To keep controls tight, save time and prevent fraud, a well-written policy on credit and purchasing card usage is a must-have. The question is: What exactly should it cover?

Although the finer points will vary depending on your specific company, industry and even the card program you choose, there are a few areas of universal concern. Based on recommendations by the National Association of Purchasing Card Professionals we suggest that at minimum, your policy clearly outline the following:

1. Types of transactions that are/aren’t allowed
2. Spending limits (by transaction type, time period and/or department/project)
3. A list of preferred suppliers (and if any rebates apply, it’s worth highlighting that information)
4. Procedures for card users and approvers. This should include everything from how a card is activated to documentation required for purchases, the approval process and how to handle rejected charges/fraud/lost or stolen cards.

All cardholders should also have a copy of a cardholder agreement — basically a list of their rights and responsibilities. This can be either a separate document, or included in your general card policy.

Getting the word out

Once you have a card policy in place, it’s important to keep it updated. At minimum, it should be reviewed once a year. Whether any changes are made, distribute the “updated” policy to all departments and cardholders. (It’s a good idea to give a copy to administrative assistants too, since they often end up actually submitting the paperwork to Accounting.)

When you distribute the policy, use multiple methods to ensure that no one “overlooks” the news. For example, you could post a copy on your company intranet, and also e-mail an electronic version to relevant departments. Having a few hard copies of the policy on hand is a good idea since some people simply won’t bother with electronic versions.

Bottom line: The more you can keep the policy “top of mind” for cardholders (and approvers) the more likely they are to actually stick to procedure. And that means fewer mistakes, improper charges or headaches for Accounting to deal with.

Tags: A/P, Best practices, Communication, Credit cards, Policy manual, Purchasing cards, Technology