If you run the finance for a nonprofit organization, chances are you have questions about expense management. While there isn't an expense management bible specifically for nonprofits, there is a lot of good advice on the internet- the trick is sorting through the much to find the gems. One common question for smaller groups is whether they should use their personal credit card for expenses and then submit an employee reimbursement claim or use some other mechanism for funding the daily purchases required to run the nonprofit. So what is the best answer? Below is a breakdown of the advantages and disadvantages of using personal credit or a personal credit card alternative.
Advantages of using a personal credit card to fund nonprofit expenses
Points. Everyone loves free stuff right? With personal credit cards, you can rack up the points really quick by expensing business purchases. With those points, you can use them later for perks such as business supplies, cash back, or even travel. Similar to points, frequent flyer miles are often a very good reason to use your personal credit card. With the miles you earn from spending on your nonprofit expenses, you can use the miles to fly to a conference or use them for personal travel (better check to make sure that's acceptable per your organization's guidelines first however).
Advantages of using a personal credit card alternative
If your nonprofit organization has strict policy guidelines regulating perks, gifts, etc, chances are frequent flyer miles or points accumulated through personal credit cards are probably frowned upon. There are however, fairly substantial benefits for using a personal credit card alternative to fund your daily nonprofit expenses. First and foremost, using your personal credit to fund anything other than personal expenses is a risk. Maybe Joe from accounting comes down with the flu and the expense checks are cut a week late… after you just expensed a $5,000 conference trip in Austin. Other benefits for using a personal credit card alternative is that you can really save a lot of time. With solutions built-in for many different industries, using PEX is one of the best ways to manage nonprofit expenses, delegate funds to employees, and make the entire reimbursement cycle smoother.
Lastly, but certainly not least-ly (err..) by using a prepaid debit card as an alternative, you can save on interest fees which come with corporate or company credit cards.