It’s been said that there are no constants in life, except for change. When running a small business, you can count on the fact that all of your employees will eventually retire, quit or be terminated at some point. And when that time comes for an employee to separate from your company, you’ll have to take steps to turn off their company credit card.
How Employee Credit Cards Work
With a small business credit card, the primary account holder is always responsible for the repayment of any charges. The primary account holder can also order additional credit cards for authorized users. With a personal card, the authorized users will likely be a spouse or relative, and business cardholders usually add some of their employees as additional authorized cardholders.
Additional authorized cardholders have the ability to charge purchases to the account, but not much else. Typically, additional authorized cardholders cannot make changes to the account, or redeem rewards. They will also be restricted from enquiring about the account’s balance or payment information. And just as the primary account holder can authorize an additional card, he or she can revoke that authorization at any time, and prevent the card from being used to make new purchases.
Also, an employee’s credit scores won’t affect their ability to be an authorized user. The account is based upon your credit. You can see where your personal and business credit stand for free at Nav.com.
How to Turn Off a Company Credit Card
As the primary account holder of a small business credit card, you can contact your card issuer at any time to turn off one or more employee cards. You might do this if a card is reported lost or stolen, or if an employee separates from your company for any reason. You may also wish to turn off a company card when an employee no longer needs to have it, or if you’ve decided to revoke an employee’s charging privileges for any reason.
As the primary account holder, you can always turn off a company card by contacting the card issuer by phone, and some card issuers will allow you to accomplish this online. Should you decide to close the entire account, all additional employee cards will be deactivated. But no matter how you turn off a card’s authorized users, the primary account holder will still be responsible for paying off any existing charges.
Best Practices for Managing Employee Cardholders
Turning an employee card on and off is a simple process, but creating company policies for managing your employees credit card use is a little more complicated. The first step is to create a document that clearly specifies how employees can and cannot use their small business credit cards. Your policy should outline the kinds of purchases they are authorized to make, and any approval that’s necessary before making them. You should also specify the consequences for breaking these policies, which could include loss of card usage, discipline or dismissal. Then have each employee cardholder read and sign the policy, and any subsequent updates. It may also be a good idea to speak with an attorney to make sure your policy complies with all relevant local, state and federal laws.
Once employees have company credit cards, it’s important to continuously monitor them to ensure compliance with the policy and to catch any violations. To assist you, many small business credit cards allow you to set up alerts or limits on specific employee cards. For example, you might wish to be alerted when a charge above $500 is made, and limit the card to $1,000 in purchases during a statement period. Many cards also offer reports that can help you track employee spending and identify any potential anomalies.
By understanding how small business credit cards work, and how to turn individual cards on and off, you can use these valuable business tools most effectively.
This article was originally written on February 5, 2018 and updated on December 10, 2020.
Have at it! We'd love to hear from you and encourage a lively discussion among our users. Please help us keep our site clean and protect yourself. Refrain from posting overtly promotional content, and avoid disclosing personal information such as bank account or phone numbers.
Reviews Disclosure: The responses below are not provided or commissioned by the credit card, financing and service companies that appear on this site. Responses have not been reviewed, approved or otherwise endorsed by the credit card, financing and service companies and it is not their responsibility to ensure all posts and/or questions are answered.