There’s a lot to consider if you’re thinking about issuing a corporate credit card to your employees.
On the positive side, purchasing becomes far quicker and simpler; it’s easier to track expenses, and using the card will help accumulate points, rewards, and rebates. On the negative side, you’ll need to control the spending and eliminate any abuses that may happen, whether accidental or intentional.
Overall, there are more reasons you’ll benefit from issuing a corporate credit card than reasons you won’t. Not least the end of paper claims method that is the bane of most employee’s existence.
According to Forbes, these cards are:
“Generally designed for companies that generate around $4 million or more in annual revenues and have total expenses of at least $250,000 per year.”
This statistic shouldn’t discourage smaller businesses, though. Larger companies tend to have more employees that require purchasing power and require these cards more frequently than businesses without fewer employees.
A corporate credit card is a type of business credit card that can be issued to businesses of all types, including sole proprietorships, limited liability-type entities, and corporations. It is important to note that the terms “business credit card” and “corporate credit card” are often used interchangeably, but they are actually different types of credit cards.
The security of a corporate credit card is often under corporate liability, meaning the company itself is liable for any debts incurred. In some cases, individual or joint liability may also be used; in these cases, a personal guarantee may be required for smaller businesses.
Not every employee in your company needs to have a corporate credit card. Those that do usually:
- Travel regularly
- Make marketing purchases
- Deal directly with vendors
- Are in charge of SaaS
- Incur human resource expenses
Before you start issuing corporate credit cards to your employees, it’s important to define the purpose of the card. Determine what types of expenses can be charged to the card and which should be paid out-of-pocket.
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You should also consider how often and for how long employees will be able to use their corporate credit cards. Consider how you want to track and reimburse expenses and who is authorized to issue and use the cards.
Once these parameters are established, you’ll better understand how to properly manage corporate credit cards and ensure your employees are using them responsibly.
How to Get a Corporate Credit Card
When it comes to corporate credit cards, businesses cannot apply for them online or at a local bank branch like an individual consumer would. Instead, companies should engage with a commercial banking relationship manager, treasury management specialist, or dedicated bank client service professional to learn more about their institution’s offerings.
Benefits are often negotiable, depending on a company’s relationship with a bank. They should also solicit or request proposals from all banks and financial services institutions, including their own and their competitors, for corporate credit card offerings.
Competing banks may make a competitive offer for a corporate credit card to win the company’s treasury management services or main operating account deposits.
While large companies are best suited for issuing corporate credit cards to their employees, there are good reasons why different business types that aren’t as traditional would also do well with this type of card.
Even if you’re self-employed, a freelancer, an independent contractor, or a consultant, as long as you have good personal and business credit and meet the issuer’s criteria, there may be an appropriate corporate credit card for you.
When it comes to applying for a corporate credit card, the issuers will look at more than just your personal FICO credit score. They’ll want to know what your business credit score is. This score uses a different model with ranges from 0 to 100.
Business credit bureaus look for your credit history from:
- Banks
- Business credit card issuers
- Trade associations and organizations
- Vendors
- Manufacturers
You’ll want to choose a credit card issuer that will report your credit activity to the business credit bureaus. These include Equifax, Experian, FICO SBSS, and Dun & Bradstreet.
4 Tips for Issuing Corporate Credit Cards
You’ll want to ensure that best practices are in place once you issue a corporate credit card to your employees.
These four tips will help you develop ways to ensure your employees understand the limits of using the card, let you easily enforce the card’s setup guidelines, keep your accounting department happy, and be “flexible enough to facilitate [any] growing business needs.”
Tip #1 — Have a clear, written agreement on your corporate credit card policy.
When issuing corporate credit cards to employees, it’s important to have a clear agreement outlining the cardholder’s responsibilities. The agreement should include specific details about how the card will be used, who is responsible for payments, and any policies regarding acceptable purchases.
Before issuing a card to an employee, ensure that they understand the terms of use and agree to them in writing. This can be done through a signature on the corporate credit card policy document or through an electronic signature program.
Include key details such as:
- How and when the employee must use the card
- Who is responsible for payments
- What types of purchases are allowed
- Rules regarding personal use of the card
- Disciplinary action for violations of the policy
Having a written agreement outlining the employee’s responsibilities can help ensure that your corporate credit card is used for its intended purpose and that all purchases are made responsibly. A well-written policy helps protect both the employee and the company from fraud and misuse of funds.
Tip #2 — Establish the card’s spending rules and your expectations
Before you issue corporate credit cards to your employees, you need to establish a set of guidelines for their usage. This will help ensure that your company is protected from any potentially fraudulent or irresponsible spending.
First, you should establish a request and approval workflow for when an employee needs to use a corporate credit card. This should include the chain of command, who is responsible for approving the expense, and what criteria must be met before the card is issued.
You should also set daily, monthly, and one-time spending limits for each employee. This will help control costs and minimize overspending. You may also want to consider establishing category and merchant controls to further limit spending. For example, you could place restrictions on travel and entertainment expenses or only allow purchases from specific merchants.
It’s also important to limit liabilities by including terms and conditions on the corporate credit card agreement that outlines how any misuse of the card will be handled. Additionally, you should have a designated coordinator who can monitor spending, review transaction details, and follow up on any discrepancies.
Tip #3 — Set up appropriate alerts to help stay on top of card use
Using alerts for corporate credit card usage can be a great way to stay on top of spending and help protect the company from potential misuse. Before setting up alerts, however, you need to first decide who will approve and control card use.
It’s important to establish guidelines, such as employee roles and responsibilities, to clearly understand when and how cards are used.
Once these guidelines are established, you can create card templates that make it easy to duplicate as needed. This will help streamline the process of issuing and managing cards.
As part of this process, you should also make sure to include financial protection such as fraud monitoring and automated payment controls.
Finally, you should consider how you plan to handle exceptions or unique situations. You should have processes in place to resolve issues arising from unusual spending or instances where a card may need to be replaced due to damage or theft. Having the proper alerts set up can help with all of these scenarios.
Alerts can be used for many different scenarios and can be customized according to specific needs. Some examples of common alerts are notifications for transaction amounts over a certain limit or for multiple transactions in a short period of time.
Other possible alerts could include notifications for new card requests or charges from suspicious merchants. Having the appropriate alerts set up will help ensure that corporate credit card use is monitored effectively.
Tip #4 — Develop simple and straightforward instructions for submitting expense reports
Instructions for submitting expense reports should be designed to ensure that all expenses are reported accurately and in a timely manner. All cardholders should be required to provide detailed information on each expense item, including the date, location, cost, and purpose of the purchase.
Additionally, receipts must be provided to support the reported expense. To streamline this process, consider using an automated system such as Expensify or TripIt to digitize your expense reports.
Each cardholder should also be provided with clear instructions for when and how to submit their expense reports. Include instructions on when the reports are due, what documentation must be included, and what spending limits are in place. Additionally, you should review card usage regularly to ensure that all charges are appropriate and within the limits set.
Best Corporate Credit Cards
When choosing a corporate credit card, you’ll want to consider:
- The type of card — cash back business credit card, co-branded or loyalty card, or a rewards business credit card
- Look for the types of “earnings” you’ll generate with the card
- Check out any sign-up bonus
- Consider the annual fee
- Cost of extra cards
- Additional features — cardholder benefits, foreign transaction fees, etc.
Merchant Maverick lists nine corporate credit cards as the best corporate cards for businesses.
These nine credit cards are:
- Divvy
- Rating: 4.6 out of 5 stars
- Good for businesses that are small to mid-size with 1-500 employees
- Rewards rating: Excellent
- Annual fee: $0
- Additional cards: $0
- Ramp
- Rating: 5 out of 5 stars
- Good for companies, other non-individual limited liability companies that are registered in the U.S.
- Rewards rating: Excellent
- Annual fee: $0
- Additional cards: $0
- Rho Business Banking
- Rating: 4 out of 5 stars
- Good for businesses that need a commercial banking suite and accounts payable solution
- Rewards rating: Good
- Annual fee: N/A
- Additional cards: N/A
- Brex
- Rating: 4.5 out of 5 stars
- Good for large businesses and tech startups
- Rewards rating: Excellent
- Annual fee: $0
- Additional cards: $0
- American Express
- Three cards: corporate platinum card, corporate gold card, corporate green card
- Rating: N/A
- Good for different levels of employees
- Rewards rating: Excellent
- Annual fee: platinum card $550, gold card $250, green card $75
- Additional cards: N/A
- Bank of America
- Rating: N/A
- Good for businesses with employees that travel extensively
- Rewards rating: Excellent
- Annual fee: $375
- Additional cards: N/A
- Capital One
- Rating: 4.0 out of 5 stars
- Good for businesses looking for a minimalist corporate card
- Rewards rating: Good
- Annual fee: N/A
- Additional cards: N/A
- J.P. Morgan
- Rating: N/A
- Good for businesses looking for a single-use card program for every expense
- Rewards rate: N/A
- Annual fee: N/A
- Additional cards: N/A
- Expensify
- Rating: 4.5 out of 5 stars
- Good for businesses of all sizes
- Rewards rating: Good
- Annual fee: $0
- Additional cards: $0
While there are a lot of good reasons to get a corporate credit card for your employees to use, we’d like to offer some thoughts on getting a reloadable, prepaid debit card as well.
The power of corporate credit cards for your employees is very real for all the reasons we’ve talked about above, but the power of a reloadable company debit card when it comes to creating a great incentive program can’t be beaten.
When issuing corporate credit cards to employees, it’s important to decide who will be eligible for any rewards points accrued through their use. The company should also consider whether it wishes to share the rewards with its employees.
Many companies offer their employees a percentage of any reward points earned when they use a corporate credit card. This can incentivize employees to use the card responsibly and help build loyalty within the organization.
It’s also important to make sure that the rewards program chosen for the corporate credit card aligns with the company’s overall goals. For example, if the company is trying to reduce travel expenses, it might choose a rewards program that offers discounts on hotels or flights. It’s also important to determine if any restrictions apply to certain purchases, such as an exclusion of items like cigarettes or alcohol.
Debit cards are the best option when you want to create maximum employee loyalty and amplify your brand affinity. Plus, they keep things simple for you, your employee, third-party sales rep, or customer.
This type of card can be reused many times. Once it’s in your employee’s pocket, you can add money repeatedly without needing to issue a new card. And every time they use it, they’ll be reminded of your company with your logo, color scheme, and name.
These cards can be used anywhere that Visa or Mastercard are accepted. Rather than offering reward points that can only be redeemed for certain items, the recipient can choose how and where they’ll spend the rewards they’ve earned.
That’s an awful lot of power packed into one tiny card, for both you and your employee.
Claudine is the Chief Relationship Officer at Level 6. She holds a master’s degree in industrial/organizational psychology. Her experience includes working as a certified conflict mediator for the United States Postal Service, a human performance analyst for Accenture, an Academic Dean, and a College Director. She is currently an adjunct Professor of Psychology at Southern New Hampshire University. With over 20 years of experience, she joined Level 6 to guide clients seeking effective ways to change behavior and, ultimately, their bottom line.
