The Christmas season is now upon us! December means many things to many people. For some, it’s a chance to spend time with family and friends, wind down and take it easy. For others, it’s a time to get some serious work done, with an (almost) empty office and less emails/calls than usual making for increased productivity! I for one am the ‘time with family and friends’ kind of guy, while our development team prefer to work over Christmas… when it’s quiet… and no one is bothering them for small bug fixes and enhancements here and there.
This holiday season brings me to discuss the tidings of pain this period can represent in the world of corporate credit cards. I have worked with organisations that, despite the strictest of corporate card policies (and adherence to policy by employees throughout the year), experienced spikes in policy breach during December. It’s important to understand why this can occur, and take steps to avoid any unfortunately not-so-festive situations!
As with policy breaches, there are two main types of exception to consider throughout the year
Trivial policy exception
When I say ‘trivial policy exception’, I’m talking scenarios that are not hugely costly or malicious. Examples may include.
- An employee spending a little more on their cab ride home from the Christmas party than expected, as they are heading to another party instead of going straight home.
- A couple of extra drinks bought at the local bar with the team on Christmas Eve.
- Dinner with clients or suppliers, slightly in excess of the usual ‘per head’ entertainment allowance.
No matter what Christmas means to you, you can’t deny that December represents a time where more ‘fun’ activities occur across the business. There are Christmas parties (several, if you work for a large company), more taxis than usual, gift hampers, Christmas cards and a couple of extra long lunches to assist with the process of ‘winding down’.
With most employees having more fun both inside and outside of the office during December, it’s not difficult to see why the occasional ‘out of policy’ expense may occur. ‘Slight breaches of policy’ carry different weight in different organisations, with a business of 20 cards probably carrying a little less than a business with 20,000 cards out in the field.
If you are an organisation that wants to identify less considerable breaches of policy – we at Expense8 can help. We have built business intelligence reports for other organisations to determine slightly abnormal taxi, meal/entertainment costs and much more.
Significant Policy Exception
When I say ‘significant policy exception’, I’m talking serious lack of common sense. Though your employees probably can’t recite the organisation’s corporate card policy, I bet they have a pretty good idea of what is, and is not, allowed. Examples of ‘significant policy exception’ transactions include.
- An employee who bought his son’s brand new pearl export drum kit (Christmas present) on a corporate card.
- An employee was so drunk in the cab coming home from the Christmas party, the cab driver actually believed him when he said “wait here” as he dropped the employee to a pub. The cab was still waiting two hours later when the employee exited the pub. Why did the cab driver allow the employee to exit the cab without paying? The employee gave him a blank eTICKET.
I have picked those two above examples intentionally. Example number one isn’t as ridiculous as you may think, though buying your kid a drum kit isn’t the smartest idea I have seen or heard. You see, most corporate finance teams return to the office (and really get back on top of things) in mid-January. With this in mind, a corporate credit card could very well be used for the purpose of purchasing percussion instruments, with the debt repaid in the first week of January. Finance will see the charge; however will also see that it has been repaid. No harm no foul? I will cover that conundrum in another post early 2016 so await this space!
Though the statistical probability of little Johnny’s drums being paid on his dad’s corporate credit card is low, it’s better to avoid any sticky situations before they occur. How? It’s simple…
Starting with a focus on policy, it’s worth noting that every organisation falls into one of two brackets
- “December is no time for leniency, the usual policy still stands!”
- “Fair enough, it’s a spirited time for giving, and flexibility”.
If your business leans more to the side of increased festive flexibility, the absolute worst thing you can do is communicate to your employees that there will be ‘some flexibility to the corporate card policy this December’. Explain this to your employees and risk 200 percussion instruments paid, in full, on your business’s corporate credit cards. It’s important to be more concise. Build a ‘December corporate card policy’. Specifically identify the areas of your usual policy that will be flexible, and to what end.
Just a reminder, your corporate card policy should seek to be:
- Clear on the consequences for policy exceptions. You wouldn’t believe the number of unfair dismissal claims I have seen and heard of, due to policies not being clear enough on repercussions.
- Pragmatic with the consequences for corporate credit card exceptions. Promising to fire employees who buy a drum kit for his or her child makes a lot of sense – it’s a relatively large policy breach. Firing employees for spending up to 20 dollars more on a cab is opening the gates for a bad situation. Are you willing to fire important people in your business over $20?
Whether your organisation has designed special set of ‘December’ corporate credit card policies or not, align your employees’ expectations. Send each employee an email to remind them of business’s policy expectations. It’ll be much harder for employees to breach policy during this period when they’re reminded of the policy in early December! For some additional light reading, click here to receive more insight into managing your expense policy.
I have always said, people respect what is expected of them, and what is measured. Communicating your organisation’s corporate card policy in December ensures employees know what is expected. Follow up on December transactions in January ensures what is expected is measured! Ensure December transactions are reviewed and appropriate action is taken where policy exceptions have occurred. For additional information in preventing policy breach, click here to download our free guide ‘3 ways to Beat Travel & Expense Fraud’ now!