This is the ideal scenario for small business owners. Your company has experienced year-over-year growth, your business is profitable and revenues are increasing quarterly. This is like the growth that most small business owners dream of.
Once you start to see your company transition from a small startup to an established company, it’s time to think about the transition of your financial tools. This may mean switching from a Business Credit Card To your corporate credit card – But before you begin the long corporate credit card application process, it’s worth asking yourself whether corporate cards are really the right choice for your business.
Let’s take a closer look at how corporate cards work, how to manage company cards, and how small and medium-sized businesses can determine whether they are ready to move from business credit cards to corporate credit cards.
What is a corporate credit card?
A corporate credit card is a type of card issued to a company. This means that the business entity, not the business owner, is legally liable for all fees posted on the card. For this reason, corporate cards are usually issued only to large companies with a track record of success and established success. Business Credit History. If your business is an LLC, S-CORP, or C-CORP, and if you have millions of business credit scores and revenues, your company may qualify for a corporate credit card.
Corporate credit cards can be used to receive cash rebates and Frequent Flyer Miles. However, the biggest advantage of a company’s credit card is that individual employees can issue their own cards to pay job-specific business expenses. Whether paying for plane tickets or renting office space, having a corporate card will make business expenses more efficient for large companies.
Corporate credit card vs small and medium-sized business credit card
Corporate credit cards and small business credit cards It’s not the same. Corporate cards are designed for businesses with multiple employees and millions of revenue, while business credit cards are designed to meet the needs of small business owners, including freelancers and side hustles. Knowing which options are best for your business can help you apply for the right card. Having the right credit line is a great way to help your business grow.
Which options are best for you?
If you run a side hustle, freelance business, or if you have a small business with revenues of less than $1 million a year, you probably need a business credit card. Business credit cards have the ability to earn business expenses compensation and Build a business credit score. If you have employees who need access to your business line, you can make them Certified Users For your business credit card.
Business credit card is also required Personal guaranteewhich means you are personally responsible for fees made on your account (including fees for authorized users). If your business doesn’t bring enough money to repay your business credit card bill, expect to pay from your pocket.
However, if SMEs are legally classified as a company, earning millions of people, and have multiple employees who need access to a company’s credit account, it may be time to consider a company’s credit card. Corporate cards do not require personal guarantees, so it is best to make sure your business has a solid credit history before applying it.
How do corporate credit cards work?
In many ways, corporate credit cards are very similar Personal credit card Or a small credit card. You can purchase for your business using your corporate credit card for your business, and many corporate cards allow your business Earn rewards At the time of purchase. Your business must make regular payments with your corporate credit card account, and your corporate card usage and payment history will be considered to you Business Credit Score.
Types of corporate credit cards
There are many different types of credit cards in a company, but the main difference is the person responsible for paying the bill, namely the employee or employer.
Individual responsibility cards
With an individual liability card, employees are responsible for paying the card’s balance directly. In general, employees can submit expenses reports to the company for a refund. The publisher is executed Soft Credit Inquiries for Employee Creditdoes not adversely affect employees Credit score.
Unlike being an authorized user with a SME card, having a corporate card in your name should not affect your personal credit, regardless of how your company ultimately processes your account. However, if the primary card holder fails to process the account responsibly, the employee can affect the personal credits.
Corporate responsibility card
With the use of a corporate liability card, the bill is paid by the company and it is the business’s responsibility to monitor fraudulent transactions by employees. Companies typically use expense reports to monitor spending. Employee credits are not checked before issuing the card, so the responsibility rests entirely with the company. Although employee personal credits are not affected, abuse of spending privileges can lead to negative consequences from the company.
Details: How to use your employer’s company’s credit card
Card Program
Corporate cards do not necessarily have the same functions as standard credit cards. They can be limited to the required business expenses per category. Below are some of the different card programs businesses can use to meet their needs.
- All-in-One Cards: These types of cards are similar to standard credit cards and cover all types of purchases.
- Purchase Cards: These cards are usually used for procurement and require daily expenses such as office supplies and equipment.
- Travel and Entertainment Cards: These cards are meant to organize your business travel and entertainment needs.
- Virtual Cards: Companies can generate single-purpose cards to automate recurring expenses and manage other accounts that are paid.
- Single Category Cards: These cards can be used to spend in certain categories, such as meals and fuel purchases.
- Payroll Cards: You can pay your salary and other compensation using a reloadable debit card, giving employees instant access to funds.
Benefits of corporate credit cards
Corporate credit cards can offer many benefits for both employees and businesses. Companies can easily organize and control Manage costs. Employees can avoid time-consuming expense reports, take advantage of the benefits the cards offer, and in some cases, they can maintain the rewards they earn on the cards. Corporate credit cards also come with several features that small business credit cards cannot offer. These include:
- Issuing credit cards for employees who do not assume personal liability for fees
- Access to accounting software and services designed to help your business manage your company’s credit line
- General business expenses and retailer discounts
- Streamlined payment processing
- Access to accounting software and services to optimize expense management and manage your company’s credit lines
- Better organisation for tax records
- Savings and spending efficiency
- Eliminate the need for cost reporting and refunds
- Better surveillance and fraud surveillance
- Easy to separate business and personal expenses
- Possibility of maintaining employee rewards
- Employees can take advantage of travel perks and elite status
How do I qualify for a corporate credit card?
To find out if your business qualifies for a corporate credit card, contact the corporate credit card issuer directly. Unlike consumer credit cards, corporate credit cards often involve a lengthy application process. You may also need to provide documentation that proves that your business’s income and expenses are high enough to retrieve a company’s credit line. Please prepare your application as it may contain a financial audit.
Can I get a company credit card? Bad trust? Technically, yes. Corporate credit cards do not require personal guarantees, which means that individuals will have a lower credit score and you will be able to qualify for a corporate credit card. On the other hand, if your business has poor credit or only developed a limited credit history, you may have a hard time pulling out a company’s credit line.
Tips for managing your corporate credit card
Corporate credit cards come with more perks, but there are also more factors to manage. To get started with your corporate credit card wisely, you need to:
Establish a policy for all cardholders
When opening a corporate credit card, be prepared to talk to employees about your company’s new credit card policy and how to use your company’s card. Make sure your employees understand that they only need to make business purchases with a card and the importance of keeping up with payments and tracking receipts.
If you are an employee using a corporate credit card on behalf of your employer, the best way to manage your company card is to promptly submit all receipts, expense reports and other necessary documents in accordance with the guidelines set by your employer. If you have any questions about how to use your corporate credit card, please talk to your manager or contact your accounting or finance team member.
Monitor and manage costs
Managing funds for large companies requires work, but most corporate credit cards come with a high-level cost reporting tool to make the task a little easier. Whether you want to track expenses by category, monitor employee spending or reassign budgets in real time, the best way to manage your company’s credit cards is to make the most of these tools.
And if your business is big enough to have a corporate credit line, it is probably big enough to have an accountant (or accounting department) who can help you understand where your business’ money is headed, whether you stay within your budget, what you need to do to keep your company’s credit line in good condition.
How do corporate cards affect your credit score?
Using a corporate credit card affects your business credit score in the same way using your personal card and affects your personal score. If you don’t make a minimum payment or are late, your business credit score will be hit.
Corporate credit cards, on the other hand, can also help you continue your business credit history. Credit Bureau – Experian, Equifax and Dan & Brad Street for Business Credit Score – When considering your score, please consider payments on time and company age. This will help keep your company’s credit cards open and improve your business credit score.
What is the best corporate credit card?
Best Corporate Credit Card It provides the flexibility, compensation and costs needed for your business. You and your employees can also pay for the necessary materials and consumables while being compensated. Typically, these types of cards require you to pay in full monthly balance. This will not cause any interest, but can cause cash flow issues for more fledgling companies. Here are some bankrate recommendations for the best corporate cards.
Conclusion
Many successful small business owners may wonder if it’s time to move from business credit cards to corporate credit cards. If your business has a team of employees, it may be time to consider applying for a company’s credit line if you have a solid credit history and, most importantly, millions of annual revenue. If your business is going well but you haven’t yet achieved such revenues, Small business credit cards Probably your best option.
*Information on Brex cards, American Express Corporate Platinum cards, Corporate Gold cards, and Corporate Green cards is collected independently by Bankrate. Card details have not been approved or reviewed by the issuer.
