Everything you should know about corporate credit cards

Every business is constantly looking to better its financial stability. A corporate credit card just helps ease up things. If used efficiently, this card can be an invaluable asset for a firm. In simple terms, a corporate credit card helps in smoothening out the financial operations of a business. It is an innovative tool and benefits both, employers and employees.

Just like a regular credit card, it follows a “spend now pay later” policy. What differentiates a corporate credit card from a regular credit card is that it is used specifically for business purposes. Now every business-related transaction can be recorded with just one card.

Imagine not having to worry about everyday expense hassles and happily focusing on other areas of your business. Sounds exciting right? This is exactly what a corporate credit card lets you do. Now, let’s look at some more of its features.

How can a corporate credit card help your business

Corporate credit cards have multiple uses. Once these cards are issued, employees can pay for any business transaction with just a swipe. They also feel secure about having a financial cushion and not worry about using their personal funds for business purposes.

The card is a good motivating factor for on-the-go employees because it gives them access to airport lounges and also rewards points that they can redeem. On the other hand, employers also benefit from this card because they can get discounts on a variety of categories such as hotels and airfares. Therefore, this card has perks for both parties. It brings transparency in transactions and there is always a clear digitized spending record. It also saves time for employees because they don’t have to manually prepare expense reports using spreadsheets.

What are the types of corporate credit cards

Purchase cards and travel and entertainment card are the two main types of corporate credit cards. If your firm has employees who are constantly on-the-go, then a travel and entertainment card will be a good bet. Employers can set spending limits and all employees’ travel needs like transportation, hotel, and airfare can be covered with just this one card. This way, they can constantly be aware of where the card is being swiped and have control over finances from miles away.

If you are looking for a digitized platform to manage your purchases and daily operations, then a purchase card may be just what you need. It will optimize working capital since expenses such as electricity, utilities and telecom can be taken care of with this card. It comes in extremely useful in streamlining the purchase process because a good amount of paperwork needed for purchase orders, invoices, etc. can be eliminated. Moreover, equipment, office supplies, and other materials can also be bought using this card.

Once you have decided which card suits your business the best, the next step is to figure out which type of underwriting the card will have, i.e., individual liability or corporate liability.

An individual liability card is along the same lines as a personal credit card. The difference is that it is exclusively meant for all business-related expenses for which the employees won’t have to use their personal income. Employees will use this card to make all business-related transactions and later submit the statement for reimbursement. As the card’s name states, the employee is personally liable for the repayment of debt. Therefore, this card will motivate employees to spend judiciously and it can help them improve their personal credit score.

A corporate liability card is more fitting if a firm wants to avoid the time lag between the occurrence of transactions and the employers knowing about them. The business will be solely responsible for repaying the debt and it will free the employees from having to submit credit records for reimbursements. The employers will have an absolute grip over the finances and can run the business with utmost transparency.

Things to keep in mind before issuing corporate credit cards

How much ever tempting it may sound to go for a corporate credit card, it is important to understand its’ features in-depth. The biggest upside of a corporate credit card can also be its downside. Since employees are assured that they don’t have to use their personal funds for business purposes, they might tend to go a tad bit overboard. Therefore, it is extremely important for employers to set spending limits.

Employers have the ability to authorize funds for specific expenses. For example, employers can set a budget limit of Rs. 1,00,000 and issue the card to employees. They can configure the card such that the employees will be able to swipe the card only for travel expenses like hotel and flight bookings, restaurants, transportation, and nothing else. Employers will also be able to set daily spending limits. This way, the finances are under control and will be used efficiently. This will also help prevent fraudulent transactions, which can be a concern for many businesses.

How can small businesses make use of a corporate credit card

In general, corporate credit cards were designed for big corporates. However, small businesses can also make use of this card. If the founders of startups and SMEs are just starting out in the industry and are looking for a way to finance their business, they can put a fixed deposit with a bank and obtain a corporate credit card against it. This card will let them build their creditworthiness, which can go a long way. Corporate credit cards are a good financial starting point for small businesses which will allow them to grow.

On the other hand, a corporate credit card can also come in handy for established small businesses that already have a good credit standing. Founders and top executives of startups and SMEs can issue this card to their employees to cover SaaS subscriptions, utilities, travel expenses, and more.

In summary…

There are quite a few options for corporate credit cards to choose from. But ultimately, you have to choose the one that works best for your business. Hopefully, this article has given you interesting insights about corporate credit cards and you are now well equipped to make the right decision!

In order to simplify the lives of founders of startups and SMEs, Zaggle is launching the Founders’ Card. It is basically a corporate credit card designed especially for small business owners and helps ensure the smooth sailing of daily operations. In addition, it comes with a prepaid wallet and a forex wallet which is ideal to take care of travel needs. This card is just what’s needed to enhance the financial stability of startups and SMEs. So, if you think your firm is in need of such a card, don’t forget to check out the Founders’ Card!