Corporate Credit Cards 101: How to Use Them for Your Business
What are Corporate Credit Cards?
Corporate credit cards are specialized business loans issued to organizations for expense management. They function like personal credit cards but are only for business-related costs like travel, supplies, and equipment. In exchange for these limitations, they typically enable higher credit limits and extra features like employee controls.
How Do Corporate Credit Cards Work?
Banks and other lending institutions generally follow a structured application and issuance process. However, processes may vary from one bank to another.
Application and issuance
Here are the common application steps when acquiring a corporate credit card in the Philippines.
1. Eligibility Check
Banks conduct a thorough eligibility check before issuing a corporate credit card. This process involves verifying your business’ registration status to ensure its legal operations. Banks also assess your financial health or ability to manage credit effectively.
2. Documentation
You must submit complete documents as part of the application process. The requirements typically include copies of business registration certificates, balance sheets, income statements, and recent tax returns. These records give banks essential information about your business’ economic standing and operational history.
3. Approval
After submitting the necessary documents, banks evaluate your business’ creditworthiness based on factors such as its financial stability, credit history, and ability to repay debts. Meeting the banks’ criteria results in the approval of your application.
4. Card customization
After approval, you can customize the corporate credit cards to suit your business’ unique needs and preferences. This customization may include setting spending limits for individual cards, defining authorized merchant categories, and establishing controls for cash advances and other transaction types.
5. Issuance
Once the cards are customized according to the business’ specifications, the approving bank issues them to your company for employee distribution. Each cardholder receives their personalized corporate credit card, along with instructions on how to use it responsibly and following the company’s policies and procedures.
Expense management and control
Here are general tips once you get your corporate cards.
1. Expense tracking
Most banks offer online real-time monitoring capabilities for efficient expense tracking.
2. Spending limits
Individual cards can have preset spending limits appropriate to the cardholder’s job.
3. Reporting
As with personal credit cards, regular reports are generated and sent to the account holder for budgeting and repayment strategies.
4. Security features
Corporate credit cards have robust fraud protection measures and alerts to safeguard transactions
5. Policy compliance
The company must create and enforce strict policies to ensure compliance with usage guidelines and regulations.
What are the Benefits of Using Corporate Credit Cards?
Corporate credit cards can be advantageous for various business aspects.
1. Improved cash flow management
Corporate credit cards give your business a revolving line of credit to purchase and manage expenses without depleting cash reserves. This flexibility allows for smoother cash flow management, ensuring that essential operations and investments can continue uninterrupted.
2. Enhanced expense tracking
Corporate credit cards often have advanced expense tracking features, such as real-time transaction monitoring and customizable reporting tools. These capabilities empower businesses to monitor and categorize expenses more effectively, simplifying budgeting, accounting, and financial analysis processes.
3. Access to rewards and perks
Like personal credit cards, many corporate credit cards offer rewards programs and perks tailored to business needs. These bonuses may include cashback incentives, travel rewards, discounts on business-related expenses, and complimentary insurance coverage. You can maximize your purchasing power and generate additional value from spending when you have a corporate credit card.
How Can You Choose the Best Corporate Card for Your Business?
Here are the factors to consider when finding the right corporate credit card.
Features
When evaluating your options, prioritize flexibility and convenience. Seek cards that let you customize features, such as setting different spending limits and categories for individual employees. Then, opt for cards with convenient access via online and mobile platforms to make account management and transaction tracking more seamless.
Fees
Assess the fees to ensure cost-effectiveness by comparing factors such as:
Cards with the lowest fees or those offering waivers based on specific conditions help optimize savings for your business.
Rewards
Rewards and incentives also maximize the benefits of corporate credit cards. Ideally, you evaluate options, such as cashback, points, miles, vouchers, or discounts, based on their relevance to your business spending. Prioritize cards that provide generous rewards or allow straightforward redemption to enhance the value derived from essential expenditures.