Spend Management

What Is A Credit Card Expense Report?

Company credit cards help boost business finances but only with accurate expense reports. Click here to know how to better track credit card expenses.

Credit cards are a popular source of capital financing for businesses. Some entrepreneurs use their personal credit cards to manage business expenses, but it can make it harder to track tax-deductible purchases. Mixing personal and business finances can also erode legal protection. Moreover, it will not help build a business credit history, which is essential for future lending needs.

Here’s why getting a business or company credit card is a good idea. This type of credit card specifically for business use gives entrepreneurs easy access to funds with a pre-determined limit. It also charges interest rates if they cannot pay the full payment on time.

Most company business cards come with special bonuses or perks such as reward programs, expense tracking, and additional cards for employees. There are pros and cons to using a company credit card, as with many things. Therefore, it is crucial to consider both before getting one for your business.

Read on to know how they can better help your business.

The Advantages Of Having A Company Credit Card

Securing a business credit card for your business is not compulsory. However, using a business credit card can provide the following benefits:

  • Streamline Employees’ Expenses
    Issuing company credit cards allows your employees to make purchases for the company directly. At the same time, you can monitor employee spending from a single platform, providing a detailed overview of who spends what, where, and why. There will also be one bill for all business expenses instead of multiple receipts.
  • Earn Company-Specific Rewards
    Your business may receive travel rewards, cash-back percentages, and sign-up bonuses for every purchase made through the account with company credit cards.
  • Automate Recording
    Using company credit cards can give you access to real-time transactions from any employee or department. Then you can easily download them to accounting programs.
  • Manage Business Cash Flow
    Every business can experience seasonal fluctuations and unexpected emergencies. With company credit cards, you can pay and cover them more efficiently. Purchasing larger quantities is also possible, as these cards have higher credit limits. Plus, you can better track cash flow through a single credit card platform.
  • Preset Spending Controls
    Most company credit cards allow employers to set spending and transaction limits for authorized users at the team and individual levels. You can keep employees accountable for their spending with preset spending controls.

The Disadvantages Of Having A Corporate Credit Card

Like personal credit cards, you should use company credit cards wisely. Otherwise, they can result in consequences.

Here are several disadvantages you should know:

  • Less Protection than Personal Cards
    Most credit companies from banking institutions provide purchase protection for personal credit cards, but business credit cards rarely get the same protection. Therefore, it is more challenging to return purchases, correct billing errors, and reverse unauthorized credit charges.
  • Higher Interest Rates
    Company credit cards can have higher interest rates than personal credit cards. These also have additional cardholder fees that can increase quickly. Thus, you may end up paying more interest rates and late fees than expected.
  • May Affect Personal Credit History
    Company credit card issuers are likely to ask for your social security number and credit history as a personal guarantee. If your business fails to pay off the bills, they may report this activity that will reflect on your personal credit.

These adverse circumstances may result in some entrepreneurs avoiding issuing company credit cards. However, there are ways to eliminate the potential disadvantages and maximize their benefits for your business. One way is to incorporate an expense report into your company credit cards.

Get unlimited physical and virtual corporate cards with Spenmo

What Is a Credit Card Expense Report?

Keeping proper records of your business expenses is essential no matter the type and size of your company, especially when you’re using company credit cards across the board.

A credit card expense report can minimize potential cash deficits and boost the company’s financial balance. On the other hand, it can also increase the risk of irresponsible spending.

You will need a safe and efficient way to keep tabs on money spent by employees on your business’s behalf. This is where a credit card expense report comes to play.

An expense report is a form used to track your business expenditures and where it can make necessary adjustments. Employees typically complete the form and break down the expenses they incur on behalf of the company. It requires them to attach receipts related to the expenditures.

An expense report often involves various details that are specific to your company. But at a minimum, it includes the following information:

  • Date: The date you made the purchase should match the date specified on the receipt.
  • Vendor: The business which provided the item or service.
  • Nature: The type of expense made, such as airline tickets, lodging, meal, or parking fees.
  • Total amount: This is the total cost, including taxes, for a purchased item or service. It should match the amount listed on the corresponding invoice.
  • Account: The customer’s account for which the expense should be charged.
  • Description: This contains a brief narrative of the business expense.
  • Subtotal for each expense: The sum of an expense category involved in the report.

Best Practices for Business Credit Card Expense Reporting

Credit card expense reporting helps itemize and monitor every business expense that employees have incurred. However, there must be a set of guidelines to make it more efficient. Every credit cardholder of the company should know and understand their responsibilities at the onset.

Implement the best practices listed below, so your business can have the most effective credit card expense reporting.

  • Assign budgets or spending limits to team members.
    Having the right spending card program is crucial to managing company credit card spending and reporting. The first step is to establish an overall budget. Work with each team member and allocate funds appropriate to their roles and projects. Besides the spending limit, you can also set pre-approval for every purchase and create restrictions on specific expense categories. Doing so will also help minimize excessive spending on your company credit cards.
  • Set policies on credit card usage.
    Company credit cards should only pay for approved business expenses. Other than the allowable expense and unauthorized card charges, outlining the qualified employees as authorized cardholders is crucial for the policy. Another factor to consider is the liability, which is structured as corporate, individual, and joint. Employees must make payments for their transactions and get reimbursed through expense reports with individual liability. Doing this will help keep employees responsible for their purchases.
  • Keep track of all receipts and statements of accounts.
    It’s often tempting to procrastinate when completing expense reports. However, waiting until the end of the reporting period can create problems. It may be hard to search for receipts and remember the purchase details made weeks or months ago. Moreover, it can lead to unnecessary errors and omissions in the report. So it’s best to be proactive in monitoring all transactions and accounts regularly. This allows you to detect any inaccurate expenses even before your employee submits the expense report.
  • Implement an easy credit expense reporting procedure.
    Employees need to know how to submit expense reports. It will be best to inform them of the receipts, approval, and other details necessary for reporting. Make sure to implement a manageable credit expense reporting procedure. The simpler the process is, the more likely employees will adhere.

Manual vs Automated Credit Card Expense Report Tracking

Manual Automated
Can be complicated for employees Helps improve the process for expense tracking
Manual verification of documents Can save on credit card fees (late/finance charges)
Prone to errors and fraud Easy access to records
Paper trail Data storage

If you need guidance on the best expense management system, go to Spenmo’s website.

Did you know? Employee productivity and confidence are adversely affected when expense reimbursements to the bank accounts are delayed and erroneous.

Ways to Track Credit Card Expenses

Tracking and recording credit card activity is essential, especially for companies that issue credit cards for a large number of employees. There are different ways to accomplish this, but the key is to find a method that works best for your business. Make sure it will help you perform the tasks more efficiently.

Here are some ways to track credit card expenses:

  • Use an expense tracker spreadsheet.
    You can use a simple spreadsheet to track credit card expenses. You need to enter and verify the purchases and other information manually. Although this may work, manual tracking may take time and effort. Plus, it can be prone to duplicate and fraudulent entries.
  • Automate expenses with expense management tools.
    Meanwhile, investing in expense management tools can help save time and paperwork. These tools can help you automate all submissions, approvals, and reimbursements of expenses; verify and reconcile receipts and bank statements with a few clicks. They also help reduce the risks of human errors in tracking and reporting expenses.
  • Integrate company credit cards in the expense management system.
    It is often challenging for accounting teams to reconcile credit card expenses. Thus, ensure to integrate company credit cards in the expense management system you choose to use. Get real-time updates without relying on manual credit expense reports with credit card integration.

Automate Your Credit Card Expense Report with Spenmo

A credit card expense report is essential for account reconciliation. It provides the company with visibility and control over employee spending on business-related expenses. Despite that, doing credit expense reports can be a daunting task. Go to spenmo.com and learn how to better manage business expenses and payments with automation.

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FAQs on Credit Card Expense Report

Am I eligible for a company credit card?

Requirements can vary from one bank to another. These can include: 

  • Be at least 21 years old. 
  • Be a business owner and/or person with executive authority of a Company/Business with a Valid UEN. 
  • Have a business registered in Singapore (with ACRA) and the company must be in operation for at least several years. 
  • Have a business that meets the minimum annual sales turnover requirement.

Can you use personal credit cards for business expenses?

You can use personal credit cards for business expenses. However, it is not recommended as it can affect your credit score and make expense tracking more difficult. Ensure your personal and business expenses are separate to avoid unnecessary financial complications.

Is a business credit card the same as a corporate credit card?

A corporate credit card is often confused with a business credit card, which also allows employees to pay for business-related items without using their personal funds. But these two types of cards have key differences in terms of eligibility, usage, and liability.

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