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Corporate Credit Card
It is progressively common for companies to offer a corporate credit card to their employees and executives. It is an essential tool that can bring many benefits, but beware: its use also requires some care from the employer and the employee.
The Corporate Card or Corporate Card is a card issued in the name of the employees of a company as a payment instrument for the necessary disbursements during their trips or their representation expenses. These are plastic cards with a holder – a natural person – who has the company’s guarantee, which can be debited both from the employee’s and company’s accounts in the first or second instance.
What are the types of corporate credit cards?
Banking entities offer their clients different corporate cards, which can be classified according to their payment form.
Here we mention them with some details:
Debit: This implies a payment method similar to any debit card. In addition, the company allows its employees to use the organization’s resources directly.
Credit: This allows the company to advance to the employee the resources it requires for the company’s representation expenses. Subsequently, the company must cancel the said loan.
Service: with which the company may have a temporary line of financing. Thus, the organization must pay the total resources spent when that period expires.
Prepaid: This contemplates that the company incorporates several resources in a device and assigns it to its employees to cover their expenses. Once the worker has used the money, he will not be able to obtain more credit from that card.
How important is it to use a corporate credit card responsibly?
After knowing all the benefits of corporate cards, it is essential to clarify the need to use them responsibly.
We give you some tips to carry it out:
It is not a barrel without funds, so everything that comes out at some point has to be cancelled.
You must understand that the transactions of each employee must be consistent with the debt quotas and assume the financial reality of the company they represent.
Suppose you represent or wish to grant another benefit to your workers. In that case, you must remember that the idea of consigning an extension of the business card is to give a cancellation method for company expenses such as representation, supplies, raw materials and travel.
Employees must understand what they are allowed to use it for and the need to verify each of the expenses through the support of invoices or receipts.
What are the benefits of corporate credit cards?
The use of corporate cards offers customers endless benefits, which we will mention below:
1. Autonomy for the employee and better cost control
The administrative departments of companies no longer have to waste time cancelling representation expenses, managing office purchases, or processing refunds for purchases made with personal cards.
Corporate cards allow company managers to empower employees with a payment instrument without the requirement to open an account with multiple holders. Furthermore, issuing multiple physical cards is no longer necessary if a virtual card is use.
2. Separation of personal and business expenses
Thanks to corporate cards, it is effortless to separate personal expenses from commercial or operational costs of each company.
And each management platform offers the possibility of applying particular expense policies and limits, indicating to employees what types of payments must cover by business cards.
3. Simplification of refunds
Corporate cards allow employees to no longer resort to credit cards or resources to cover all professional expenses.
Back-office managers also don’t have to spend time tracking, reconciling receipts, and organizing to reorganize worker reimbursements.
Moreover, one benefit of corporate cards is that all expense reports, or at least the vast majority, can be centralized in a single account, using as many business cards as necessary.
4. Centralized management and automated reconciliation
Corporate cards allow you to have a global vision of operating costs, but this task can be challenging when the expenses distribute among several bank accounts and credit cards.
Below we point out some critical aspects around this point:
- Corporate cards allow you to centralize all expenses in a single account.
- The financial manager will have the opportunity to be aware of each of the payments and consumption in real-time, both personal and company.
- The management is much more fluid and efficient since the workers’ disbursements appear in a single monthly account statement.
5. Expenses in detail
We already said it, but repeating it never hurts. Making a separation of personal expenses makes it possible to control better disbursements and what to invest in each item to organize accounting better. Most business cards incorporate expense reports, which download directly into the accounting software.
6. Better financial conditions
Corporate cards, unlike personal cards, always have better credit conditions, including lower interest rates and longer payment terms.
However, corporate cards have a much larger quota than personal cards that financial institutions assign employees.
7. Build and improve your credit history
A well-managed corporate card is an excellent reference to financing institutions when accessing other points and services. And it is that organizations can know the money flow that is flowing through a person’s account, with which they have the possibility of measuring the payment capacity.
Corporate Credit cards are becoming more common in organizations worldwide, regardless of size. Since these financial tools use to optimize employee expenses more simply and conveniently.
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