Your business credit card is watching you (part two)


Increasingly, companies are using business bank cards not only to acquire business and save money, but also to monitor employees. (following)

Two years ago, Illinois-based Lake Forest began mandating the use of corporate credit cards. Purchasing Administrator Susan Westover says the move has helped the company reduce spending and abuse that doesn’t comply with travel policy.

“When it comes to travel, the biggest cost is non-compliance with company policy,” said Eduardo Vergara, senior vice president of global commercial cards at American Express. He added that employees will often book their business flights on their personal cards to increase loyalty points. “Most travelers think they’re their own travel agent, but the reality is that general policies save money for the company,” he said.

Tenneco realized it would save money on gas — an ever-increasing expense — if employees rented fuel-efficient vehicles instead of driving their personal vehicles. “It was asked for last year, but not enforced,” Westover said, but this year it will be part of official company policy.

“One of our customers could save $10,000 in water,” said Marcie Verdin, vice president of large account commercial products at MasterCard. “Employees bought the most expensive water bottles.” The client used MasterCard’s portfolio-building software, an effective tool that provides business travel managers with a detailed breakdown of employee expenses. He thus found that the employees of the company had expensive tastes. MasterCard also offers “Travel Dashboard”, a data reporting tool that provides insight into the overall performance and compliance of travel programs. Aberdeen Research shows that 24% of companies report some level of fraud related to the use of corporate credit cards.


Employers can also choose to automatically restrict the use of corporate cards by allowing business travelers to pay for flights, car rentals, and hotel accommodations but blocking card use in retail stores. MasterCard is developing a feature called InControl that will allow employers to monitor employee spending in real time by sending email notifications each time a card is used.

Business travelers who use their pro cards may have to forgo some benefits when traveling on company money. Unauthorized long-distance calls and $20 martinis at the hotel bar might be harder to get through to travel managers, but business cards have the advantage of convenience.

On average, business card users are usually reimbursed five to six days later compared to 10 to 12 for employees who use their personal cards, says Vergara of American Express, who added that reimbursement was the main issue. more important for frequent business travellers. Some card issuers also have executive business card programs that provide additional benefits for certain employees. Executive card privileges may include airport lounge access, concierge services, travel upgrades.

Businesses choose to use one of two types of payment card arrangements: the corporate liability agreement in which the company receives and pays the bill for the card or the individual liability agreement in which the employee pays the bill and is reimbursed after submitting an expense report. According to Richard Palmer, a professor at Eastern Illinois University and co-author of the RPMG survey, there is no significant difference in customer satisfaction between these two methods. The survey shows that Individual Liability Agreements are nevertheless the most popular among the choices of S&P 500 companies – size companies.


The biggest challenge for businesses using corporate credit card programs is ensuring that a card is paid on time. According to RPMG Research, each month approximately 4.8% of payments by employees of a company using an individual liability agreement are irregular and 14% of travel card statements presented to companies with the corporate liability agreement are irregular. not supported by receipts.

Professionals also noted employee preference to use personal cards, insufficient card distribution to employees, and budget limitations as barriers to effectively implementing a travel card program. Card issuers are investing in improving reporting technologies as they compete for customers. Indeed, as the RPMG survey suggests, employers are concerned about access to more detailed information about employee spending. But business travelers list customer service as a top priority.

Travel budgets will likely be cut this year, but financial analysts and card issuers say the business card market will continue to be profitable even in a weaker economy. Spending on business cards has risen about 12% in each of the past five years and 14% in 2007, according to Bartolini of Aberdeen Research. He added that there is still huge potential for card programs aimed at the secondary market of small and medium-sized businesses. “Medium-sized companies don’t know that they can also successfully negotiate first-supplier type contracts,” says Bartolini. “For very small companies, one of the advantages would be a pre-negotiated discount program – for example, airline privilege cards”.

US Bank expects its “Travel and Entertainment” portfolio to grow at a rate of 8% in 2008. Robert Abele, director of the bank’s purchasing department, said the ever-rising cost of travel will encourage businesses to use professional credit cards. “Pressure from inflationary pressures is driving a significant portion of growth, and airlines are now beginning to pass these costs on to the consumer,” Abele said. “We’re starting to see companies manage their spending, and we think inflation is driving strong growth in this sector.”

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