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Analysis / Business

Liability For Corporate Cards

I continue to be amazed at the absence of a debate on Individual Liability (IL) versus Corporate Liability (CL) cards used by business. For the benefit of the uninitiated, IL means the employee carries the risk on the company card (even though the card is in the name of the company), CL means the company does.

It typically relates to travel and subsistence where company employees are required to travel on company business. Somewhere in between is the cute middle zone called Joint and Several Liability, which means the card provider goes after the individual first and if no luck can fall back on the company.

Why do we naturally acquiesce and accept the practice of holding our employees responsible for company spending? Why is it OK to have a company to insist its employees pay for the hotel that the company required them to stay at during the business trip? Is that fair? Would we ask our people to go and buy the company stationery on their personal card? I think not! Then why do it for travel?

Don’t we trust our people? Don’t we have technology in place to manage the business processes so that we have automated compliance with business rules? What is worse, why do we by default, let our people choose their own private (reward based) cards rather than an IL company card? This means the individual can claim cash on the company for the expense but the company misses the VAT reclaim in those countries that have goods and services tax. A double whammy!

Then what is the story? What is the logic?

Let the company pick up the tab for company spend and then the company can have full control over compliance with spending. Where people stay, how much they spend, how the accounting is managed.

You know what I now hear? In these difficult credit times, isn’t that the best time to let the employee carry the risk? What arrant nonsense! Please let us get back to a business equilibrium. Managing a company’s expenses is the responsibility of the company. And there are many services delivered over the web to let companies manage this process efficiently.

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Robert Kirby has more than 20 years experience in the expense management and payments industry, and has led business operations from three different continents. Prior to co-founding Spendvision in 2001, Robert held senior executive positions with Globeset, where he was initially based in Austin, Texas as VP responsible for B2B transaction services. Later he moved to Australia to become VP and general manager of the APAC and Japan business unit. Prior to Globeset, Robert held senior management positions at Telstra and led the development and implementation of eCommerce and payments products and services. Robert has held a position on the Board of the Australian Payments System Council – a body charged with advising the Australian Treasurer on the efficiency of the Australian payments system. He is also a member of the Commercial Payments International advisory board.