CL King

Uncovering Hidden Investment Opportunities Since 1972

header photo

Corporate Credit Should Never Be Misused

Any business owner can tell you that it is difficult to get corporate credit up and running. Therefore it is essential that you do your best to keep things on track once you get it all set up. One of those areas you need to give special attention to has to do with your employees. Many of them may need to access corporate credit either occasionally or on a regular basis.

Some companies just don't have good policies in place so employees really misuse the corporate credit by default. Those things that fall into a gray area often get turned in when they aren't eligible. For example they may turn in charges for drinks they had at the bar before a business dinner. This isn't a necessity so you may only want to cover the cost of the dinner and the drinks are their responsibility.


Not everyone should need to have access to corporate credit, and you want to limit it where you can. It is going to be easier to track expenses if you only have a small group of people making them. It will really depend on the type of business that you offer to people though. Sometimes you just can't help but allowing a large number of people to access it.

The big thing though is to ensure all that have access to it don't misuse it. They should only be using it for business related expenses. If their spouse travels for business with them then their cost of airfare and meals needs to come out of their personal budget. You should be asking for verification of what they are doing at the time of a given charge. This way there is a good record of all that information.


Initially it may seem like you are micromanaging in this area, but you don't want to get taken advantage of. There have been reports of employees buying everything from makeup to meals for themselves with corporate credit. They have been known to buy cars and even pay their own mortgage payments. These events are only taking place though where employees know they have a very good chance of getting away with it.

This is a much better scenario than finding out a large amount of money has been frivolously charged to such accounts. If you aren't prepared for it financially it can be devastating for the overall effect it will have on your corporate credit. You also can't expect your employees to just pay such expenses out of their own pocket. Even if you will reimburse them for them later many just can't handle that type of financial burden.


If you are hesitant to implement strict guidelines relating to the use of corporate credit, take some time to read stories online. You may be amazed at some of the things that people have done for their own gain with such access. It only takes a few people out there with such intent to create a huge problem for any type of business.

Of course honest mistakes will occur from time to time. Give the employee the chance to explain what took place. For example they may have given the business credit card number instead of their personal one because they are so accustomed to traveling for business. You will have to review these instances on a case by case basis.


If you want to learn more, consult with the experts at CL King and Associates.
CL King provides investment banking, equity research, sales and trading, and investor services to corporations and institutions. The firm also co-manages bond offerings, IPOs, follow-ons, secondaries, convertibles, and preferred.

If you want to learn more, please visit here:

Go Back