Club credit cards issued for General Managers, Controllers, Membership Departments, and other frequent travelers or relationship-based positions are common and provide a great convenience benefit for the holders. At the very least, it is thoughtful of a Club not to expect its most valuable employees to pay out of their own pocket for business-related expenses.
With benefits come opportunities and incentives to mistake personal expenses for expenses that are truly paid for the company’s benefit. High level of salaries, great benefits, and a spotless background sometimes may vanish because of one slippery charge. Among common fraudulent charges are fuel for family cars, family travel and entertainment, grocery shopping, as well as purchasing items and returning them for a store credit to be subsequently used for personal purchases. For most Clubs, it is not the amount of the personal charges that is life threatening, but the appearance to the Club’s members when the questionable or fraudulent activity is discovered. It will be discouraging to the members and it will be discouraging to employees.
How do you prevent the credit card holder and the Club from falling into the “common” trap?
Here are a few ways:
- Limit the number of Club’s credit cards and use only one provider. All holders of the Club’s credit cards should have their own unique cards that they would be held responsible for. Procedures should be in place to cancel the credit card as soon as an employee resigns or is terminated. Request new cards and different account numbers on a periodic basis if the cards are not unique to prevent former employees from memorizing credit card information and using it online.
- Establish a limit for one time charges, a daily limit, and the credit limit for each card. No cash advances should be available to card holders.
- Maintain a log of the credit card holders with the respective account numbers and authorized users. If the number of Club credit cards is limited and they are not issued into someone’s name, select a person who would be responsible for the each card and for obtaining support for the charges.
- Clearly communicate the Club’s policy on credit card use. Establish a low limit for charges that require an original receipt to be presented with a description of the business-related charge. Do not accept the credit card statement or the credit card receipt as the only supporting documentation.
- Pull the credit card statement directly from the web, review the activity for the type of expenditure, vendor, location and timing of the charge, and reasonableness of the amount.
- Assign only one card to be used for purchases of any advance travel arrangements or sizable purchases.
- Monitor “double-dipping”. If an employee has certain expense allowance paid as part of their compensation, make sure such expenses are not charged to the Club’s credit card. Also, monitor that the receipts are not used multiple times (amount before and after the tip or before and after tax).
Also, here are a few ways the Club can live without having a credit card issued to any of its employees:
- Issue reimbursement checks immediately
- Reimburse credit card fees and interest charges
- Issue advance checks for large purchases
- Issue one credit card to be held by an employee in the Purchasing Department who would be responsible for making any travel arrangements
Not having Club credit cards may be inconvenient. It may also be more expensive, but it surely keeps the business-related expenses down and limits the opportunity for fraud.