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Credit Cards !

crispycrispy Trusted RegularSouthamptonRegistered Posts: 456
Hello,
I wonder if anyone would be able to provide me with any feedback / advice from the use of company credit cards. In my current role I act as company accountant for an SME turnover approx £ 7m, Our purchasing dept has recently started to make greater use of a company credit card (employees have their own card) for making smaller stock purchases or covering any potential travel expenses. At first I was for this as would agree it would make the purchase / payment of the smaller value items very straight forward / quick to process. However, it appears in recent months this has gone out of control from an increased use of transactions using amazon and in particular ebay.

What I have is a number of paypal payments showing on the card statement which I cannot match up to anything. I have copies of all issued purchase orders of which the ebay purchases should be included, however I am still finding difficulty in matching the transactions to anything. The buyer in question said they would keep a spreadsheet of transactions (this hasn't happened) and I have reported to the MD the issue but they do not appear to be interested or bothered (maybe due to low value) and shrug me off. In order just to close month end I am having to post items to suspense as I have no idea what they are, and receive no answers from the card holder - I am sure this is not good practice and will be picked up by our external accountants.

All I want is to receive the correct information to do my job properly, produce accurate and meaningful management accounts - there is also the issue that I am unable to reclaim any potential input VAT Tax without any relevant back up paperwork. I get the impression from Purchasing and the MD that I am being 'fussy' and should just get on with it. Can't wait for next months statement and spending all day just trying to figure out what the transactions are....

Apologies for moaning and thank you for any response :)

Comments

  • amurrayamurray Feels At Home Registered, MAAT, AATQB Posts: 302
    Hi there!

    I had a similar instance in a previous company, spending got a little out of hand, although card holders had a small credit limit on their cards, it wasn't being used as intended. Therefore in the end we decided to implement a credit card policy and have each member of staff sign this off. Basically it outlined items and values which they could spend at a time (i.e. what kind of expenditure - office supplies etc, and also had a section that they agreed to obtain a receipt/and or a VAT receipt (should the company they purchase from be VAT registered). I sat with the FD/MD to outline this policy and then ran it past HR to ensure it was compliant.

    For any transactions which I hadn't received receipts for I use to email out the statement/list of transactions to each cardholder and advise we were missing these..... if they could not provide the receipt (given some excuse like the dog ate it or similar), I'd ask if they know what it was for, i.e. stationary, entertaining etc and then I could code to the right nominal/general ledger code, however I would always code to No VAT (to ensure I was not claiming VAT back without a VAT receipt). Any other expenses that could not be classified were then coded to Misc expenses (this not a great approach, as the external accountants always questioned the total value of this account at year end), although the values in isolation were of small nature. I also like to ensure any expenses was classified correctly to report the management information accurately, however the FD was happy with this.

    Our FD/MD were happy with this approach, and to be honest it solved the majority of cases of loosing receipts, most cardholders scanned across or gave these receipts to the finance team before they had a chance to loose them!

    Hope this helps!
    MAAT, AATQB, FIAB, MICB PM.Dip.
    Completed AAT in March 2020
    Currently Studying: CIMA 'Operational Level'
    MarieNoellecrispy
  • crispycrispy Trusted Regular SouthamptonRegistered Posts: 456
    Hi amurray,

    Many thanks for your response (which was excellent). I think it may also come down to the culture of how a company reacts to any internal controls. I have sent out emails to request info on the unidentified items however unfortunately the only answer I seem to receive is 'yes - I will get you those no problem' and then.......nothing ! This attitude is completely different from that of where a friend used to work. In their company the finance dept had more of a dominant role and insisted that all expenses were backed up with receipts - if an expense was not proved out the employee would be queried by management - personal business expenses would also not be reimbursed without complete back-up. Where I work management does not seem really that bothered about the subject, even when I mentioned we are missing out on potential input tax.

    I would try to implement a policy for using credit cards but feel that over time this would simply become ignored. Sadly, the culture at my company is very slack with regards to internal controls - very poor. I wouldn't want to tie the company to too many over the top controls which restrict our business operations however don't think it is much just asking purchasing deptartment what they are buying !
    amurray
  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,432
    I agree, it's difficult to implement good practices if the manager doesn't support you.
    I would classify any unsupported expenses in a separate account - disallowable for tax and VAT. Then it's for the external accountant to pick this up and discuss with the manager. If it's a material amount then maybe they will see sense...
    amurraycrispy
  • crispycrispy Trusted Regular SouthamptonRegistered Posts: 456
    Hi MarieNoelle,
    Many thanks for your response. This is exactly what I am going to do - I am fed up of chasing receipts with no reply or support so will therefore post the unidentified payments to a seperate 'suspense' account. At year end I will provide with a breakdown of these amounts for our external accountants - it will then be between them and our MD to resolve. The amounts to date are not particulary material but under the current culture will undoubtably grow and I believe to be a poor overall attitude to handling the company's assets.

    I am not happy :( Am consideing my current employment status but am worried about my ability in a new position (i think I am over-qualified) and suffer from some kind of anxiety disorder which i feel may put any potential employers off.
  • amurrayamurray Feels At Home Registered, MAAT, AATQB Posts: 302
    edited May 2019
    crispy said:

    Hi amurray,

    Many thanks for your response (which was excellent). I think it may also come down to the culture of how a company reacts to any internal controls. I have sent out emails to request info on the unidentified items however unfortunately the only answer I seem to receive is 'yes - I will get you those no problem' and then.......nothing ! This attitude is completely different from that of where a friend used to work. In their company the finance dept had more of a dominant role and insisted that all expenses were backed up with receipts - if an expense was not proved out the employee would be queried by management - personal business expenses would also not be reimbursed without complete back-up. Where I work management does not seem really that bothered about the subject, even when I mentioned we are missing out on potential input tax.

    I would try to implement a policy for using credit cards but feel that over time this would simply become ignored. Sadly, the culture at my company is very slack with regards to internal controls - very poor. I wouldn't want to tie the company to too many over the top controls which restrict our business operations however don't think it is much just asking purchasing deptartment what they are buying !

    Hi Crispy,
    I agree it certainly comes down to the culture of the company and how policies are viewed and enforced. Management will need to be behind the policy and principles to really enforce this properly, otherwise you'll be wasting your time and it will become more frustrating for you.

    My previous company where we implemented an "expenses policy", HR also tied in a clause about missing receipts could make the employee liable for the expense and therefore it may be deducted from their monthly pay, because the company was also missing out on claiming the Input Tax back. This never happened but I think this really supported the policy and enforcement.

    I think @MarieNoelle's suggestion is a great idea - by creating a separate nominal/suspense account where all transactions are entered with no VAT applicable and then let the external accountant discuss with the management at year end.
    MAAT, AATQB, FIAB, MICB PM.Dip.
    Completed AAT in March 2020
    Currently Studying: CIMA 'Operational Level'
    crispy
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