How to manage a charity credit card 15 November 2018 at 11:30PM in Charities 9 replies 2.4K views

Parkhall

Hi

Our small charity will need a credit card to buy routine requirements such as web hosting etc. When we write cheques they must be signed by two trustees. So how can we have similar oversight control of credit card spending ?

Any advice much appreciated.

Savvy_Sue

Parkhall wrote: »

Hi

Our small charity will need a credit card to buy routine requirements such as web hosting etc. When we write cheques they must be signed by two trustees. So how can we have similar oversight control of credit card spending ?

Any advice much appreciated.

You can't have anything as tight as two person authorisation. We ran through the options in this thread.

What you might consider is setting up internal controls: every times someone wants to use their credit card, they complete a short form or take a copy of the order they want to place. Get it signed by whoever's got the authority to do so, THEN the card is used. But it gets quite irksome.

You can almost certainly set single item limits on credit card expenditure.

Web hosting you might be able to settle by direct debit - it depends if the company will send you a paper form (some won't).

Parkhall

Thanks very much for the reply Savvy_Sue. The idea of using an internal form to authorise payments is probably the way to go. I'm sure that thousands of charities must use credit cards so they probably implement a similar method.

Parkhall

Just a quick memo to flag up another method for utilizing a credit card with proper authorization.

If you use a pre-paid credit card (eg. FairFX) it will be possible to load the card with just the amount required to meet a particular payment. Loading the card from the charity bank account can be co-authorized just like any other online payment.

Pre-paid credit cards can be used for almost any transaction for which an ordinary card would work. A FairFX card is just a type of Mastercard.

The only catch is that they charge 1.5% fee for international transactions but UK point of sale transactions are free. FairFX waive the normal business fee of £50 per annum if you are a charity. The card costs £10.

This method dawned on me today as I have used a FairFX card before for personal use. So if your charity requires occasional credit card purchases with full control/authorization this is method should work.

Savvy_Sue

Is there a charge for loading the FairFx card? That's put me off using some prepaid cards.

Parkhall

No charge for loading the card or transferring money between cards.

The fees are here

The Maintenance & Support fee of £50 is waived for charities.

Undervalued

Parkhall wrote: »

Hi

Our small charity will need a credit card to buy routine requirements such as web hosting etc. When we write cheques they must be signed by two trustees. So how can we have similar oversight control of credit card spending ?

Any advice much appreciated.

Which is fine up to a point but what you really need is a system where any expenditure (maybe above petty cash level) is authorised by two trustees. Once a bill arrives there is generally no option but to pay it, so the oversight needs to be earlier in the process.

All two signatories protects you against is one of the trustees being dishonest. Up to a point you still have that if the credit card bill is settled by cheque but not, presumably, if bills are paid by online banking etc.

Parkhall

Online banking can be set up so that two people must independently authorize each BACS payment. So topping up a pre-paid card has the same protection as a co-signed cheque.

Undervalued

Parkhall wrote: »

Online banking can be set up so that two people must independently authorize each BACS payment. So topping up a pre-paid card has the same protection as a co-signed cheque.

Fair enough but, as I said, it only protects you against one or other of the "signatories" being dishonest. In most cases by the time it comes to cheque writing (or making an online payment) the charity has been committed to that expenditure.

Savvy_Sue

Undervalued wrote: »

Fair enough but, as I said, it only protects you against one or other of the "signatories" being dishonest. In most cases by the time it comes to cheque writing (or making an online payment) the charity has been committed to that expenditure.

That's true, but done properly it should also limit the damage of dishonesty.



The trouble is, the checks often aren't carried out properly, either before or after the event ...