Corporate credit cards are used by companies so that their employees can charge authentic business expenses such as travel, office purchases, meetings and meals without depending on their own funds. Usually, the name of the company and the name of the employee who is designated as the cardholder is mentioned on the corporate card.
Clearly speaking, companies that generate an annual revenue of millions to billions of dollars usually issue a corporate credit card. However, a business credit card, can be issued by a company of any size, including a small business. Both business and corporate credit cards provide different benefits and can be used for various purposes.
In what ways does a corporate credit card differ from other business credit cards?
One major difference between a business card and a corporate card is who will be paying the debt. Companies can select from different liability options for corporate cards.
- Corporate liability – Under this case, the company is the only one responsible for paying the debt. The issuer of the card sends the bill directly to its firm.
- Joint liability – In this case, the employee and the company together pay back the debt. In addition, an employee can be held liable for paying the debt on the card used by them.
- Individual liability – the employee is directly responsible for the debt of a corporate card in this scenario. The bill of the card is sent directly to the employee’s place. However, the employee might later ask the company for reimbursement.
How does a business qualify for availing a corporate credit card?
Apart from the annual revenue of the organization, the requirements for a corporate card include –
- Minimum 15 users of the corporate account working in the company.
- Capability to pay the projected credit card charges of a year or more, as it is usually a big amount
- Detailed information about your companies, structure and services.
- Resend audited financial statements and tax information of your company.
Moreover, any company applying for a corporate card must have its own business, credit score and business credit report.
Benefits of using a corporate credit card
One of the major advantages offered by corporate credit cards is the ability to manage expenses more efficiently. For instance, a company gets to impose limits on the spending that can be made by a cardholder. Moreover, the company can even control the payments made by the card and limit purchases to only restricted Merchants or countries.
A corporate card delivers financial relief for employees. It eliminates the need for an employee to pay for expenses such as flights and hotels and wait for them to get reimbursed later. Moreover, a corporate card enables an employee to ignore the tedious task of saving receipts and submitting what them for reimbursement.
Corporate credit cards also offer an advent of benefits. Some of them include benefits such as lost luggage support, cash advances, replacement of your stolen, lost, or damaged card within a single business day, insurance coverage for losses caused due to theft and emergency assistance services such as emergency medical transportation.
What firms must know about using corporate credit cards?
The financial department of every company must keep a keen eye on corporate credit card spending. A few more steps that should be taken by a company to ensure that the corporate cards are being used properly include –
- A corporate cardholder policy – every organization must establish a clear and transparent cardholder policy for its employees. It might even include policies such as banning cards if used for personal expenses, setting spending limits and strictly prohibiting other employees from using the corporate credit cards of their colleagues.
- Signing an agreement – every organization must make it compulsory for the employers using a corporate credit card to sign the agreement, which briefly explains the company’s expectations for the usage of the card and how an employee can be penalized for violating the rules.
- Monitoring card statements – The finance department must review every cardholder’s credit card statement on time to track and manage the business’s budget.
To issue a Singapore secured credit card or other corporate cards to the employees is not a big issue. But the responsibilities that come along are something to be considered carefully. Duties of a business firm after issuing credit card to employees include reimbursements, tracking the spending made by each employee, creating a budget limit and asking the employees to strictly adhere to the guidelines for using the corporate credit cards.