While closing business deals or engaging with clients, taking them out on lunches or dinners could set a favourable tone for you. But, employees don’t need to bear the costs of these business endeavours. Instead, companies can offer authorised employees a corporate credit card for business-related expenses.
You can use corporate credit cards to complete transactions via online and offline payment modes. It includes purchases through a PoS in brick-and-mortar. This way, the payments are recorded on the company credit statement without mixing up the owner or employee funds.
Difference Between Business & Corporate Credit Cards
Now, you might have heard of business credit cards before. While many companies and websites use these names interchangeably, that’s not the case. As credit cards serve different purposes – though they might have certain similarities.
1. Business Credit Cards
Used by entrepreneurs or their nominated employees, it allows the user to pay for business expenses like purchasing pieces of equipment or other payments. To avail this credit card, entrepreneurs must adhere to credit checks and provide proof of business ownership. However, this credit verification is only for the business owner, making them liable for all the debt.
Regardless of who used the card, repayment will fall on the business owner, not the authorised employee.
2. Corporate Credit Cards
Issued by banks to corporates, it allows companies to create a hassle-free reimbursement process for their employees. It ensures that employees avoid incurring out-of-pocket expenses for business-related expenses. However, some issuers may require a certain number of employees to use the corporate credit card.
Unlike business credit cards, the authorised employee will be held responsible for any unjustified expenses on the corporate credit card. Additionally, the authorised employees are subject to credit checks.
Using Corporate Credit Cards for Your Business
This way, companies can boost employee morale and elevate financial stressors. However, avoid solely focusing on its advantages to prevent falling prey to some drawbacks. It includes the following scenarios,
● Smaller companies may struggle to maintain these accounts
● Cardholder fees can add up quickly
● Employees can’t earn their reward points
● Tedious application processes for corporate credit cards
Once past these matters, companies and their employees can take advantage of corporate credit cards. They offer a host of features that benefit both the parties involved, like offering rewards and benefits, tracking business transactions, etc. Its thorough records allow companies to monitor all transactions made, preventing misuse.
To further understand the multiple uses of corporate credit cards for business, check out the following benefits.
Separate Record of Business Expenses
By availing the features of corporate credit cards, business owners can set a firm boundary between personal and business-related expenses. It cuts down a considerable amount of time in vetting statements and the complexity of tax reporting or tracking annual expenditures. Furthermore, it prevents audits caused by heavy usage of personal credit for business ventures.
Did you know? Some cards offer services of online tools that track your charges categorically! They keep track of year-long invoices and bills in an offline Excel sheet.
Cashbacks & Reward Points
Through these cards, employers and their employees can reap exciting rewards, in addition to the free credit card and universal payment modes. Unlike personal cards, these offer a specifically tailor-made to suit corporates. Certain cards offer benefits like cashback or attractive bonuses on signing up.
Improved Cash Flow
With most of their finances tied to the company, acquiring additional liquidity may pose a challenge. These cards can mitigate the problem with their rotation credit extension, which allows you to make large purchases. So, when your business encounters a tight financial period, easily wade through these problems with corporate credit cards.
Identify Fraudulent Transactions
Most corporate credit cards offer protection against fraudulent activity identified through suspicious credit activity. In such cases, credit companies provide coverage for these transactions, and the cardholder only needs to pay a small sum.
Monitor Employee Credit Behaviour
If your employees frequently travel for work, purchase supplies or avail corporate credit for other business expenses, it’s crucial to track these transactions. A corporate credit card allows you to monitor the amount of money spent and record the expenses categorically. Additionally, you can set a max cap off for individual cardholders to control their spending capabilities.
So, despite their similarities in allowing users to set limits on individual cards, corporate credit cards offer more control. Its many in-built features provide access to analytical tools for accounting and expense tracking, which significantly improve expense management processes.
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