Corporate cards explained

Get better at managing employee expenses with a corporate card.

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Rachel Wait

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If you run a large organisation with many employees, using a corporate card for company expenses could be a worthy alternative to a business credit card.

What are corporate cards and how do they work?

A corporate card is a type of payment card that businesses can issue to their employees to carry out work-related purchases. Rather than having to reimburse employees for expenses such as travel costs, employees simply spend on their card and the business automatically covers the cost.

Exactly how this works depends on whether the card is a credit card or charge card, where the balance (or part of it) needs to be repaid each month, or a debit card, where the funds come straight out of the company bank account.

Corporate cards often come with a range of benefits and perks, such as reward programmes and travel insurance, and can offer sophisticated tracking and expense categorisation so that your company can monitor spending as it happens.

But while these cards offer many benefits, the downside is that corporate cards tend to have strict eligibility criteria. For example, your business typically needs to have been trading for several years and be generating a large amount of revenue. You might also need to have a certain number of employees and meet a minimum level of spending to qualify.

Note that when using a corporate card, only the company’s credit score will be affected.

Benefits of using corporate cards for your business

A corporate card can help your business keep spending under control, as well as simplify expense management. Your employees can spend what they need, when they need, and they don’t need to wait to be reimbursed.

You can often set customised spending limits for each employee, and you’ll be able to view detailed transaction information and purchase analysis so that you know what’s been spent where.

Many corporate cards also offer benefits, such as airport lounge access, travel insurance, reward programmes and a concierge service.

How to choose the right corporate card for your company

When comparing corporate cards, it’s important to consider whether there’s a limit to the number of account holders you can have, and what benefits are on offer.

You want to pick a card that provides rewards your company can take advantage of. So, if your employees regularly need to travel, look for a card that offers travel perks, such as airport lounge access or travel insurance. On the other hand, it might be more important to your business to choose a card with low fees.

Another important step is to read through the eligibility criteria thoroughly. As we’ve mentioned, criteria can be strict, so it’s vital to check you qualify before applying.

Difference between corporate cards vs business credit cards

Both corporate and business credit cards allow businesses to hand out cards to employees to use for their expenses, and the business automatically covers the cost.

However, a key difference is that business credit cards tend to have more flexible lending criteria. Usually, to qualify for a business credit card, you need to be at least 18 years old, a UK resident, and have had no serious debt problems such as a county court judgment (CCJ). The size of your business doesn’t tend to matter as much.

By contrast, to get a corporate card, you typically need to be a well-established company with a high annual turnover.

Because of this, corporate cards are more geared towards managing the needs of large organisations with complex expense management requirements. These cards can often integrate with accounting software and tend to offer a greater range of rewards.

However, most corporate cards charge annual fees, whereas not all business credit cards do.

Pros and cons of virtual corporate cards

Many corporate cards are physical cards, but you might also be able to apply for a virtual corporate card. Before deciding whether to get a virtual corporate card, weigh up the pros and cons:

Pros

  • Easy to track company spending
  • Quicker to receive than physical virtual cards
  • You can set individual spending limits for each employee
  • Greater security when shopping online
  • Easy to freeze or disable the card

Cons

  • Not as readily available as physical cards
  • You can only use virtual cards online
  • Strict eligibility criteria
  • Your lender could charge you for each additional cardholder
  • Annual fees often apply

Bottom line

If you’re a large company looking to simplify your expense management system, a corporate card could be worth considering. However, it’s essential to check the eligibility criteria carefully and also understand which card is likely to offer the most suitable benefits for your business before you apply.

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Rachel Wait is a freelance journalist and has been writing about personal finance for more than a decade, covering everything from insurance to mortgages. She has written for a range of personal finance websites and national newspapers, including The Observer, The Mail on Sunday, The Sun and the Evening Standard. Rachel is a keen baker in her spare time. See full bio

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