the importance of policies and the downside of poor policies. We will also learn about the perks of having a strong policy for your corporate credit card reconciliation process. Lastly, we discuss how an expense management software can help enforce these policies.
How can a well-defined policy benefit your organization?
Every company has its own way of running its day-to-day functions. Companypolicies should be in parallel with what the company aims to achieve.
Policies enhance your employee’s abilities to deliver consistent results. All this without increasing the burden of employee management.
Simple, well-written policies allow your employees to understand their roles and responsibilities within a predefined limit.
Having a clear and concise guideline will allow operations to run smoothly without having frequent interventions of management.
Policies help increase internal compliance and help optimize resources such as time, money and manpower.
Policies are important for consistency in operational activities. Hence, your policies should provide clarity to the employees.
Accountability issues, official requirements, expense limits, or key activities should be addressed. In doing so, it will leave less room for employees to make accidental errors and expenses.
It fails to monitor, control and analyze expenses resulting in failure to optimize business expenditures.
Role of policies in the corporate credit card reconciliation process
A corporate credit card can give you added benefits, but the reconciliation process can be a time-consuming and tedious task. Especially if your employees don’t correctly make use of the card.
The corporate credit card reconciliation process can be kept in check by having an easy-to-understand policy and enforcing them effectively. Here are some benefits of having a well-crafted policy:
Significant reduction in overspending by employees
Based on the card program, the limit should be clearly spelled out. In doing so, spending limits are capped if employees have a clear idea. A policy stating which expenses are allowed and which are not, helps curb overspending. Employees are made aware of which purchases can be reimbursed, thus lessening the risk of personal loss.
Stating responsibilities of the cardholder
When an employee is authorized with a corporate credit card, there are certain responsibilities he/she has to carry. These may include:
Safety of the card
Usage for company expenses only
Payment of bills
Through effective policies, cardholders have a clear idea of how they can use the card. Policies also give clear instructions on where and whom to report to in case the card gets stolen or lost.
Expense reporting is done accurately and on time
Policies are like a guideline for employees to follow when submitting and reporting their expenses. It states the documents required, timeline on reporting, whom to send for approvals, and the procedure to follow.
Expense reports are submitted without little-to-less delays if the employees know exactly when and how to go about it. This reduces the chances of having the report sent back for clarification and running around for approvals and missing documents. This, in turn, increases employee compliance and morale.
Increases efficiency in accounting
If an employee is well versed with your company credit card policies, accounting becomes painless with fewer policy violations. Thus, helping the finance and account team to reconcile on time and stay audit-ready.
Any duplicate claims or expenses are automatically flagged as a policy violation. The expense report, which does not match with the receipts is also automatically detected. Thisreduces the chances of fraud, such as multiple reimbursements and overstating expenses.
The expense management software also helps the company to categorize what is allowed and forbidden as a business expense. In case an expense report for a personal expense is submitted, it is automatically detected as a policy violation. This helps to streamline the usage of the corporate credit card only for business purposes.
For timely reporting, the finance team can notify the employee to file their expenses in due time. This can avoid delays in reimbursements, and streamlines the entire reconciliation process.
Employees can file export reports and monitor their claims. Managers can detect policy violations easily and use insightful spend reports to adjust policies.
Expense data from credit cards are automatically integrated for policy compliance analysis. In the case of policy violations, the issue is flagged, and both the employee and manager are notified. This provides a seamless and central solution for policy checks and violations.
Expense management software provides detailed insights into violations, top violators, category-wise spending, etc. These insights can help finance and management teams to improve policies over time. It can also help them to identify preferred vendors and drive cost efficiencies.
In an automated solution, the process is automated based on the company's workflow and level of approval hierarchies.
Policies can help your employees to stay compliant and help you to run the organization like a well-oiled machine. Policy can ease the multiple processes involved in a corporate credit card. From making expenses to claiming reimbursements, a well-written policy can make the entire procedure smooth for everyone involved.
A carefully thought-out policy can be enforced more effectively if you integrate it with expense management software.