Home Finance Corporate Credit Cards: The Ultimate Beginner’s Guide

Corporate Credit Cards: The Ultimate Beginner’s Guide

Corporate Credit Cards
Corporate Credit Cards

Credit cards that are issued to employees of established companies that let them charge business expenses are simply known as corporate cards. Such cards allow employees the freedom to manage hotel stays, plane tickets, or even commute from work to home without having to use their own cash or cards. Having a corporate card makes it easier for the employees and their supervisors to manage, budget, and access any expenses made while offering additional perks such as frequent flier miles, among other exciting rewards. 

So, how does a corporate card work? Corporate cards, as the name suggests, are reserved for corporations. While most other businesses can get a small-business credit card, the approval of these cards is based on the company’s financial health, not the business owner’s personal finances. Issuers might typically need the company’s recent financial statements, tax information, credit reports, and the contact information of the owner or president.

Understanding the different types of corporate credit cards:

  • The first type is an individual liability card, through which the responsibility for paying the credit card charges falls on the employee. Later, reimbursement is provided by their employer. This is also known as a personal liability card.
  • The second type of corporate card is the corporate liability card. The employer is solely responsible for settling the bill at the end of every month. However, any unauthorized payment or personal expenses can make the employee liable and put them under the hook. Since the company is responsible, the issuing credit card company won’t typically check the employee’s credit score. The employee will, in turn, be responsible for filing expense reports regularly, 
  • The third and most common is the card agreement known as having a “business guarantee”. Such agreements make the company responsible for any charges made to the card rather than any particular individual. Small businesses may require a ‘personal guarantee’ from the owner of the company.

How can a corporate credit card benefit your business:

  • Better manage your expenses:

A key advantage of owning a separate credit card for employee expenses is that it makes managing expenses and any additional payments easier for both the employer and the employee. Rather than waiting for approval for every single expense, it is much easier to look over the whole report at the end of the month or the end of every week. 

  • Take control of your corporate card:

Additionally, by being able to place spending limits on the corporate card, an employer can control the spending per transaction, spending categories, etc. Not only that, but it also controls where the card can be used, limiting purchases to certain specific locations and merchants. Another great benefit of an expense manager/corporate card is that it streamlines the whole process rather than questioning your employees. Get a quick view of it all under the useful reports provided by such credit cards. 

  • Extra and exciting rewards:

As an employee, getting rewarded for any work feels extremely gratifying. So, receiving extra perks and benefits from their corporate credit card simply to make payments is definitely an additional bonus. Being able to earn and redeem rewards or coupons such as an airline’s frequent flyer program, access to lounges, or being part of a hotel’s frequent guest program can largely improve employee morale and satisfaction. With such reward programs, corporate cards also offer emergency travel assistant services, emergency card replacements, quick cash disbursements, and car rental damage waivers.

  • Quick customer service:

An important need, especially when you are in a hurry or need to rush. When in doubt, simply call the number on the back of the card for instant assistance. Whether you are confused about the fine print, terms and conditions, or need to understand how the benefits work, have your doubts answered and your queries laid to rest.

Why are company policies for corporate credit cards important? 

Usually, big corporate companies that issue corporate cards for their employees have a written policy regarding their proper use. It is important for the employees to familiarize themselves with these rules and avoid any accounting errors. Stick to the company policy and avoid making an unapproved business expense or personal payment, even if it is not on purpose. 

Finishing up:

Owning a corporate card could be the next best decision you make for your business. Benefitting both the employer and employee, a corporate card offers services, rewards, and so much more. With timely alerts and reports, avail a corporate card to streamline your business expenses and management. If credit cards don’t fit your bill, corporate cards are available as debit cards as well!