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Is Corporate Credit Card a good decision or bad?

By Sthitaprajnya Panigrahi

Almost every major bank across the globe has some sort of corporate credit card offering which acts as a lucrative option for every business person whether to possesses it or not. Possessing a corporate credit card majorly depends on the fact whether the buyer is managing the finances of a business or are an individual employee.

In Business

Offering a number of compensations for businesses to enrich their employees with purchasing power and manage their expenses reporting, corporate credit card has many advantages in business. Opening to credit line for employees and controlling their spending abilities, corporate credit card can offer simplified expense reporting and analysis. It can also reap rewards that can be utilized for employee perquisites and enticements or to minimize the expenses.

Initially, these series of offerings might put the purchase of corporate credit card seem like a simple decision to the employees. However, to enable employees with purchasing power through a corporate card program, businesses should cautiously consider the supervision and authority that comes within the program. Before distributing corporate cards to workforces, businesses should ensure that their disbursement policy is conventional, It is positively necessary to ensure that employees know the context of using the corporate card and the types of expenses that comes within it.

As an Employee

Using corporate credit cards as an employee can enable you with access to additional purchasing power along with various other benefits. Permitting you to separate your personal and business expenses, corporate credit cards abridge the process of expenditure reportage and compensation. Some of the advantages of carrying a corporate credit card as an employee includes reward programs, simplification of expenses along with the division of personal and business expenses.

Using credit card rewards programs can often offer not-so-pleasant rewards than consumer cards specifically designed business travellers. Therefore, sometimes it may make sense to utilize personal credit cards for business expenditures. However, few employers often demand employees to submit expenses and operate corporate credit cards.

Advantages Offered by Corporate Credit Card:

  1. The Liability for card purchases can be categorized into one of three categories which includes corporate liability, joint liability, and individual liability. Unlike personal credit cards, the person who is accountable for expenses on the card can be changed depending on the card agreement and policies.
  2. Most corporate credit card programs bestow rewards for individual cardholders, as an enticement to utilize the card for business purchases. In some cases, it is possible to transfer points earned between the individual corporate rewards account and personal account. The only disadvantage to these reward programs is that there is often an extra annual charge allied with making rewards and some of these rewards can be lost if an employee leaves his/her employer.
  3. While a corporate card can comfort the resistance associated with business expenses, it also checks being an open door to limitless spending. It allows you to accomplish the buying power of employees and cast a boundary on how much an employee can spend on behalf of the business.
  4. Learning trends and classifying outliers is a significant part of ascertaining compliance with your company’s expenditure policy. Most corporate card issuers will deliver tools and reporting which enable the employees to understand and control their spending.
  5. Using corporate credit cards can be cost-effective as it constantly covers employees with travel insurance benefits, majorly associated with premium credit cards. If you have employees who travel for work, availing them with corporate credit cards can not only save money and also ensure peace of mind.

Disadvantages:

One of the major disadvantages associated with corporate credit cards is that they are only available to reputable companies with huge turnover and high annual revenue. Not only the application process is quite lengthy to acquire one, it may include a financial audit and business must endorse a positive credit history to be eligible of getting one.

Conclusion:

Many efficacious yet small business owners often wonder whether it’s time to changeover from a business credit card to a corporate credit card. If your business is thriving in terms of having an efficient team of employees, a dense credit history, and significant annual revenue in the millions, it is preferable to go for a corporate line of credit.

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