What you need to know before you upgrade from a small-business credit card.
If you’re running a small business with a few employees, managing your finances may be easy. But as your revenue starts to grow into the millions and your number of employees increases, things can get complicated.
It may be time to consider switching to a corporate credit card. The main benefits include employee spending tracking to reduce fraud and misuse, manual-task automation and streamlining finance management.
Our pick for a small business corporate card
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What’s the difference between corporate and small business cards?
|Corporate credit cards||Small business credit cards|
|Who are they for?||Issued to large companies and corporations with more than $1 million in revenue.||Designed for the small business owner with one or two employees with access to a company credit card.|
|Who is liable?||The company is entirely liable for all debt. Before issuing the card, the bank reviews the company’s finances and uses some of its assets as collateral. However, some banks will tailor cards allowing you to choose your liability options.||In most cases, you are personally liable for any debt you incur on these business cards.|
|Do they report to personal credit?||No. Your personal credit won’t be affected. Instead, all card activity is reported to business credit bureaus.||Depending on which card you choose, the bank may report to personal and business credit bureaus. Your personal credit can take a hit if your business runs into financial trouble.|
|Can I monitor employee spending?||Yes. This is the main perk of this type of card, especially if your business has several employees with access to business cards. You can easily track spending for each employee and approve reimbursements.||Some banks offer spending management tools for small business credit cards. However, these are not usually as efficient as the custom-designed software used by corporate credit cards.|
Who else can use corporate credit cards?
Corporate cards aren’t always limited to private entities. Government agencies and nonprofit organizations could find these cards helpful as well.
Compare small business credit cards
Featured cards: JP Morgan Chase corporate cardsJP Morgan Chase offers six corporate cards and are sold as commercial credit cards:
- Single-Use AccountsSM. Also called SUA, it acts like a check that provides you with a 16-digit virtual account number for each payment. This helps you reduce check writing and standard card payments, and makes your payments more efficient.
- Purchasing Card. Aimed at business-to-business payments with the goal of simplifying and managing purchases.
- Corporate Card. This card is meant for businesses that spend on travel and entertainment.
- One Card. Businesses that need both business-to-business management and traveling and entertainment spending can get them with One Card.
- Corporate Flex Card. The only JP Morgan corporate card that lets you earn reward points on all of your purchases.
- GSA SmartPay® 2 Solutions. Designed for government agencies to help streamline payment and procurement processes.
Which banks issue corporate credit cards?
- JPMorgan Chase corporate card. You can choose between six available card options. This includes cards that offer rewards, streamline business-to-business purchases, give perks for travel and entertainment expenses and help government and nonprofit agencies.
- American Express corporate card. Select between seven corporate cards that streamline spending on travel and offer cash back on all purchases for a range of employees.
- Citibank corporate card. With eight cards under the Citibank umbrella, this is the largest selection of corporate cards you can find. Choose between travel cards, cards for meeting and event expenses and virtual account cards.
- Capital One corporate card. The only corporate card you’ll find with Capital One is its One Card that offers benefits like rewards, unlimited employee cards and no foreign transaction fees.
- Wells Fargo corporate card. The WellsOne® Commercial Card reduces manual processes by up to 90% and helps you expand your business globally with cards denominated in local currency.
What to consider when choosing a business credit card
Benefits of a corporate card
A corporate credit card comes with several benefits, including:
- Management of expenses. With more employees using cards, it’s easier to manage spending with the tools offered by corporate cards.
- Spending controls. Set spending limits and alerts for all of your employees to help manage your budget.
- Fraud reduction. With alerts and reports, you can manage fraudulent spending before it gets out of hand.
- Powerful reporting tools. Reporting tools put your employee’s business expenses all in one place to help you generate reimbursements and manage spending.
- Less personal risk. Corporate cards don’t affect personal credit scores. Your business is responsible for all debt accrued on the cards.
Who is liable for corporate credit card expenses?
Corporate liability is most common with corporate credit cards. But if your business spends a lot and has many employees, some banks may tailor a liability program specific to your business.
- Corporate liability. In this case, the company is liable for all charges, except in specific circumstances when there are unauthorized charges.
- Individual liability. This program holds the employee fully liable for charges. Card issuers check employee credit scores with a soft pull, and require that employees submit expense reports for company-related purchases.
- Combined liability. This makes both the company and each card member jointly liable for the credit card. In this case, the company isn’t liable for purchases that aren’t related to the company.
Tips for using a corporate credit card
- Consider creating a corporate credit card policy so your employees understand what spending is allowed in your company.
- Set up spending limits and controls for employee cards to help manage spending and set parameters.
- Setting up alerts to monitor card activity can help reduce fraudulent spending and help manage your budget.
- Incentivize employees by allowing them to cash in rewards for personal use.
With more invoices, employee credit cards and cashflow, your small business may be ready for a corporate card. These cards can help your business process payments easier and manage employee spending.
If your small business is still making less than $1 million annually, consider comparing small business credit cards.