Are you managing a business? For most, it's no small feat since you'll juggle several financial tasks. And in most cases, getting a corporate card may have crossed your mind at some point.
If you're planning on getting a corporate card soon, it requires careful thought since you have various considerations. When managing a large-scale business, a corporate card may be worth considering. Once you have uncertainties about registering your business for a corporate card program, there are several things to keep in mind.
A Close Look At A Corporate Card
A corporate card works in the same way as an average credit card. You can use one for purchases you need to pay off on your next billing while offering rewards as you accumulate points from purchases. An advantage of corporate cards is that they have helpful tools that allow businesses to track their spending closely.
Generally, corporate card providers are more likely to target large-scale companies. In such circumstances, it may not be suitable for small businesses or startups, especially a sole proprietorship. Nowadays, however, some corporate card providers cater to small businesses.
Normally, larger small businesses are suitable candidates for applying for a corporate card program, especially those capable of reaching up to several million dollars in yearly revenue. After opening an account, most will require a company to pay the balance in full every billing cycle and manage the spending. However, your company will also gain rewards, including travel perks and statement credits.
Financial institutions such as banks are the ones who issue corporate cards to companies. One of the best aspects of these cards is allowing companies to monitor and regulate employee spending along with robust financial toolsets.
Once you apply for a corporate card program, you can hand out individual cards to your employees. You can utilize the cards for any purchase, along with rewards. Most corporate cards also provide companies with the capability to monitor expenses. It makes the feature valuable in detecting potential fraud or unnecessary spending and taking timely action.
Depending on the corporate card provider you choose, it generally allows several employees in an organization to carry out purchases charged to the company. There are several ways to configure a corporate card to protect against liability.
In corporate liability, an organization or company will be in charge of paying the expenses. Generally, the employees have to file a detailed report on their expenses every month so the company can cross-check the charges upon the availability of the monthly card statement. Still, employees aren't obliged to pay the bill upfront. The scheme is typically the standard for most corporate card programs nowadays.
What Are The Advantages Of Corporate Cards?
Corporate cards boast both advantages and drawbacks you should be familiar with. Depending on your business, it's crucial to determine if the benefits outweigh the drawbacks. In most cases, it'll depend on the financial structuring of your business, particularly on the expenses and limitations on spending.
Generally, corporate cards offer streamlined communication, expense management, and easy-to-track transactions. In any company, it takes time for employees to ask for permission for various expenses. When you have a corporate card, it only requires setting spending limits and authorized vendors. Additionally, it allows easier monitoring of expenses and all transactions, so you'll always have an overview of the financial aspect. All authorized cardholders can file their expenses, which greatly saves you the hassle of checking the reports. It makes it manageable to determine the usual expenses and provides you with an insight into the spending habits of your employees.
What Are The Drawbacks Of Corporate Cards?
Although most businesses are switching to corporate cards due to the benefits they provide in streamlining operations, they still have drawbacks you should be familiar with. Sadly, it's likely to lead to overspending or fraudulent transactions if not routinely monitored.
In some companies, they find it challenging to maintain the right balance in configuring the expenditure. And when unable to control it can put a company at risk of overspending, but being too strict can hamper the benefits of having corporate cards in the first place.
Another main drawback of corporate cards is the cost. Generally, most can be too much for small businesses or startups. With this in mind, getting one should be an important consideration, whether it's something your business can handle.
Some corporate card providers might have requirements such as having a minimum number of cardholders. If you currently don't require several cardholders, consider checking out other options without this requirement or postpone applying for one.
Final Thoughts
A corporate card can bring about several benefits to any company. Once you decide to apply for one, it's crucial to consider whether it's suitable for your specific needs or if your business is capable of maintaining it. The type of business you're running and its size may play a role in making you a suitable candidate or not. If you want to prioritize your company's interests, consider taking the time to thoroughly research whether a corporate card will work best for your organization.
