Tuesday 24 January 2017

Issuing Company Credit Cards to Employees Is A VERY BAD IDEA!!

Posted by at 9:00 AM in

If you do – take them back and lock them in the company vault where they belong! Replace company credit cards with a Purchase Order System and put a stop to excessive and uncontrolled spending. Here is what happens when you issue credit cards:

  • You don’t get receipts
  • Too much material is purchased
  • Material is purchased at prices above what you are paid
  • Excess material ends up in the job site dumpster or in someone’s garage
  • Unauthorized purchases are made for soda, sandwiches, tools, and more

How does a PO System work? Select a primary and secondary PO administrator. Provide each with a PO Register to electronically record basic purchase information. Number the first register 1000 – 1999 and the second 2000 – 2999 and so on. Require all transactions with vendors be paid over the phone by one of the authorizing PO administrators. Have vendors fax or email receipts directly to the office after each purchase. Once the transaction is complete and recorded on the PO register the transaction is immediately job costed. At the end of the month reconcile every bank and vendor statement with the PO Register. Any transactions not recorded should be identified with transaction information provided by the vendor, then job costed. Look for persons and patterns of violation and correct immediately. You have just achieved 2 major outcomes:

  • You have gone a long way forward in stopping excessive spending
  • You have solid verifiable records indicating per job profits and job management performance

For per job profits less than 40% you can take a closer look at why people or procedures are underperforming and take immediate steps to improve performance going forward. These positive outcomes begin with taking credit cards away from employees. If you don’t use a PO System, you don’t job cost, or if you give credit cards to employees you should mend your ways – TODAY!

Reference: 9-Month Coaching Plan – The Business Transformer – Double, Even Triple Your Business in 18 – 24 Months http://growmyrestorationbusiness.com/successes/