Learning how to manage finances efficiently is crucial for the success and growth of any organisation. One powerful avenue that has gained significant importance in this regard is the corporate credit card. Designed specifically for business purposes, corporate credit cards offer a range of benefits that can streamline expense management. Other potential benefits include improved cash flow and enhanced financial control. This article delves into the intricacies of corporate credit cards, exploring their features, benefits, and best practices for utilisation.
What is corporate credit card?
Definition and explanation
A corporate credit card is issued by financial institutions to businesses rather than individuals. These cards are provided to employees for business-related expenses such as travel, office supplies, and client entertainment. Unlike personal credit cards, corporate credit cards are linked to the company’s credit profile and are typically managed by the finance or accounting department.
Differences between corporate credit cards and personal/business credit cards
- Liability: Corporate credit cards usually hold the company liable for the debt, whereas personal and business credit cards can hold the individual or business owner liable.
- Control: Corporate credit cards offer centralised control over spending, with detailed reporting and spending limits set by the company.
- Customisation: Corporate credit cards often come with customisable features to suit the specific needs of the business, such as departmental spending caps and detailed expense tracking.
Key features and characteristics
Corporate credit cards come with several features that make them indispensable for businesses:
- Centralised Billing: All employee expenses are consolidated into a single bill, simplifying payment and accounting processes.
- Spending Controls: Companies can set spending limits, restrict usage to certain categories, and monitor transactions in real time.
- Detailed Reporting: Comprehensive expense reports help in tracking and analysing spending patterns, aiding in better financial planning and budget management.
- Rewards and Incentives: Many corporate credit cards offer rewards programs, cashback, or travel benefits, providing additional value to the company.
Benefits of using corporate credit cards
Streamlined expense management
One of the primary benefits of corporate credit cards is the ability to streamline expense management. By consolidating all business expenses into one account, companies can easily track and manage expenditures. This centralisation simplifies the reconciliation process and reduces the administrative burden on the finance team.
Improved cash flow and purchasing power
Corporate credit cards can significantly improve a company’s cash flow by providing a grace period between the purchase and the payment due date. This allows businesses to manage their liquidity more effectively. Additionally, having a corporate credit card can increase a company’s purchasing power, enabling it to make larger or more frequent purchases without immediate cash outflow.
Enhanced employee convenience and accountability
For employees, corporate credit cards offer the convenience of making business-related purchases without using personal funds. This reduces the need for out-of-pocket expenses and reimbursement processes. Furthermore, with predefined spending limits and detailed transaction records, employees are held accountable for their spending.
Simplified expense tracking
Corporate credit cards come equipped with advanced tracking tools that provide detailed insights into spending patterns. These tools can categorise expenses, generate reports, and integrate with accounting software, making it easier for businesses to monitor and control their finances.
Use Case: Financial control with corporate credit cards
Consider a medium-sized company with multiple departments and frequent business travel. By issuing corporate credit cards to key employees, the company can set spending limits based on department budgets, monitor expenses in real time, and generate detailed reports for each department.
Choosing the best corporate credit cards for your business
Criteria for selecting the best corporate credit cards
When selecting a corporate credit card, businesses should consider the following criteria:
- Interest Rates and Fees: Compare the interest rates, annual fees, and any additional charges associated with the card.
- Rewards and Benefits: Look for cards that offer rewards programs, travel benefits, and other incentives that align with the company’s needs.
- Spending Limits and Controls: Ensure the card provides customisable spending limits and robust control features.
- Integration with Accounting Software: Choose a card that integrates seamlessly with the company’s accounting and expense management systems.
- Customer Support: Opt for a provider that offers excellent customer service and support to address any issues promptly.
Comparison of top corporate credit card options
Several financial institutions offer corporate credit cards with varying features and benefits. Here are a few top options:
- American express corporate card: Known for its extensive rewards program, travel benefits, and robust expense management tools.
- Chase ink business preferred: Offers high rewards on travel and office supplies, along with comprehensive expense tracking features.
- Capital one spark cash for business: Provides unlimited cashback on all purchases and flexible redemption options.
- CitiBusiness® / AAdvantage® Platinum Select® World Mastercard®: Ideal for businesses with frequent travel needs, offering travel rewards and benefits.
How to apply for a corporate credit card
Step-by-step guide on the application process
Applying for a corporate credit card involves several steps:
- Research and Compare: Start by researching various corporate credit card options and comparing their features, fees, and benefits.
- Gather Documentation: Collect necessary documents such as the company’s financial statements, tax identification number, and proof of business registration.
- Complete the Application: Fill out the application form provided by the chosen financial institution, providing accurate and complete information.
- Submit the Application: Submit the completed application along with the required documentation to the financial institution.
- Wait for Approval: The bank will review the application and, if approved, issue the corporate credit cards to the company.
Tips for improving the chances of approval
- Maintain a Strong Credit Profile: Ensure the company’s credit score and financial statements reflect a healthy financial position.
- Provide Accurate Information: Double-check the application for accuracy and completeness before submission.
- Choose the Right Card: Select a card that aligns with the company’s spending patterns and financial needs.
Managing corporate credit card expenses
Best practices for managing and monitoring expenses
Effective management of corporate credit card expenses involves:
- Setting Clear Policies: Establish clear guidelines on the appropriate use of corporate credit cards, including spending limits and prohibited purchases.
- Regular Monitoring: Use the card’s expense tracking tools to monitor transactions regularly and identify any irregularities.
- Employee Training: Educate employees on the proper use of corporate credit cards and the importance of adhering to company policies.
Implementing effective policies and controls
To prevent misuse and ensure financial control, companies should implement the following policies:
- Spending Limits: Set spending limits for each cardholder based on their role and department budget.
- Expense Reporting: Require employees to submit expense reports with receipts for all transactions.
- Audit and Review: Conduct regular audits of corporate credit card transactions to ensure compliance with company policies.
Invest in corporate credit cards to gain financial benefits
Corporate credit cards are a valuable tool for businesses looking to streamline expense management, improve cash flow, and enhance financial control. By understanding the features, benefits, and best practices associated with corporate credit cards, companies can make informed decisions that align with their financial goals. Choosing the right corporate credit card and implementing effective management policies can lead to significant cost savings and operational efficiencies.
FAQs
Which bank gives corporate credit cards?
Some of the most well-known issuers of corporate credit cards are American express, Chase, Capital one, and Citibank. Depending on the requirements of a business, one bank may be better suited.
Is it hard to get a corporate credit card?
Generally, getting a corporate credit card can be tedious, depending on the business’s credit rating and readiness to pay back the money. However, the possibility of approval can be increased if proper financial records management and a well-checked credit score are implemented.
Can I get a credit card on a company name?
Yes, businesses are able to apply for and get credit cards in their name. These are business credit cards that are extended to corporations, usually administered by the company’s finance section.
Which employees get a corporate card?
To be more precise, corporate credit cards are offered to staff who tend to make many business-related expenditures, including managing directors, department heads, key employees, sales personnel, and others. Generally, the employees who are issued with a corporate card depend on the company’s policies as well as the kind of work the employees do at the company.