Making purchases as well as paying for transport and other business-related expenses is part of your role as the business owner. Depending on the size of your organization, it can be possible to rely on your bucks or credit card to make purchases, especially when you’re a small business set up. However, ensuring you have clear and well-outlined reports and invoices is important to track your spending accurately.
As your business expands, your spending will also increase. This may make it hard for you to track and record your spending, affecting your production line. While you can entitle the responsibility of managing your funds to qualified team members, it can become complicated as your payment needs increase.
At this point, getting a corporate card might become an ideal option for your business operations. But what are corporate cards?
Corporate Card 101
A corporate card is a credit card given to team members by their employers. The team members will use the funds in the card to cater to business-related expenses. The expenses include business trips, accommodation, subscription payments, and more.
A corporate card will help you avoid putting your business expenses on your card. This saves you from damaging your credit score if your business experiences downtime or other issues. However, it’s important to determine whether your business meets all the eligibility requirements before applying.
Benefits Of Corporate Cards
The following are the perks of having corporate cards:
1. Save Time
It’s the goal of most organizations to achieve their goals and objectives in the least time possible. Getting a corporate card may help save time for your employees at all levels of the organization. A corporate card will help separate business expenses from your credit card.
When a team member makes a purchase, all the details are automatically recorded in the company’s bank account and expense report management system. Hence, it’ll be easier for managers to confirm whether the spending complies with the set rules of the expense policy.
Additionally, there’s no need for team members to spend hours developing spending reports and sending them to the accounting department. This saves a considerable amount of time for your team members at all levels. In return, they can utilize the saved time to concentrate on core business activities, increasing their productivity and revenue.
2. Improve End-User Experience
As mentioned above, corporate cards will separate business expenses from personal accounts. Eliminating the need for team members to cover their expenses and waiting for days or weeks before getting paid can greatly improve team happiness. This may benefit those team members who usually submit large expense bills, those who have insufficient funds to cover the bills or those who are using phones to conduct business activities.
Improving your team’s happiness may help boost their morale, ultimately improving their productivity. Apart from this, it’ll also reduce the chances of over- or under-reimbursing team members for international payments, especially when the exchange rate fluctuates.
Downsides Of Corporate Cards
Despite the mentioned benefits of corporate cards, some limitations are still associated with them. They include:
1. Indulgent And Excessive Spending
This is one of the cons of corporate cards. In some cases, the team members can become irresponsible when issued a credit card by the company. Unless you have a reliable expensive management system, indulgent spending is a real risk when issuing corporate cards. For instance, the team members may opt to stay in an expensive facility during a summer trip rather than a pocket-friendly but above-standards facility, which might not be the case if it was their own money.
One of the best ways to address this issue is to offer efficient financial awareness training. The training program ensures the team members are equipped with the right skills and know-how to make the right financial decision and avoid irresponsible spending.
Corporate card programs can be costly for some businesses, especially small enterprises. It might also be more costly than giving business credit cards to your team members. However, you can minimize its cost by ensuring the team members understand and follow all the spending policies and stay on top of expense tracking.
It’s also important to understand that your business might not qualify for corporate card programs, depending on its size. If you have a limited workforce, you might not enjoy the benefits of this program and you might incur the cost from your cash or personal credit account.
As discussed above, corporate cards may help separate your business expenses from your personal account. This saves you from damaging your credit score in case your business fails. However, it’s important to understand the disadvantages associated with corporate cards before applying.