What is a Corporate Credit Card and Why is It Required?
Corporate credit cards play a vital role for large corporations to manage their finances better. These provide freedom to their employees to make authorised business expenses and allow them to keep a track on such expenses and manage them better.
Types of corporate credit cards
Corporate credit cards are of two types – individual liability card and corporate liability card â€“
- Individual liability card â€“ In the case of a card like this, an employee is responsible for paying the due credit. Employees can later receive reimbursement from the company by filling up an expense report. However, in this case, the credit card company reviews the credit history of an employee.
- Corporate liability card – Here, a company or an employer is responsible to pay for the outstanding bills. However, companies only pay for the authorised charges and employees have to fill up a regular expense report so the company can match it with card statements of every month. In this case, credit card issuers do not check the credit history of an employee as a company is responsible for bill payment.
Eligibility of a corporate credit card
There are no such uniform eligibility criteria for corporate credit cards. It varies from one credit card provider to another.
However, to apply for this card, companies have to submit the following documents â€“
- Latest audited financial statements.
- Details of company structure.
- Tax information and history.
- Contact information of the company personnel who will perform business on its behalf.
Pros of a corporate credit card
Expense tracking –
Corporate credit cards allow companies to track every expense of their employees. Without a card like this, companies have to rely on employees to inform them about their expenses, and at times there can be discrepancies.
Hence, employees should use these credit cards wisely to avoid facing any backlash from their employers.
Reduce expense fraud –
Employees often submit a false expense report to receive more reimbursement. There are a handful of ways to do these; employees can submit a fraudulent receipt, bills, etc. to scam the company. However, with a corporate credit card, these possibilities can be eliminated easily.
Companies can import the credit card statement from the respective issuer, and it will include the exact figure employees have paid for various expenses. Thus, employees can’t manipulate receipts. Additionally, companies can add clauses like the employee has to pay for any personal liability and others.
Easy to process expenses –
Integrating these credit cards allows companies to create and process an expense report without any major hassle. They can import the credit card statement from the credit card company and get a detailed idea on every expense.
Apart from that, employees have to mention their credit card number, billing code, etc. in their expense reports, which make it easier for companies to process different expense reports.
No more wait for reimbursement –
This type of credit card benefits employees as they don’t have to wait for reimbursement anymore. Usually, employees pay for the expenses with their own money and then fill up an expense report to claim a refund.
However, incorporating this card eliminates this whole process. Employees can pay for any expenses and companies are liable to pay that amount to the credit card issuer.
Cons of a corporate credit card
Usage restriction –
Unlike regular credit cards, these credit cards have pre-set limitations in terms of their usage. Usually, companies only allow their employees to pay for approved business expenses through these cards. If they pay for any personal expense, then as an employee, they are liable to repay their credit card debt.
Availability of credit card benefits –
Credit cards accumulate reward points, and additional benefits with their usage and cardholders can redeem their credit card reward points in their future transactions.
However, in the case of these cards, it is not always the same. Employees may or may not receive such benefits.
Not easy to avail –
To avail a corporate credit card, a company has to fulfil specific criteria. Usually, large corporations with a significant amount of turnover can avail these cards.
Individuals who are planning to avail a credit card can opt for products like the Bajaj Finserv RBL Bank SuperCard, which offer industry-first features like up to 50 days interest-free cash withdrawal from ATMs and emergency personal loan which is interest-free for up to 90 days.
Corporate credit cards are beneficial for large companies, especially when employees require frequent travelling. With the help of a card like this, the finance team can track and manage expenses efficiently. Employees also benefit from it as they don’t have pay from their pocket and wait for reimbursement.