Everything You Need to Know About Corporate Credit Card Packages
As a growing business, you need to make sure that all your company expenses are accounted for. If your yearly revenues are at least $4 million, a corporate credit card might be one of your options.
But before you dive into the “crazy world of credit cards”, there are several things you need to know.
Maybe you have a lot of questions, like “How do credit cards work?”, “What corporate credit card is best for my business?”, or “Do I really need one?”
After reading this guide, you will have the answers you need.
Corporate Credit Card Defined
But first, let us define what a corporate credit card is.
Corporate credit cards are issued to a company or organization that earns millions to billions of dollars per year. These cards are primarily used by employees to pay for company-related expenses, including travel stays and flights.
The card usually carries the name of the employee (cardholder) and that of the company/organization.
Smaller companies can also obtain a credit card to be used for the same purpose. It’s called a “business credit card”.
How do Credit Cards Work for Merchants?
Using a corporate credit card is very similar to using a personal credit card. It can be used for any types of purchase.
These cards are usually issued to employees who would normally spend money out of their pockets for business/work purposes. For example, during travel, they can use it to buy plane tickets, book accommodation, pay for food, etc.
While these expenses are reimbursable, employees won’t have to temporarily shell out their money anymore.
Salient Features of Corporate Credit Cards
Qualified companies can choose from several liability options, such as:
- Joint Liability – both the company and the employee are held liable for non-payment of the credit card balances. So in case of default, the credit card provider can file a report before the credit bureaus. The employee’s credit card score will most likely be affected.
- Individual Liability – here, only the cardholder (employee) is responsible for paying the credit card balance. In return, he or she will have to ask for reimbursements from their employers.
- Corporate Liability – only the company is liable for the cardholder’s (employee’s) credit card balance.
Unlike a business credit card which always requires a personal guarantee, a company that has a corporate credit card can choose what type of liability to choose for their employees.
Perks & Benefits
The biggest advantage of securing a corporate credit card is pretty obvious: it helps you monitor your business expenses.
It eliminates the tedious task of collecting receipts and financial reports from your employees. Some corporate credit card issuers offer automated reporting systems where you can easily view and track purchases. These automated reports can be filtered to see the total balance or the cardholders’ individual balances.
Moreover, credit card statements are usually issued to both the employee and the company through the budget officer.
Sounds interesting, right? Well, the advantages of corporate credit cards go beyond this.
Payments made through credit cards can be limited to certain suppliers with an agreement between your company and the card issuer.
Additionally, you can set different limits on the corporate cards of your employees. For example, managers, team leaders, or department heads may require higher limits than the rest of your employees because they travel more often.
You can also control employee spending by incorporating monthly caps, setting limits on frequency of use, or putting restrictions on individual expense.
Most banks offer reward systems for company-holders of corporate credit cards. Every time their employees use their cards for purchases, the company earns points which are convertible to gift cards, merchandise, discounts, freebies, and rebates, among others.
A Few Caveats
Now that you pretty much understand how do credit cards work for corporate accounts, there are a few things you have to be cautious of. Fraud, abuse, and misuse of credit cards are rampant, and those from corporate accounts are no exception.
To protect your business, here are some things you ought to do:
Make clear rules for employees.
Employees who will be issued with corporate credit cards need to be aware of certain things like what they can use it for, how often, and whether or not they have liability for non or delayed payments.
Which Corporate Credit Card Package is Right for Your Business?
Every penny of your business counts.
While there are many credit card packages for corporate accounts, you want to make sure you’re choosing something that meets your needs. Hopefully, it will help lower your costs too.
Among the most popular providers of corporate credit cards are American Express, Capital One, Chase Ink Business, and Wyndham. These banks vary in terms of annual fees, welcome bonuses, and credit rating requirements.
When choosing a corporate credit card package, here are some things to consider:
- Pricing and interests. Credit card issuers are upfront with their pricing. In most cases, the bank will check your personal and business credit scores to compute for your card’s interest rate.
Check other fees as well, such as penalties for late payments, cash advance fees, annual fees, foreign transaction fees, etc.
- Don’t get easily swayed by the perks and benefits. Do check the limitations of the credit card package too. Some corporate credit cards only allow you to use rewards for only a certain period, others charge higher late fees, and so on.
- Choose the package that matches the needs of your business. If you have employees who travel a lot, a card that earns you more booking rewards and the like makes a good option. Additionally, you may need corporate credit cards that have higher limits, depending on your employee expenses.
Check with the credit card issuer if you can set limits or restrictions for your company’s security.
Corporate credit cards are a great way for large businesses to manage costs. But they are not without some drawbacks. With careful considerations of the pricing and interests, limitations, benefits, and other things, you can pick the best credit card package for your business.