How is a card account managed in the books?
Published
The card account is the ledger account carrying the company card's movements. A debit card is movement on the bank account itself; a credit card is a separate liability account - each purchase raises its credit balance, and settling its statement closes it.
The two rules
1. Record by transaction, not by statement. A card purchase is recorded on its date with its document (expense + input VAT where applicable / card account). Waiting for the monthly statement means a month of costs absent from your books and input VAT deferred for no reason.
2. Reconcile the card statement like the bank. Every statement line meets a recorded transaction with its document - and a line with no counterpart is an immediate question (a forgotten subscription? a fraudulent charge?).
The personal-card dilemma
A business cost paid on an owner's or employee's personal card: record the expense with its document, crediting the owner's current account or due to employee - then settle. Acceptable as an exception, toxic as a system: it scatters documents and leaves input VAT hostage to personal receipts. The structural fix is a company card with a limit for whoever needs one.
Frequently asked questions
Monthly subscriptions auto-renewing on the card?
Each gets its monthly entry with its document, plus a quarterly inventory of what renews - the card is the most fertile ground for dead subscriptions nobody uses.
The card's annual fee and commissions?
Bank charges, dated as they hit the statement - appearing in the reconciliation like any fee.