Can You Use A Company Credit Card For Personal Purchases, If you’ve ever had a company credit card, the question on everyone’s mind is, “Can I use this for personal purchases?” which is quite valid.
Though you can feel the urge to swipe the card even when you’re in a hurry, don’t. I suggest you hold off for a moment because I am about to address if a company credit card can be used for personal purchases or not.
In this article, I’ll be providing you with all possible details regarding company issued credit cards explaining their risks, their guidelines, oh and also, there is always a catch.
Being a regular employee or a booming business owner, understanding the use of company credit cards with its restrictions without a doubt, will save you from a lot of hassle and serious trouble in the future.
What Exactly is a Company Credit Card?
A company credit card is defined as a card given by employers or business to their employees’ with an aim of meeting business-related obligations. Unlike the credit card one has at the individual capacity which is used in purchasing foodstuff to entertainment, a company card is used strictly for working purposes. The main purpose of the company card system is to for ease of spending that is associated with the operation or running of a business.
Let’s explain it some more:
1. Purpose of a Company Credit Card
It enables an employee or an owner of a business to make purchases and not use their personal money, which they maybe refunded for the company in such a case. This is particularly helpful when dealing with business trips, when dealing with client meeting and buying office items where a situation where one has to spend money and then seek for repayment might not always be cheep and the best.
Here are a few ways in which a company credit card is put into use:
- Travel and Lodging: If you are on a company’s travel, then you can use this card for booking tickets, hotels or hiring rental transportation.
- Meals with Clients: When you have an adequate meeting with prospective clients or customers, the card’s expenses can be claimed for beverages and food during those meetings.
- Office Supplies and Equipment: The company card can also be helpful when acquiring printers, computers, or even software that is essential for the company operations.
- Event Tickets/Conferences: The company credit card has also been used by companies and businesses to buy big events entry tickets as well as trade conferences, seminars, among others.
- Shipping and Freight: A standard expense in almost all Businesses is business related transport and shipping services. When sending parcels to clients and suppliers, for instance, a company credit card can also be used.
2. How Company Credit Cards Work
The striking difference between a company credit card and a personal credit card lies in who is liable to make payment for any outstanding amount. For the case of a company card:
- The business, not you, is the one that ultimately pays the credit card bill. Most of the times, the payment is drawn from the business bank account or from the business credit line.
- The employee and/or cardholder may be accountable for utilizing the card in accordance with the limits imposed by the organisation, maintaining notations of their spending, and forwarding them for assessment further.
A company card is typically connected to a business account and can ease the recording and tracking of business expenditures. In some circumstances, the credit card company may even provide monthly statements directly to the finance department or the accounting department of the company status which helps to verify and control the expenses incurred.
3. The Benefits of Using a Company Credit Card
When it comes to a business, there are numerous advantages that company credit cards can offer, including, but not limited to:
- Efficiency in Managing Expenses: Managing expenses becomes extremely easy for companies as all purchases are done via a singular account, and employees having access to a card instead of submitting manual reimbursements can be more productive.
- Building Business Credit: Using a company issued credit card especially when managing it properly, will allow a business to build or establish good credit, a feature that could be necessary when applying for loans or other financial services in the future.
- Control and Oversight: Limits on the company credit cards can be set by the employers making it easier for them to control and seek accountability on how the cards are being used.
- Expense Management and Reporting: Reporting tasks are much easier to handle for accounting teams as many business card providers tend to offer detailed reports related to business expenditures.
That said, there are restrictions in place that prevent users from abusing the privileges associated with the cards. These restrictions determine what form of spending is allowed on the card as well as what will happen if the card is used in an inappropriate manner.
Can You Use a Company Credit Card for Personal Purchases?
Now, let’s get to the more important question: Are you allowed to charge personal expenses on a company credit card?
The answer is simple, No and here are the reasons.
1. Company Policy Restrictions
Here’s a fact, most organizations are very clear in the use of their credit cards and their policies stipulates that the card in question is strictly for business expenses. If you are seen buying a sweater or having dinner with friends then you are seen abusing the card and offending company policies which can range from a warning to termination.
2. Legal and Financial Implications
Ever heard of abusing a company’s card? Well it’s not only a policy violation but charging personal expenses can also be seen as fraud. For uncontrolled purchasing activities many companies treat that as funds misappropriation and faced with severe legal consequences
- Fraud and Misuse of Funds: Any transaction which the company interprets as not authorized is regarded as fraud. It is worth noting that fraud when defined in broad contexts is very serious and could lead to criminal cases depending on the amount involved as well as the nature of the fraud.
- Financial Liability: Sometimes companies would do the opposite by suing employees who are asked to reimburse the work related assets that are used for personal purchases or in more severe cases sue them to recover the expenses.
3. Ethical and Reputational Risks
For sure using company card for personal use is also an ethical issue. And even if in your mind no one is in a position to find out, it can stain your image in the workplace setting.
This happens because a boss or the HR who knows that a misuse has occurred would want to assess how honest their employees are and the consequence is loss of trust. Further, in future, employees will have difficulties because even slight misuse are enough to cast doubts on their reliability.
4. Why It’s Tempting, But Not Worth It
I understand why some may be challenging to resist the opportunity to charge their personal expenditures on the company credit card as I reflect on your previous remarks. You could be out on a night out with the peers and short of cash or you could have an unanticipated expense, and the card happens to be close by.
Quite the contrary – using the card for personal purchases is definitely not a sweet deal. And chalking these up is much better in my opinion than breaking the limits.
Most companies have in place some kind of reimbursement policy which stipulates that for example if, as a on duty traveler, you had some personal costs, you may give them some receipts and later get the money back for those costs. But with the exception of cases of extreme emergency or properly documented purposes of the company, the company use of the cards should be regarded as forbidden.
5. What If You Really Need It?
Employers provide their employees with company credit cards so their employees can use them for work related purposes only. However, in the unfortunate event that you have to make a personal purchase with the company card, it is a best practice to check with your boss or HR.
Few companies might permit such actions, but be predicate and have that approval in writing. Whenever possible however, it’s a best practice to immediately pay back the expenditure to avoid any conflict with the company.
The Risks of Using a Company Credit Card for Personal Purchases
You shouldn’t mix business with personal life and if that has already happened here is what could happen.
Legal Consequences:
For being unemployed next to nothing, the company may consider this as fraudulent activity. By doing so, you are breaching company protocols and the trust they so generously bestowed upon you. Companies that operate on international levels have legal policies that ban specific personal transactions. These credit cards cannot be a personal debit card.
Financial Impact on the Company:
Firms could experience unexpected fees and international sales contracts which is not only worrisome for international companies but could ruin funding for start ups affecting the amount of trust you have built with your employer. There is.
Damage to Your Reputation:
Using the company card for private matters will certainly damage your career image. You will be marked as someone who shouldn’t be entrusted with the finances by your coworkers, your employer, or even the customers.
Company Policies on Using Credit Cards
Most firms have an internal guideline that stipulates, among other things, the appropriate use of credit cards and that such cards are to be used for business appropriate expenses only. But sometimes a company may permit its employees to make certain personal transactions with the card but only in cases of an emergency or while on a business trip.
As an employee, it is important on your part to know what your company’s policy states. Particularly if you don’t understand it, ask HR or your manager for guidance about it. It is always better to ask first than get in trouble for the misuse of the card.
What Happens if You Accidentally Use the Card for Personal Purchases?
Everyone makes mistakes- it happens, for instance, you might have been in a rush or didn’t realize that a company credit card is not used for personal expenses. If you misused it, here’s what to do:
Report it Immediately
The very first thing you should do is let your supervisor or HR know about it. Just tell them you made a mistake, and they are likely to assist you in rectifying it. It is a matter of being responsible on your part.
Repay the Company
Reimbursement for personal use of a company card can also be required of you by many businesses. Always save receipts and be prepared to reimburse them as required. The sooner you repay them, the fewer issues you’ll encounter.
Learn from the Situation
Moving forward, double check your purchases and keep your business expenses and personal expenses separate. It is always nice to know what you’re buying and the reasons behind it.
Is There Ever a Time It’s Okay to Use the Card for Personal Purchases?
As a general rule, the answer would be no, but there might be a few select occasions wherein this may apply. Here are the exceptions: In such cases it may be alright to use a company credit card for personal purchases.
Emergency Situations
There can be companies that give their employees the leeway to use a company card for an emergency if the employee cannot find their card or access funds. But the employee will have to pay that back once the issue has been fixed.
Gray Areas
Depending on the type of business, some companies maintain a more lenient policy that allows some purchases made for personal use that are directly related to business activities. For instance, if you are buying something for a client and it is not always clear whether the purchase is only for the business, always ask your employer first.
How to Avoid Misusing Your Company Credit Card
Here are some ways to take the high road:
1- Know Your Company’s Policy
There are rules associated with the use of company credit cards so make sure to read them. However, if the rules are in any way vague, request that they be made clear to you.
2- Use Separate Cards for Personal and Business Expenses
Combining work and personal expenses is often a bad idea and even worse, just one credit card. This ensures that the spending is properly accounted for and there is no confusion.
3- Get Permission First
If there’s a small doubt regarding whether a purchase is appropriate or not, let your employer approve it first. It is better to avoid any negative repercussions in the future.
4- Keep Track of All Expenses
Expense tracking software is often seen as complex but using spreadsheets to keep account of purchases made with the company card is a great way to avoid being disorganized and misleading.
What Should You Do if You’re Caught Using a Company Credit Card for Personal Purchases?
If you’ve done the mistake of using the card for personal purposes, don’t feel that the end is near. This is what you have to do instead:
1- Take Responsibility
Have the courage to accept your mistake. Most employers are forgiving when an employee confesses and has the willingness to make things right.
2- Offer to Reimburse
Take the initiative to cover for any purchases made during employment that were of personal use. This practice will help you alleviate the repercussions of the situation.
3- Work to Rebuild Trust
After you have repaid your debts to the company, the hard part would be to try and fix their opinion of yourself. For the future, be more cautious about the company’s money.
My Opinion
So now that we know you have a company credit card, can you use it for non-business related transactions? A short answer to that would be this: is not such a good idea. Yes, there may be a few perfect situations where that would be helpful please consider only business expenses.
Following these basic rules such as adhering to company policies of what is or is not making purchases and/or recording them and always being honest about your spending can greatly reduce the likelihood of using a company card for personal purchase.
Always remember do not lie, do not take the company credit card out for anything else that is not business if it is absolutely necessary, ensure to have clearance in advance from your employer. Your credibility as a professional and job security is connected to that!
