Introduction
Many people think that only large enterprises could benefit from using corporate credit cards. But corporate credit cards are actually tools that businesses of all sizes can take advantage of. Using corporate credit cards for businesses could simplify your finance processes and allow you to turn your attention to other aspects of the business.
Time and money are precious resources. Here are some benefits of corporate credit cards that can help business owners gain them back.
What are corporate credit cards?
As their name suggests, corporate credit cards are used specifically for business expenses. Similar to business bank accounts, what sets them apart from their personal counterparts is that they’re equipped with a series of features designed to make business payments easier to make and control.
Often corporate credit cards will come with a card management system where you can view all your cards along with every transaction made on them. Through this system, you’ll also be able to set card limits, manage merchant categories, review transactions, and integrate your card data with your accounting software.
Why should businesses use corporate credit cards?
- Instant credit limit
It’s no secret that getting business credit can be difficult, especially when they come in the form of large bank loans with a long-term repayment plan. Luckily, you can get an alternative that can be more accessible by using corporate credit cards. While your credit card limit will likely be lower than what you’d gain from a bank loan, your limit will refresh at the end of your billing cycle after you’ve made your repayment.
Once you’ve applied and gotten approved for a corporate credit card, you’ll be able to instantly activate your credit limit and start spending.
- Simplify cash flow
There may be some purchases that you have to make to keep your day-to-day operations going smoothly, but that can be difficult when you don’t have any cash on hand and are awaiting payment. A credit limit to tide you over until your customers settle their invoices can do wonders for your cash flow.
corporate credit cards for businesses allow for some breathing room to ensure that your cash flow doesn’t go into the negatives. Instead of being at the mercy of invoice terms, you can utilize your corporate credit cards and repay your credit at a later date.
- Rewards
Many credit card providers will incentivize you to make payments with your cards by offering reward programs. Rewards can come in multiple forms, from cashback to airline miles to even gift cards. By spending on your corporate credit cards, you can essentially save money for future payments.
While you never want to spend for the sake of spending money, using a corporate credit card for business and making expenses that you would already make with your cards will be beneficial because of these rewards. You’ll end up with quite a lot of cashback and points over time!
- Access to travel and purchase protection
Other than rewards, another perk that you can get from using corporate credit cards for businesses is travel and purchase protection or insurance. If you do a lot of business travel or are planning to make big purchases for operational purposes, you may be worried about things going wrong after you spend a lot of money on them.
With corporate credit cards, you can get an added layer of security to reassure you. Get travel insurance, damage waivers, and other emergency services as an added bonus from some providers.
- Track and monitor spends
A card management system is one of the benefits of corporate credit cards over personal cards. You can link all your corporate credit cards to one dashboard, which you can use to view, track, and control all your card expenses.
Every card you issue your employees will be easy to monitor through a centralized platform. With automatic transaction updates, you can get real-time visibility into your expenses. Some credit card providers will also allow you to block certain merchant categories and set spend limits for better control.
- Access to accounting tools
While it may seem like manual data entry and bookkeeping is manageable at the start of your business, it’ll get more complicated and time-consuming the more expenses you make. The good news is that you can avoid having your time taken up by these administrative work processes by utilizing corporate credit cards.
One of the benefits of corporate credit cards that business owners can enjoy is that they often have built-in integration with accounting software. This means that every transaction you make can automatically be recorded in your ledger for a smoother bookkeeping process.
- Manage employee expenses
Aside from vendor payments and subscriptions, you’ll have other, er day-to-day employee expenses. While their volume might not be necessarily large, having plenty of transactions happening can lead to difficulties in tracking them.
The benefit of using corporate credit cards for businesses is that you won’t have to waste time trying to track and chase every transaction and receipt. You can set individual card limits for each employee, minimise overspending risk, and make sure you know exactly what they are spending.
Things to consider before getting a credit card for your business
- Interest rates
Different corporate credit card providers will offer different interest rates on your credit. Typically, cards with higher interest rates will offer better reward programs, but you’ll also find low-rate cards available for businesses. Some providers may even offer interest-free credit.
You want to weigh the pros and cons of the different interest rates that are available and see which one has the best rate and return. Make sure that the interest rate on your corporate credit card of choice is not more than you can afford.
- Annual fee
Other than credit interest rates, you’ll also have to pay an annual fee for your corporate credit cards. This is typically a flat fee. Similar to interest rates, often you get more benefits with higher annual fees. However, a lower annual fee doesn’t always mean that you won’t be getting benefits and rewards.
Plenty of corporate credit card providers also will waive your annual fee within the first year of joining. You want to get the best deal you can find before you commit to a corporate credit card provider.
- Cashback, travel rewards, and other benefits
While there are other benefits of corporate credit cards like better expense tracking and management, you want to make the most of your reward programs. Identify your business needs and what your largest expenses are to determine which rewards will be the most beneficial for your business.
If you have plenty of subscriptions, cashback and discounts on the platforms that you use will save you a lot of money. Similarly, if your employees often go on business trips, you’ll want to look for better travel rewards and mileage rates.
- Interest-free periods
It’s not just interest rates that you should consider. You’ll also want to take a closer look at what billing cycles and repayment plans are available to you. Some corporate credit card providers will offer interest-free credit under certain circumstances.
If you make your credit repayment within an agreed-upon time period in full, you won’t be charged an interest rate for your credit usage. This is a great middle-ground to improve your cash flow without having to pay extra costs in the form of interest. Make sure you make your repayments in full to take advantage of this!
- Liabilities
It’s important that you check who is going to be liable for your corporate credit cards. While it’s a common understanding that corporate credit cards are under the business name, there are also many providers that offer personal liability corporate credit cards. This means that the cardholder will be responsible for the card spending.
Make sure that you decide what you want and know whether the cardholder or the business will be liable for each card. If you’re issuing a number of cards to many employees, the latter may be better.
Conclusion
Using corporate credit cards for businesses has many benefits that will help considerably in the long run. From easier expense management to credit card rewards and discounts to even higher employee satisfaction, there are plenty of reasons to start using corporate credit cards. You’ll find that you’re saving plenty of time and money when you make the switch.
But before you commit to a corporate credit card provider, you’ll want to be sure that you know what your business needs are and choose the right provider for you. When you find the right fit, you’ll be able to make the most of your cards.
