Use of the card: Overview, definition, and example
What is use of the card?
The "use of the card" typically refers to the rules and guidelines surrounding how a company-issued card—such as a credit card, debit card, or purchasing card—can be used by employees or business owners. These cards are often provided by businesses to make it easier for employees to pay for work-related expenses, such as travel, office supplies, or other company-related purchases. The card can be a physical card or a digital card, and the use of the card usually comes with specific guidelines to ensure proper use and prevent misuse.
Why is use of the card important?
The use of the card is important because it helps businesses control spending and ensure that employees are using company funds appropriately. Clear rules around card usage prevent personal expenses from being mixed with business costs and can help track and manage expenditures more efficiently. By setting clear guidelines, businesses can also protect themselves from fraud or misuse, ensuring that the cards are used only for legitimate business purposes.
For employees, understanding the rules about card use is critical to avoid making mistakes that could lead to disciplinary action. For employers, having a well-defined policy helps streamline financial management and maintain accountability.
Understanding use of the card through an example
Let’s say a marketing manager at a company is given a company credit card to use for business expenses, such as client lunches or travel. The company policy states that the card can only be used for business-related purchases, and any personal expenses must be reimbursed.
One day, the manager uses the card to pay for a dinner with a friend, which violates the policy. When the expense is flagged during a review, the manager will be required to reimburse the company for the personal dinner and may face consequences depending on the severity of the violation.
On the other hand, if the manager uses the card to pay for a business dinner with a client, that’s within the guidelines, and the company will cover the expense.
Example of a use of the card clause
Here’s how a use of the card clause might look in a contract or company policy:
“The Employee agrees to use the company-issued card exclusively for business-related expenses, including travel, client meals, and office supplies. Any personal use of the card is strictly prohibited and may result in disciplinary action, including reimbursement of personal charges and potential termination of employment.”
Conclusion
The use of the card is a crucial aspect of managing company finances. By setting clear expectations about when and how a company card can be used, businesses ensure that expenses are controlled, legitimate, and documented properly. For employees, knowing the boundaries around card use helps prevent accidental misuse and ensures compliance with company policies. Clear rules about the use of the card contribute to smoother financial operations and a healthier employer-employee relationship.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.