A typical worry for managers of commercial credit card programs is that the cardholders will use their commercial cards when they shouldn’t be. (For more information on one such concern, see our previous article on personal spending during the holidays by clicking HERE.)

But the opposite can be a problem as well: that being, the employees who, for whatever reason, are not using their commercial cards, but instead are using their own personal credit cards for business purchases.

The Problem of Using Personal Credit Cards for Business Expenses

Using a personal credit card over the issued commercial card is a dangerous habit. The practice is a matter that shouldn’t be taken lightly by management.

The reason? Combining business with personal expenses can create a challenging tangled web of extremely important financial tax data. It also muddies up the true picture of your business’s financial health. This is a problem not only internally for a company’s own informational purposes, but also when an organization’s finances are being examined and scrutinized by external, third-party institutions, such as a bank for a loan or an IRS audit.

Why aren’t employees using their cards?

There are several reasons why employees might not be using the commercial cards that have been issued to them. Let’s explore a few — and then examine what can be done.

The cardholder forgets to use the commercial card.

Employees — so used to using their own personal credit cards for purchasing — simply forget that they are supposed to be using the company credit card for business expenses. Out of nothing more than habit, they pull out their personal credit card for these business transactions.

The cardholder doesn’t have the commercial card.

For some reason, the cardholder doesn’t have the company credit card available at the point of purchase. It could have been left out of his or her wallet. Worse yet, it might have been lost or stolen. Other reasons — such as giving the commercial card to someone else to use — are more insidious. Rather than not go through with the transaction, the employee resorts to using a personal card.

The cardholder is getting rewarded for using the personal card.

It could be that some employees are being rewarded for using their own credit cards. Such rewards might be redeemable points, cash, gifts, and airplane mileage. They might see every transaction — whether its business or personal — as an opportunity to work toward those rewards. The strong incentive is then to use their personal cards rather than the business credit cards, and then later ask to be reimbursed for their business expenses.

The cardholder becomes lackadaisical.

Employees know they should be using their cards — and yet, some aren’t, simply because they don’t want to or don’t feel like it. This can be a matter of inconvenience or downright laziness on the part of the employee. In their eyes, it really doesn’t matter which card they use — even though it does matter to the company. They simply don’t care.

Ways to Encourage Commercial Credit Card Use Over Personal Cards

All the reasons listed have similar solutions. Here are some of the ways to handle the problem and encourage your employees to use their Commercial Cards instead of their own credit cards:

Recognition of the Behavior

One of the first steps in changing an employees behavior is by recognizing it. The only way to do that is via a stringent review of all expense transactions. The transaction history will paint a picture, allowing managers to see when personal cards are being used in lieu of Commercial Cards.

Communication and Application of Consequences

Once the employees using personal cards over Commercial Cards have been identified, it’s time to communicate to them and take steps to correct the behavior. It’s easy for employees to continue with bad card practices if they believe there are no consequences. So these employees need to know a) they’ve been caught and b) what the consequences will be.

To keep a record of the communication, do so via email. That way there will be a record of what’s been said, any consequences for the behavior, and what’s expected of the employee going forward.

The expected behavior and the consequences for not using the P-Card should be outlined via a written “Policies and Procedures” manual for your program that is always accessible by your cardholders.

Training for Better Understanding

One solution to combat lack of Commercial Credit Card usage is to train the employees not only on how to use a Commercial Card, but also regarding why the card is being used in the first place. Some people need to know the reasons behind their actions in order to feel more motivated to follow through and carry out those actions. Employees who realize why the Commercial Card is being used — how it betters not only the business but also protects and helps their own financial situation — might be more apt to use it.

A training program that explains the reasons behind what’s being requested of the cardholders can help prevent some employees from becoming lackadaisical about Commercial Card use — and can also reiterate the consequences of not using the card when they should.

Card Integrity Provides the Solutions

Tracking spending behavior, communicating to cardholders, and cardholder training are all solutions offered by Card Integrity. To learn more, visit our solutions page by clicking HERE, contact us by clicking HERE, or call us at 630-501-1507.