The Difference between Company Money and Personal Money

When recent press reports alluded to the possibility that Ad King Sir Martin Sorrel might have used company money to pay for personal expenses which resulted in his having to leave the company, it brought to top-of-mind a practice that is perhaps also alive in India especially amongst Indian promoters.

What could motivate owners/promoters to bill all their expenditure to the company account?

Largely it is the feeling that the company is doing well because of them. They toil over it, stretch unimaginable hours to make the company profitable, and perhaps then justify that whatever expenditure they have must be picked up by the company.

If the CEO is also an investor, then the feeling of oneness between company money and personal money might be even greater. The feeling of “I put my hard earned money into this company to take it to where it is today and now it is time for the company I created to pay me back.” Or this is the feeling that I have often seen expressed in private by Indian promoters. If you have worked with an Indian promoter-driven company you might have experienced this as well.

What causes this Oneness of Company Money with Personal Money?

I think it is largely because there is a merging of company ego and self with personal ego and self. I am the company. The company is me. Over time if that feeling is being allowed to percolate in the consciousness, the individual will constantly try to even bill personal expenditure as company expenditure.

Many CEOs have been caught or exposed in the past in India as well. There have been reported stories of fudging personal travel, family travel to the company account. In my first job as head of a profit I found that my predecessor who had a long-term illness and was sent on medical leave had been constantly billing all travel which was for seeing his doctors located in another state as company expenditure.

When I refused to sign his vouchers on personal travel he was infuriated. That was the first time I realized how quickly executives at the top of the ladder can fall into this trap.

If you have ever worked for a promoter-driven company, you might have already been witness to several incidents where the CEO/owner/Promoter dug into this pocket to pull out his corporate credit card to pay for personal expenses.

Typically this exemplifies a kind of loose ethics, a lack of sense of propriety and lack of morals. Often coupled with excessive greed.

Experts feel that plain cheating is on the rise over the years in every field or profession. All one can hope is that there are only a few bad apples in the barrel!

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Prabhakar Mundkur has spent 40 years in advertising and worked in India, Africa and Asia. He is currently Chief Mentor with HGS Interactive a part of HGS in the Hinduja Group. He is on the advisory board of Sol 's Arc (solsarc.org ) an NGO dedicated to special education for intellectually challenged children. He is also a member of Whiteboard ( whiteboardindia.org ) which supports senior management of NGOs in financial management, PR, Communication and HR through pro bono expertise.

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