Managing expenses for business organizations is one heck of a task because tracking the miscellaneous expenses and maintaining a record of them requires time, effort, and resources. Organizations are issuing credit cards to some employees to ease this burden so that the fund allocation and approval process can be simplified. These square plastic cards can do much more than swipe through to facilitate payments. Employee credit card is an efficient tool for employees who can use them strictly for business-related purposes. However, such commercial credit cards have their list of perks and benefits.
Several factors contribute to the eligibility of companies that require corporate cards to be issued, for example, their financial standing, liquidity, cash flow, annual turnover, number of employees qualified for the credit cards, etc. Without diving deep into the numbers and stats of the eligibility criteria, let’s focus on the outcome surrounding the usage of credit cards because there are malpractices involved at certain points. Being well-versed with all the legalities associated with employee credit cards is paramount for business institutions.
Since the issuing authorities like Citi Bank or American Express in Singapore are providing credit finance services to employees via the corporate houses, there is an involvement of two parties who will be withheld for any flaw or misuse of the issued credit cards. Let’s decipher them from both the perspective of employees and the business organization:
- Under Singaporean law, there is a provision for criminal charges against employees who engage in cruel practices with the company’s credit cards. They are booked under the charges of theft, fraud, or breach of trust. In some cases, a penalty is levied against them, and they may also have to face imprisonment.
- Apart from the criminal charges, they may have to face civil lawsuits, under which employees have to compensate for the financial losses made to the organization by misusing the commercial credit facilities. This compensation can include the total amount charged with the card and the expenses incurred against the organization involving the malpractices of corporate card usage.
- Companies that issue employees credit cards also fall under Singaporean law’s jurisdiction. They might be held responsible for the illegitimate use of these corporate cards if they fail to monitor and track their transactions regularly. Therefore it is crucial to train employees about the appropriate usage of credit cards and how to manage their business expenses effectively. If these companies fail to comply with the guidelines issued by the legal authorities, they may have to face fines and pay hefty legal fees, and the reputation of their organization will go for a toss.
Since financial institutions do not scrutinize the credentials of individual employees before issuing corporate cards, the employer is the one whose credentials matter in this case. Therefore the liability lies on the business owner, the prime cardholder. Business organizations must be mindful before allocating such financial liberty to any employee. To mitigate the risk of any fraudulent activity, companies should emphasize more on strict policies and schemes related to expense management.