Why More Credit Cards Can Improve Your Nonprofit's Financial Management

As a Nonprofit CFO, I’ve encountered a common misconception: fewer credit cards mean better financial control. Surprisingly, the opposite is true. Issuing more credit cards to your team can enhance your organization’s financial management. Here's why.

The Problem with Fewer Cards

When only a few people - such as the CEO, COO, and Director of Finance - hold credit cards, it leads to a chaotic expense reporting process. These cardholders often share their cards with staff, leading to:

• Charges they don’t recognize.

• Difficulty tracking and reconciling expenses.

• Delays in reporting monthly incurred credit card expenses.

  
  

This lack of clarity leads to inefficiencies, making it harder to maintain accurate financial records.

The Solution: More Cards, Better Financial Control

To address this issue, implement a policy where any staff member who uses a credit card at least five or six times a year receives their own card. Here’s how this approach benefits your nonprofit:

1. Individual Responsibility: 

   • Each cardholder is 100% responsible for all of the charges on their credit card.

   • This means they are more likely to track and report their spending accurately and on time.

   • Reduces the likelihood of missing receipts or unrecognized expenses.

2. Streamlined Reporting: 

   • When online purchases are made using a credit card, email receipts are sent to the email address of the person using the card.

   • Utilize expense Management tools like Expensify, BILL, or Ramp. Many of these tools can match receipts with corresponding charges using AI, simplifying the expense reporting process.

3. Reduced Administrative Burden: 

   • When multiple people use the same card, it often requires executive assistants to manage the high volume of credit card transactions, identify who made the charge, and collect the supporting documentation.

   • Issuing more cards significantly reduces the workload, leading to cost savings and more efficient operations.

4. Better Financial Oversight: 

   • With more individual cards, your finance team gains clearer insights into spending patterns.

   • Expense tracking becomes more transparent, helping nonprofits allocate resources more effectively.

Implementing a Smarter Credit Card Policy

Issuing more credit cards might seem counterintuitive to having good financial controls, but this approach can lead to better financial control and efficiency. By making each team member accountable for their expenses, nonprofits can streamline their financial processes and reduce administrative burdens. To ensure success, set clear guidelines for credit card usage, spending limits, and reporting expectations. Equip your finance team with expense management software to automate and streamline the process. By distributing more credit cards strategically, nonprofit leaders can improve financial control, reduce administrative headaches, and enhance overall accountability.

Looking to optimize your nonprofit’s financial processes? Consider an accounting technology best practice assessment to find the best tools for your organization

Richard Hetherington, CPA, MBA

Bio

Richard joined the Kiwi Partners team in 1999 and has over twenty-six years of experience in legal, financial, and nonprofit organizations. Richard has provided CFO services to 60+ nonprofits clients, including providing financial oversight and support to Kiwi Partners and the client’s accounting staff.