Why Employee Use of Personal Cards is a Gamble

If your organization still allows employees to use their personal cards for business expenses and then get reimbursed, it is worth another look. Have you considered the risks lately? Early last year, I wrote about a couple ways in which fraud might occur with this approach. Namely, the employee could benefit financially by submitting the same expense more than once or by cancelling a business trip, but still pocketing the reimbursement for a reservation (e.g., airfare, conference registration). Now I am adding another type of fraud to the list. Keep reading to see if your organization is aware of the following risk.

The Receipt Risk

When an employee seeks reimbursement by submitting a receipt that the supplier provided electronically, the employee can change the dollar amount. It doesn’t matter if the receipt is an email (no attachment), such as what Uber provides, or if the receipt is an emailed PDF attachment, such as what a hotel sends. Both can be edited; I verified this firsthand.

When I edited a PDF from a hotel, a pop-up message alerted me that the file was read-only and had to be saved as a new file. Just one easy, extra step…

The Answer

While receipt tampering can happen regardless of the card used—personal card or company card—use of company cards (Commercial Cards) with corporate liability/corporate pay offer controls. Since there are no reimbursements to employees, there is no motivation for an employee to change a dollar amount on a receipt. Accounts payable uses the card issuer’s central bill to initiate payment for all cardholders’ transactions.

If the program has an individual liability/pay arrangement (as some Corporate Travel Card programs do), your organization still has the ability to independently view and verify actual transaction amounts through the card issuer’s technology. It would be possible to catch receipt tampering prior to reimbursing the employee. However, this is a mostly manual exercise that could quickly consume significant time.

The bottom line is, to prevent employee fraud, it is critical to have transaction visibility and to eliminate employee expense reimbursements to the extent possible.

Related Resource

The other fraud risks that I mentioned in the introduction above are described within the 2017 blog post, Why Mandate Card Use for T&E. It also includes another drawback of not having a Commercial Card program for business travel.

Is your organization willing to gamble (and lose) by allowing employees to use their own cards and get reimbursed?

Is your organization willing to gamble (and lose) by allowing employees to use their own cards and get reimbursed?



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About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With 20 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

Three program success factors for Canadian company.

If asked about the top three things that drive Commercial Card program success, what would you say? The collective answers from industry professionals would likely be diverse, which is a good thing. The more insights we garner from others, the stronger we can make our card programs. During the first half of 2015, I caught up with Linda Dyck, CPCP, manager, corporate accounting, Canadian Blood Services, to hear more about what has made their programs successful and what might be in their future. She specified technology, supportive management and card diversification, as described below.

Technology Instrumental to Growth

When Linda joined Canadian Blood Services 11 years ago, she inherited what she called a “poor program” primarily due to a lack of technology and too many manual processes. She recalled few reporting options and reconciliation that “was a mess.” By her second year, this began to change after they completed a request for proposal (RFP) process that resulted in a new provider and more online tools. The online tools, providing easy access to transactions, also initiated an attitude change as management loosened their conservative approach toward card issuance.

A few years later, receipt scanning was another victory. They only keep paper records approximately six months, whereas, in the past, they had the expense of storing paper for seven years.

Supportive Management Keeps Program on Track

Overall, Canadian Blood Services sees the value of Commercial Cards, so Linda has never had an issue obtaining executive management support. She shared they are smart enough to know that cards decrease the number of invoices processed by AP and also reduce the number of full-time equivalents (FTEs) needed.

Managers take their reviewer/approver role seriously, which Linda views as a key reason that internal fraud has not been an issue. They know what their employees are buying and why. She likened manager review of transactions to their sign off on time sheets for payroll purposes; both responsibilities are equally important.

Program success involves getting key components in sync.

Program success involves getting key components in sync.

Card Diversification Resolves Pain Points

In addition to Purchasing Cards, Canadian Blood Services makes use of traditional Ghost Cards. For example, purchases of office supplies by their various sites are tied to Ghost Cards, eliminating what used to generate approximately 1,000 invoices per year for AP to manually process. They also utilize Visa Payables Automation (VPA) with around 30 suppliers—a program that is steadily expanding and further reducing their use of paper checks.

Looking ahead, Linda is intrigued by an upcoming type of prepaid card with enhanced controls from Payabillity. She would be able to keep unfunded cards on hand until she needs to fund and distribute them. They could be used for things like honorariums and petty cash replenishment, which today involve cumbersome processes.

Based on my discussion with Linda, I can easily see that her success is driven by an ongoing pursuit of improvement. She does not cease learning and evaluating how what she learns can benefit her organization. Excellent approach! 


To continue expanding your education, see also four tips from another industry professional and check out the growing content from Recharged Education.   


About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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Felony charges and fraud-fighting tactics.

Since writing in February about Purchasing Card misuse by the Minneapolis Public Schools, I have seen two similar articles about other public school districts. There is a mix of questionable business purchases via P-Card and blatant personal purchases. However, the two stories are quite different, as described below. One involves felony charges and the other discloses a unique policy for missing receipts.

1. Felony Charges for Ex-Principal

As reported by the Star Tribune, a former principal for a suburban Twin Cities high school has been charged with three felony counts of theft by swindle, stemming from inappropriate P-Card use spanning more than a year. Purchases include flowers for his father’s funeral, gift cards and electronics. In addition, he purchased iPads for which “the location of the purchased equipment is unknown.” Released information includes copies of receipts, invoices and card statements. It appears to me that no one was monitoring his purchasing activity.

Be vigilant about finding the policy violators and invoking the related consequences. 

Be vigilant about finding the policy violators and invoking the related consequences. 

The lessons to take from this story are: 

  • Monitor all cardholders.
  • Mandate documentation (e.g., itemized receipts).
  • Ensure purchases comply with policies.
  • Swiftly address fraud, misuse and abuse.

I cannot understand why any organization would be lax about these fundamental controls. This story is not about the problems with P-Cards, even though this is the message that some readers might receive. Rather, it is a story about the ignorance and/or laziness of the school district. To top the matter off, this man resigned at the end of last year, but the district had not taken any disciplinary action against him prior to that.   

2. District Takes Hard Stance

Saint Paul Public Schools (SPPS) is trying to avoid the hot water Minneapolis was in. While they, too, have had inappropriate P-Card purchases, SPPS has cracked down. 

Missing Receipts

Like other organizations, SPPS requires itemized receipts for every purchase, but there is no “missing receipt” form for cardholders to use as a backup. They suspend the card and instruct cardholders to write a personal check for purchases lacking the required documentation. And, yes, they have enforced this. One director-level employee who said he did not know about the receipt policy repaid the district $130 for missing travel-related receipts.

It is unclear how SPPS employees are trained prior to card issuance. However, by requiring employees to sign an internal card agreement to confirm their knowledge of policies, an “I didn’t know” claim does not hold.

Questionable Business Purchases

SPPS also investigates questionable purchases (e.g., expensive yoga pants for a gymnastics team and more than $800 for dozens of potted poinsettias). They ask cardholders for justification and the business purpose, and their policy directs them to be as frugal as possible. I appreciate the intent of such policy language, but, unless there are specifics to define frugal, everyone can interpret differently. Certainly, for public sector organizations, training for cardholders and managers becomes even more critical. In the private sector, an organization might be more lenient in allowing departments to decide how to spend their budgets.

Monitoring activity and consistent policy enforcement set the right tone. Employees know they are watched.


About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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