Create the Right Culture to Manage Risk and Costs

  • September 10, 2017

Great products and talented employees aren’t the only ingredients you need to fuel sustainable growth at your company. Building a culture of responsible spending from the start also helps to ensure you have the funds available to scale the business.

A well-managed commercial card program can help you develop that culture. Adopting cards, along with the following five good habits, can rein in expenses, lower your risk of employees spending money inappropriately and demonstrate operational maturity to investors.

"Adopting cards ... demonstrates operational maturity to investors."  

 Create the Right Culture to Manage Risk and Costs

1. Draft and distribute a policy that outlines acceptable expenses

Giving your employees guidelines that spell out what’s considered a reasonable expense is an essential first step, whether for purchasing or travel and entertainment. Be as specific as you can regarding types of allowable expenses and maximum spending levels.

Develop guidelines up front – don’t wait until a problem with rogue spending forces the issue. Ensure that top leadership – your founder and CEO – supports the policy and makes it clear that everyone, including senior management, is expected to comply.

2. Issue cards ― with good controls in place

Mandating that employees pay with corporate cards whenever possible can actually give you more control over spending when you take advantage of your ability to set spending parameters based on individuals’ job duties. Office assistants might be able to use their cards at only a certain category of merchant, while you might set spending limits on other accounts.

Also, draft a brief, formal agreement for employee cardholders to sign that outlines how they should and should not use company-issued credit cards. This document should also include their obligations and consequences in cases of unauthorized use.

3. Mine the wealth of spending data

One big payoff of employees using corporate cards is an abundance of detailed data. Make the most of it by proactively – and frequently – reviewing how company funds are actually being used. Build reports that help you identify outliers, such as unusual merchants or expense categories, or spending at odd times or on weekends.

Reviewing reports by expense category also allows you to quickly see where budgets might be exceeded. It’s also good practice to randomly audit a few cardholder accounts each month, just to ensure that guidelines are being followed.

4. Insist on receipts

Require employees to submit documentation that supports an expense claim, such as a receipt or proof of delivery. Some companies choose not to require receipts for expenses under a certain threshold, such as $25. To prevent abuse via undocumented cash spending, you might require that corporate cards be used for minor expenses – these days, even incidental purchases can be put on plastic almost everywhere. Mandating use of the corporate card in general also helps ensure that a merchant credit against a claimed expense, such as a refund for returned merchandise, goes back to the company.

5. Require management review and approval

No one’s expense reports should be processed without first being reviewed and approved by their manager. That process allows for a little flexibility when rules are bent for good reason. However, be sure to note out-of-policy spending when it occurs in case a trend develops that needs to be addressed. It’s also best practice for even the founder or CEO of the company to have their expenses reviewed by the appropriate colleague on the management team. Doing so helps create a culture of accountability.

Putting these five good habits in place can feel challenging in an entrepreneurial culture that often celebrates breaking rules, not making them. But company leaders who are bold enough to adopt solid policies around spending know that in the long run, they are protecting employees and the ability of the business to execute on its vision.

" a culture of responsible spending."

Please reach out to me to talk about how to build a culture of responsible spending. If you’re looking for a card provider that will help you set up a program with customized controls, please consider SVB’s Commercial Cards offering.


This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. You should obtain relevant and specific professional advice before making any investment or other decision. Silicon Valley Bank is not responsible for any cost, claim or loss associated with your use of this material.