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Don't Let Misuse Of Corporate Credit Affect Your Business

Feb 24, 2008
Don't let the misuse of corporate credit affect your business. While you may need to allow employees to have access to it, you definitely don't want to give them free rein. It is well worth it to hire a few staff people to review the reports that people turn in for business related expenses. This way you can spot any red flags before they have gotten out of control.

One of the easiest ways to keep employees honest when they use corporate credit is to let them know what the process will be. If they know how to correctly document their expenses and what they need to verify it, there won't be so many problems. It may sound harsh but you should have a policy that if the expense can't be verified that they don't get credit for it.

There are many reasons whey employees many need to have access to corporate credit. They may need to be able to purchase things for a presentation or to get some important documents shipped out immediately. Others wine and dine potential clients in order to try to get them on board. Others incur expenses relating to travel so they can go to work site and to see other clients out there.

The big thing though is to ensure all that have access to it don't misuse it. They should only be using it for business related expenses. If their spouse travels for business with them then their cost of airfare and meals needs to come out of their personal budget. You should be asking for verification of what they are doing at the time of a given charge. This way there is a good record of all that information.

Some employers are afraid to be so tight when it comes to corporate credit. They fear it will give employees the impression that they aren't trusted. Yet if you just explain it from an accounting point of view they will understand it. They should realize that your business can be audited by the IRS at any time and you need such documentation for your own records.

This is a much better scenario than finding out a large amount of money has been frivolously charged to such accounts. If you aren't prepared for it financial it can be devasting for the overall effect it will have on your corporate credit. You also can't expect your employees to just pay such expenses out of their own pocket. Even if you will reimburse them for them later many just can't handle that type of financial burden.

If you are hesitant to implement strict guidelines relating to the use of corporate credit, take some time to read stories online. You may be amazed at some of the things that people have done for their own gain with such access. It only takes a few people out there with such intent to create a huge problem for any type of business.

Even with such strict policies in place you need to work with your employees. For example if they end up in a desperate situation while on business such as being snowed in, they may need to access more fund than you approved. You have to be flexible to a point when it comes to corporate credit. The key is to make sure all of the claimed expenses are legitimately related to work done on behalf of your business.
About the Author
Robert Bain - veteran business owner shares his thoughts on building corporate credit, even if you have bad personal credit. Visit href="http://www.corporatecreditpower.com">CorporateCreditPower.com to read more.
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