What is a corporate card program?

Definition

A corporate card program is the set of company-issued cards employees use to charge approved business spend instead of using their own cash. It is the card setup and the rules around it, and later statements and expenses sit on other pages.

Where it shows up

Balance Sheet: Related to the card payable until the statement is paid.

P&L: Related to the charges once they are coded.

Cash flow: Related to cash leaving when the card bill is paid.

See also: Credit Card Payable · Spend Policy · Expense Report

When you look at the Balance Sheet, open card charges sit as a credit card payable until the statement is paid. The program itself is not an account; the unpaid statement is.

The P&L moves when those charges are coded to expense accounts. Gas, software, or travel hits the period of the charge, not the day the card bill is paid, if you keep the books on accrual.

On the Statement of Cash Flows, cash leaves when you pay the card company. That cash out is later than the charge, which is why the payable exists in between.

A shop with many cards will see one payable for the program, or one per card, depending on how the issuer bills. Either way, the program is how employees are allowed to charge, not the payable itself.

How it works

The company applies for cards in its own name. Each cardholder is an employee who is allowed to charge certain kinds of spend, often with a dollar cap per swipe or per month.

The employee charges a merchant. The issuer pays the merchant, and the company now owes the issuer, which is the opposite of an employee paying out of pocket and waiting to be paid back.

Charges land on a statement. Someone codes each line to an expense account, matches it to a receipt or invoice, and flags anything that does not belong.

A bank feed or a card feed can import those lines into the books. The feed does not replace the program; it only lists the charges the program already allowed.

Until the statement is paid, the unpaid total is a payable. Paying the issuer, often in a check run or by ACH, clears that payable and is the cash event.

A bank reconciliation of the operating account will show the payment to the issuer, not each gas swipe. The card statement is the support for the individual charges.

The program also decides who gets a card and who does not. Drivers may get a fuel card, while office staff may get a card for supplies, and some people may still file out-of-pocket costs on a paper form.

Lost cards, personal charges, and missing receipts are part of running the program. Those exceptions are reviewed against the same rules that said the card could be issued in the first place.

A purchase order is still the right document for a large planned buy. The card is for smaller, repeated spend where waiting for a vendor bill would slow the work down.

Example

A florist gives drivers a company card for gas instead of collecting paper receipts later. Each fill-up hits the card, shows on the monthly statement, and is coded to delivery expense when the lines are reviewed.

There is no journal for the program itself. The later statement creates the payable, the coded lines create the expenses, and the payment to the card issuer is the cash out, all of which belong on other pages.

The driver does not wait for a personal repayment. The shop pays the issuer, and the receipts stay with the statement so each swipe can be checked.

Common mix-ups

A corporate card program is not an expense report. The report is for costs the employee already paid personally, and the card program is for charges made on company plastic from the start.

A corporate card program is not the employee's own card. A personal card used for work still needs a repayment, while a company card means the issuer is owed by the shop, not by the employee.

A corporate card program is not the payable on the statement. The program is how cards are issued and used, and the payable is the unpaid balance that sits until the issuer is paid.

Related terms

• Credit Card Payable: The balance owed on company credit cards at period end.
• Spend Policy: The written rules for what employees may buy and how it must be approved.
• Expense Report: An employee's submitted record of business expenses to be reimbursed.
• Purchase Approval Limit: The dollar threshold at which a purchase needs a higher level of sign-off.
• Internal Controls: The procedures that keep the books accurate and assets protected.
• Account Reconciliation: Proving that a ledger balance agrees to independent support.
• Software Subscription Expense: Recurring fees for the software tools the business runs on.
• Travel And Entertainment Expense: Costs for employee travel, meals, and client entertainment.