4 Strategies to Implement Controls and Prevent Corporate Card Misuse

Employees use corporate cards for (what they believe are) legitimate business expenses.

Financial controllers put their efforts into creating long (and often boring) company policy documents. Understandably, employees often ignore such policies. 

Travel budgets may be 200$ per night, but they may end up spending 500$ making assumptions that it may be okay.

In addition, certain policies are deeper. E.g. you may spend on meals but you may not spend on meals with alcohol.

Intentional or unintentional, such expenses are a burden for the company. 

The worst part? These expenses often remain undiscovered until the monthly statements are released or during routine audits. And, with innumerable daily expenses, it becomes challenging for the finance team to identify and flag non-compliant expenses. 

This blog post will share 4 strategies to help you get control over corporate card spending. 

4 Ways to Prevent Corporate Card Misuse 

Even though it seems viable to enforce stringent control measures to prevent corporate card misuse, it has the unwanted effect of breeding employee distrust, and preventing them from effectively carrying out their duties without too much back office work. 

A complex expense filing process, characterized by manual tasks like adding receipts, attaching card transactions, and obtaining approvals from multiple people, overwhelms employees and leads to mistakes. 

For example, if an employee forgets to attach a receipt or misses a required approval step, they will face reimbursement delays or penalties, while finance teams will struggle to reconcile inaccuracies and process claims efficiently.

Here are 4 ways to implement a self-serve, flexible corporate card management process to get more visibility and control.  

1. Establish a Spending Policy

A spending policy dictates how funds are to be used within an organization. 

For instance, you can specify that travel expenses must be pre-approved, documented with receipts, and shall not exceed AED 2000.

Such a corporate card policy provides clear boundaries and criteria for permissible expenses. 

To create a comprehensive spending policy, start by defining the goal and scope of the policy, including which expenses to cover (e.g., travel, entertainment, supplies). 

One easy way to do this, is to look into your ERP and find all the most frequent vendors & GL Categories your employees spend money on.

Once done, define the following elements: 

• Spending budgets — Set limits based on different expense types, departments, etc.
• Approval process —  Outline the process for approving expenditures, specifying who has authority to approve at various levels of spending and various types of spending. E.g. If an employee is looking to purchase IT software, perhaps you want oversight from the IT team. 
• Documentation required — Specify what documentation is required to justify expenses (e.g., receipts, invoices) and how expenses should be recorded and reported.

Communicate these policies with your employees and all other stakeholders. Conduct training programs and add these to onboarding kits to ensure everyone is well-versed. 

With Pluto, it becomes easier to enforce spending policies as the controls for each card can be customized.

From adding specific vendors, spending limits, and approval workflows to having advanced features such as auto-freeze cards (blocking cards in case of policy violation), you configure controls right within the cards to prevent corporate card misuse. 

2. Create Approval Workflows

Approval workflows are structured hierarchies that define the steps for reviewing and authorizing expenses before they can be pushed to your general ledger. They lay down the step-by-step process for reviewing expenses, which ensures that all transactions align with company policies and are within budget limits.

This provides clear records of who approved what and when and enhances accountability. As a result, there are fewer unauthorized expenses. Moreover, the entire review process becomes more streamlined, reducing the time and effort needed to manage expenses.

For instance, the workflow starts with an employee submitting the expense report. Then, the manager reviews and approves/rejects the report. The finance department conducts a secondary review for policy compliance and budget. Finally, finance teams reconcile the corporate card statement and the documents.

Manually, this becomes hectic for enterprises. Even when they opt for automation tools, configuring specific workflow demands technical expertise. 

Pluto simplifies this with its no-code approval workflow builder. You can create intricate workflows with simple if-then rules and configure them automatically into the cards. 

As a result, employees no longer have to go from one office to another for approvals. Each expense notifies the respective stakeholders to review the transaction. They get all the key information on a centralized platform, making it simpler for them to evaluate. 

3. Simplify Expense Filing 

A manual expense filing process requires employees to physically compile their receipts and expense reports, which are then submitted for review and approval. This includes filling out forms, attaching paper receipts or scanned copies, and manually entering data into spreadsheets.

However, this manual process leaves employees to spend hours filing expenses with the risk of incorrect data entry or lost receipts. Not only does it become impossible to track expenses in real time, but such a complex process leads to dissatisfaction and decreased productivity. 

An expense management software like Pluto simplifies the expense filing process. 

Each card transaction triggers a notification for employees to upload receipts directly via Whatsapp, where Pluto auto-captures all the key information. Simultaneously, managers are notified to review them. All the information is consolidated on a centralized platform, giving a real-time overview to all stakeholders. 

“The beauty in one part that I was amazed about Pluto, in terms of your technology, was your whole integration with WhatsApp and the ease of how easy it was to swipe, make a payment, take a picture, upload it via WhatsApp, and it's there on the platform for approval.”

~ Lee Kersen Mascarenhas, Head of Operations, BloomingBox

This streamlined expense filing process keeps all the key information on a unified platform—making it easier to review and identify non-compliant expenses. Moreover, it becomes easier for accounting teams to reconcile expenses and always be audit-ready.  

4. Assign Dedicated Virtual Cards

Many companies limit the number of corporate cards issued due to concerns over misuse and administrative complexity. In some cases, the preferred banking institution has a limit on the number of corporate cards. 

Nonetheless, shared corporate cards make tracking and holding individuals accountable for unauthorized expenses difficult. Additionally, employees experience delays in accessing the card when needed, leading to unnecessary delays.

Pluto not only offers unlimited physical/ virtual corporate cards, but also the ability to configure them in adherence to your spending policies. And while unlimited cards make it easier to monitor spending patterns and identify misuse at granular levels, with budget-controlled cards, you will not have to deal with non-compliant expenses at all. 

“We wouldn’t know until the statement turned up at the end of the month what had been spent and where. After Pluto, rather than waiting until the end of the week to collect enough receipts, we can actually see the money as it goes. We can go into an individual card user spent and see exactly how the money was spent effectively in real time.”

~ Christopher Anthony, Global Business Controller, Platinum Heritage 

Dedicated corporate cards enable employees to make necessary purchases without waiting for access to a shared card. Similarly, the finance team easily matches expenses to specific employees, simplifying the reconciliation and auditing processes. 

Promoting Transparency and Accountability With Pluto

You can end corporate card misuse with an environment of transparency and accountability instead of stringent controls.

It should be easy for employees to file expenses and managers to review with all information readily available at a centralized platform. The finance teams should not be bogged down by exhaustive analysis of each transaction or chasing employees to adhere to the spending policy. 

Instead, a self-service, flexible system that enables you to configure spending policies into the corporate card with real-time visibility will enhance transparency. With dedicated cards for each employee and defined approval workflows, everyone will be accountable for their expenditures. 

However, Pluto doesn't restrict itself to budget-controlled cards or real-time monitoring. Pluto comes with the following advanced features:

• Simplifies the expense filing process with its WhatsApp integration to capture receipts and bring all key information to a centralized portal
• Offers zero-balance cards, where employees can request funds as and when needed. Once the manager reviews the expenses, the card is funded with the approved amount.  
• Facilitates ATM withdrawals which are reflected as cash-in-hand under respective employees, making them accountable for the cash withdrawn 
• Allows employees to request just in time funds in case they hit the maximum limit. Once the manager approves, the spending limit of the card is readjusted. 

Pluto can do much more to simplify corporate card management and prevent corporate card misuse. 

If you want to know more, book a demo today!