Your Corporate Card Is Watching You

Increasingly, companies use corporate cards not only to win business and save money, but also to keep tabs on employees

by Tatyana Gershkovich

For modern business travelers, it's as valuable a tool as your laptop or cell phone. It can help you win clients and close deals. You take it everywhere you go but you can't always use it. And if you use it the wrong way, it could get you fired—or worse. What is it? It's the corporate card sitting in your wallet, and it's helping your company keep tabs on you.

The corporate card began as a way to ensure that employees could pay for what they needed—whether last-minute airfare to Chicago or a steak dinner for 12 clients—to win business. Corporate cards, in theory, work just like any credit card, except that the company picks up the tab. Every month the issuer would send out a statement and the executive—or more often his assistant—would submit his expenses.

Usually in the form of illegible and half-crumpled receipts stapled onto paper that the poor folks in the accounting department would have to decipher. As one can imagine, the opportunities for padding were considerable. Who's to know if that dinner for two was for clients or your girlfriend? And the difficulty of separating the legitimate expenses from the non was such that it was often easier to just write the check.

An Orwellian Twist

But today, thanks to new reporting software, businesses can tighten up their expenses and stop the wastage by both more closely monitoring employee spending and reducing the costs of processing the payments. It is progress with an Orwellian twist, however. Big Brother might not know what you're thinking, but he sure knows how you spend your time—and the company's money.

Corporate cards allow companies access to detailed information on employee spending. Travel managers can now use Web-based tools to view itemized purchases of everything from airline tickets to snacks from the hotel minibar. This information helps companies negotiate discounts and "preferred vendor" deals with the hotels, airlines, and car rental services that employees use most often. The Boston business research firm Aberdeen Group found that companies save 1.3% to 3% of their total travel spending by negotiating contracts with preferred vendors, and the cost of processing an expense report is $26 less. "Travel is often thought of as a cost of doing business," said Andrew Bartolini, a commercial card analyst for Aberdeen. "But today's business climate demands that strict attention is paid to the largest controllable expense within the average company."

"Cash is good for gangsters, but these days it's not the preferred method for paying for anything," said Frank Dombroski, managing director of commercial card solutions at JPMorgan Chase (JPM). "From the company standpoint, it's about information management. Travel cards allow a single point of access to all of their transactional data, by vendor, by city, and by type."

Corporate Cards Produce Savings

JPMorgan Chase is the largest issuer of all Visa (V) and MasterCard commercial cards (excluding prepaid and debit cards, where Bank of America (BAC) leads). It is the fourth-largest issuer of corporate cards for travel and entertainment expenses (T&E), behind Bank of America, Citigroup (C), and U.S. Bank, the retail division of U.S. Bancorp (USB), according to data compiled by The Nilson Report, a leading trade publication.

A typical Standard & Poor's 500-stock index company saves more than $2 million annually by using corporate travel cards, according to a study from RPMG Research. Automotive parts manufacturer Tenneco (TEN), for example, spends more than $20 million annually on business travel.