Corporate Credit Card Fiasco
Many corporations provide their employees with corporate credit cards to pay for business expenses. If everything works as planned, the company credit card simplifies expense reporting and doesn’t force employees to float the company an interest free loan while waiting for reimbursement.
But what happens when something goes wrong? What if the company doesn’t pay the bill?
My fiancée recently took a sales job with a Fortune 500 packaged food company. Soon after joining the company, her company handed her an American Express Corporate charge card to pay for company travel expenses. What they didn’t do: pay the bill.
Due to more than a month of unresolvable “technical problems,” her employer has not granted her access to the company’s expense reporting system. Access to this expensing system is needed to submit expense reports and to instruct the company pay the corporate credit card bill. The bill for her corporate card is now overdue.
No problem, right? It’s a company credit card, which makes it the corporation’s problem, not hers. Not so fast.
Most corporate credit cards — especially cards issued to employees of larger companies — are “individual” corporate cards. These cards are individual obligations, not corporate obligations. Corporations structure the cards this way to ensure that every charge is justified and to discourage employees from abusing company credit cards. Understandably, they don’t want to be stuck with the bill if you buy a new car with your card! But by the same token, you don’t want to be stuck with the bill if your employer doesn’t pay for its expenses.
Trouble arises when your employer (a) is incompetent (as in my fiancée’s case) or (b) runs out of money. If the company doesn’t pay the bill, the debt becomes your problem. The unpaid bill ruins your credit report, and ultimately, the collection agencies will come after you.
What can you do?
Not a whole lot.
If your company gives you a credit card, read the card’s terms and conditions carefully. If the card contract makes you legally obligated to pay the charges, don’t accept the card. Tell your employer that you refuse to be held legally responsible for its debts.
Of course, paying for business expenses yourself and waiting to be reimbursed still leaves you on the hook. (At least the company’s problems won’t ruin your credit.)
The bottom line is that there are only two “safe” solutions: (1) ask your employer to advance/prepay for company expenses and trips or (2) insist on a ‘true’ corporate card for which you are not legally responsible.
If you’re working at a place and think that they’ll stiff you on expenses, perhaps you should find work somewhere else.