How Do You Qualify for a Corporate Credit Card?
Every large or growing company has a variety of business expenses. Whether your employees need to fly to another country, book flight tickets, or book accommodation. These are some of the business-related expenses that are not borne directly by the company but through its employees.
Getting them corporate payment cards, also known as corporate payment cards, is an efficient way to keep a track of expenses and make it easy for the employees to avail services they need.
On one hand, the employees aren’t required to use their own credit/debit card during a business trip while on the other hand, the employer can visibly access all the expenses incurred & pay i.e. reimburse the employees. Thereby, a convenient & hassle-free option for both of them.
What Does a Corporate Payment Card Mean?A corporate payment card is a type of card issued by an employer to his/her employees for managing business-related expenses. They are generally available only to larger or established companies, meaning those with at least several million/billion dollars in annual revenue. To avail of a corporate payment card service, a concerned company must submit a federal tax ID and undergo a financial audit to qualify.
Companies issue these corporate credit cards to employees so that they can pay during their business trips and the employer can get evidential statements of spending ie. bills to keep a track of expenses.
How Can Employees Use a Corporate Credit Card?In many ways, these corporate payment cards function a lot like personal credit cards. During a business trip, an employee has a range of expenses to incur such as accommodation, flight tickets, etc. Without a corporate credit card, they are compelled to use their own credit card. Though on a temporary basis as they are going to be reimbursed later, they need to maintain personal funds. And this is where these corporate payment cards come into the scenario.
Here, employees can use these cards to make purchases during their business trips. Various corporate payment cards allow you to earn rewards on your corporate purchases. Your employer will make regular payments on your corporate credit card account, and the history of those expenses will help in your business credit scores.
How Corporate Credit Cards Are Different From Other Business Credit Cards?If you are in the corporate world, you must know if a corporate credit card is right for your business. Corporate payment cards differ from business credit cards generally in two major terms ie. Eligibility & Liability
1. Different Eligibility -Only companies that have annual revenue of over $4 million are eligible to apply for a corporate credit card. Business credit cards are issued to smaller companies with fewer card transactions.
2. Different Liability - Business credit cards need a personal guarantee i.e. both the employer & employee are responsible for non-payment. While some corporate payment cards have joint liability as an option. Depending on the type of card, either the employer or employee is responsible for the payment charges.
Are You Eligible For a Corporate Credit Card?How to know if your company qualifies for a corporate payment card? As mentioned earlier, a corporate credit card is issued to a company that has at least $4 million in revenue per year. This is the basic eligibility for getting a corporate credit card issued. Some other criteria are as follows:
1. There should be at least 15 holders of the corporate payment card account within a company
2. Expected yearly credit transaction should be at least $250,000
3. The company should have a registration as an S corporation or a C corporation.
4. Must have been in the industry for a year or more
5. Must not be a sole proprietorship
By fulfilling these requirements, a company may apply for a corporate payment card service. However, the corporate credit card issuer may also ask for:
1. Federal tax ID
2. Audited financial statements
3. Company details including credit history and credit score
What Companies Should Know About Using Corporate Credit Cards?1. Set Up A Corporate Cardholder Policy For Employees - It includes blocking cards for personal use, establishing rules of usage, and spending limits, and mandate that only the employee has the right to use it.
2. Sign an Agreement - This document should state the company’s expectations for card usage and the penalty rules for card-holding employees.
3. Regular Check- The company should review the credit card charges of each employee monthly.
What Users Should Know About Corporate Credit Cards?1. A corporate payment card should be used as a personal credit card with the utmost care by the employees.
2. The corporate credit card holder must be aware of the spending limits & other rules imposed by the company.
3. Be aware of the fact that your personal credit history might be linked with a corporate payment card depending on the liability.
Why do Businesses Opt For a Corporate Credit Card?Here are a few benefits of a corporate credit card, helps both employers & employees. Take a look:
1. An employer is capable of managing multiple corporate credit card programs with expense management software.
2. Employers get a visible & entire statement of transactions/expenses incurred by the employees.
3. Employers can set an automated reminder to their employees for sorting their card expenses and submitting a report on time.
4. Employers can alter their corporate credit card policies as required.
5. The expense management software automatically detects any duplicate expenses or mismatches. This boosts internal compliance within the company
6. Employees can report their expenses in real-time and get reimbursement
Now you know how significant these corporate credit cards are for both employees and employers. They are an effective way to keep a track of business expenses incurred by the employees and manage business expenses efficiently by the employees without having to spend their own money.