Corporate credit cards play a vital role in most travel agency businesses.
We certainly have moved past the days of going to a store and paying in cash, or dusting off the cheque book! But they do need to be managed carefully to avoid problems.
However highly effective corporate cards are, here are five tips on what to do with corporate cards in your travel agency.
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Minimise The Risk Of Fraud
Firstly, there is always a risk of fraud with corporate cards. Staff can make fraudulent claims for private expenses under the guise of ‘business’ purchases. Also, the card numbers can be stolen and used by others to purchase items on a semi-regular basis, coming underneath your radar.
Another common issue is that most people have a tendency to overspend from time to time, and this is no different in a business. Having a corporate card allows that expenditure to occur much faster and more impulsively on ‘emergency’ needs than if the card wasn’t available.
For example, say you are a travel agent in Ashwood, and you are out Christmas shopping in the city, when you see an opportunity to buy that new computer for your agency. The computer may have been reduced from $2000 to $1800 so you snap it up on your corporate card. However, if your corporate card cannot be repaid and you need to pay interest, commonly 20% or higher on cards, you will end up paying more than the purchase than if you were patient and purchased it you’re your travel agency could afford it.
Have A Usage Policy
For all of the pitfalls, corporate cards can be a real benefit as they allow for ease of purchasing by executives for necessary expenditure.
To protect the downside, you need a clear policy on when agency staff can use the card, and what they can use it for
Manage Credit Limits
Also, a credit limit needs to be placed on the card, often at a much reduced level to what the bank may allow – to protect everyone in the travel agency. To protect from theft, ensure pin numbers are destroyed, and the cards are only given to trusted agency staff.
Avoid Using Private Cards
Private cards can also be a source of frustration for management if staff is complacent with submitting statements for reimbursement and the company has to fork out unexpected cash from months of accumulated debt, putting strains on cash flows and throwing out monthly budget to actual comparisons.
Instead, having a corporate credit card allows management 24/7 access to the card transactions online, enabling transparency of what is being spent on a real time basis and enhancing fiscal control.
But that is not where the benefits stop. Staff using their own credit cards absorbs personal credit limits, and can cause anxiety and frustration when they cannot make necessary personal purchases. So reducing that anxiety is another string in the bow to keep happy staff, which leads to enhanced firm stability and productivity.
Hillyer Riches can lead you in the right direction with a full range of travel agency accounting services. We have the business advisors to help you with these issues and other problems that your business will face now and into the future. We can achieve this because of our breadth of experience with helping solve these problems for other travel agencies just like you.