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Corporate Card Program - Liability Structure and Accounting Issues

Chad Mohn's Profile

We are looking at changing the liability structure of our corporate T&E card program.

As it stands right now, cardholders must process their expenses in Concur, their manager approves the expense, and then a weekly payment file is sent for expenses that have been approved in the prior 5 days. When the payment is actually made, our accounting team has the coding for all included expenses b/c they've completed everything in Concur.

We are running into issues because cardholders / managers are not processing their expenses in time and are incurring late fees and having their cards shut down. Cardholders are technically personally responsible for their own late fees, they don't pay those in time, and then it's a never ending cycle of delinquency.

We are looking at moving to what's called a company bill / company pay liability structure. In this scenario, ALL of the T&E expenses from the prior cycle will be automatically paid each month, regardless of whether or not cardholders and their managers have properly approved the transactions in Concur.

While this structure would reduce late fees and keep all cards current, we are worried that it might cause our accounting team to have to spend a lot more time managing the program. Here are our big worry points:

1) Let's say our overall statement balance is $100k. When that $100k goes out the door 20 days after the statement end date and you only have 75k of the underlying expenses fully processed through Concur, what do you do with the remaining 25k? Do you just apply the 25k to a generic T&E account and then adjust as necessary when the Concur coding comes through? That seems like it would be a pain to manage if there are hundreds of uncoded transactions each month. (As a reminder, under our current system we have coding for everything included in the payment b/c transactions are only included in the payment run when everything is completed in Concur.) Are there files we can download out of Concur to help with the process? In my mind, I'm thinking of setting up some type of reserve for uncoded transactions. So if we pay $100k and the Concur download only has $75k worth of coding, we put $25k in the reserve. If the next month we pay $100k again and the Concur download has $115k worth of coding (so $15k uncoded from prior month is now included), we would then have $10k in the reserve. I'm confused just talking about it....

2) Under our current structure, expenses marked as personal are not included in the payment run. It is then the responsibility of the cardholder to separately pay the bank for their own personal expenses. Under the new structure, the company would pay the personal expenses (b/c everything is automatically paid) and then the cardholder will have to pay us for their personal expenses. What's the best way to deal with that? Do you set up each individual cardholder as a customer in your system and show them as owing you money?

I understand the best plan is to effectively enforce the policies you already have on your books. Expensing must be done in Concur after X # of days and personal charges on the corporate card are 100% disallowed and can lead to termination. We do have these policies in place and if everybody abided by them, we wouldn't have any issues under any type of card liability structure.

In reality, setting the policy is a completely different beast than actually enforcing the policy. It's easy to say you are going to terminate an employee that fails to process items in Concur in a timely fashion, but much harder to actually get the approval to do it when there's a real name and face attached to the decision.

Any thoughts? Thanks a lot!!

Answers

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Hi Chad,

So, your company has a screwed up process even when the employee is financially liable for the credit card balance, and someone thinks that relieving the employees from that onus is going to magically make them submit expenses faster?
People who think that will work probably believe in the Easter Bunny too :)

Why should accounting "manage the program" when it's abused? Each card holder's manager should be oversee their staff's compliance.

Who are the worst offenders? Your C-suite execs? Field service staff? Create a fact based list of them with amounts missing, get your CFO on board with a change that must be supported by his peers.

I see every good reason to prohibit personal expenses on a company issued card. But, I see no point in threatening dismissal. That's overkill. However, maybe you look at automatic payroll deduction for any employee who cannot tell the difference between their personal and company credit cards.

Years back we had a guy whose expenses were always late, and he traveled a lot. Ultimately it led to the uncovering of a $250k fraud he had committed, so we sold his house and kept the profit. His wife was not happy. Sloppy record keeping is often done to mask other things....and you are a public company.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

This is one reason (and Emerson and I always disagree) why I don't do corporate cards. If an individual is spending their money and owe the credit card company personally, then they can get the expense report to me on time and I'll process it the same.

We use Expensify, everyone is told to submit (or the program will automatically do it) weekly. They are processed usually Sunday or Monday with ACH right to their checking account.

Max Total time an can be outstanding if the rules are followed - 2 weeks (including ACH delays).

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

We managed one at my last company. We had 25 cards and rarely had issues. The policy was simple: they had to sign an agreement up front that any lost, stolen, missing or personal charges would be payroll deducted. If there was an issue it was documented, payroll deducted and if it turned into a repetitive situation the card would be revoked. I never had to revoke a card.

You create a policy that holds the person responsible and then enforce it.

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

What a concept, Christie: policy enforcement (and the policy is not unfair either). :)

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