In recent times, corporate credit cards have gained immense popularity. The demand for these cards has risen significantly due to the changing requirements of Indian businesses. India has become a key hub for entrepreneurs, with over fifty thousand startups challenging conventional industries. Corporate credit cards are designed to simplify digital expenditures for businesses.
If your company has yet to acquire a corporate credit card, we’re here to elucidate why obtaining one is prudent. Continue reading to uncover the benefits.
What is a Corporate Credit Card?
A corporate credit card is a special credit card a bank gives to a business. The business owner can also give these cards to their employees, making it smoother to get reimbursed. This removes the need for employees to use their own money for work expenses and then wait for reimbursement.
Corporate cards make the company more capable of buying things and improve the speed of turning money into products with short-term credit without extra costs (like interest). Some expenses like SaaS subscriptions, cloud CES, and marketing costs require a credit card. Corporate credit cards provide a bigger spending limit than personal cards, so all business costs can be covered without affecting personal responsibility.
Besides helping with money management, corporate credit cards make it simpler for a growing business to follow the rules and report on spending. They also have extra benefits like rewards and lower fees for international transactions.
How Does a Corporate Credit Card Function?
A corporate credit card operates much like a regular credit card. It can be utilised for online transactions and in-store purchases at point-of-sale terminals. These transactions are recorded on the company’s statements, preventing any confusion with personal funds belonging to the owner or employees. Usually, the card displays both the company’s and the cardholder’s names.
To acquire a corporate credit card for yourself or your employees, you have two options:
● Obtain it from a credit card issuing company.
● Partner with a bank or a financial services provider to secure the cards.
Benefits of Corporate Cards in Simplifying Financial Management
● Boosting Workflow Efficiency
Corporate credit cards digitalise payment processes, cutting down on paperwork. This establishes a secure record of all employee purchases. Furthermore, it removes the hassle of going through reimbursement and filing expense reports, ultimately saving valuable time for staff members and managers.
● Curbing Expense Fraud
Expense fraud can inflict substantial losses on organisations. Schemes like manipulating receipts or inflating expenses become easier with manual processes. Corporate credit cards diminish the need for reimbursements since employees don’t use personal funds upfront. This greatly reduces the potential for expense fraud. Real-time expense tracking enhances transparency and prevents malicious activities.
● Enhancing Compliance
A corporate credit card permit sets spending limits, enables quick card management, and imposes restrictions on vendors, locations, and timings. These features foster adherence to expense policies.
● Heightened Security
Corporate credit cards have safeguards against misuse, theft, scams, and losses, ensuring the security of company funds.
● Integration with Management Systems
Corporate credit cards can seamlessly integrate with expense management and accounting platforms, offering comprehensive spending visibility. This facilitates budget tracking, improved oversight, and enhanced financial analysis.
● Increased Savings
Using corporate credit cards streamlines operations, saves time, reduces fraud, stabilises cash flow, and indirectly leads to significant cost savings for business owners. Additionally, credit cards offer rewards, cashback, lounge access, and discounts, further contributing to long-term savings.
Managing Corporate Credit Card Expenses Effectively
Corporate credit cards simplify expense management, yet finance officers should take certain steps for optimal utilisation:
● Ensure Employee Card Policy Understanding
Guide about card usage responsibilities of using cash from credit card. Conduct training sessions to address queries, fostering compliance and preventing disputes.
● Complete Compliance Before Card Allocation
Before handing out cards, ensure all parties have signed relevant agreements outlining card usage policies and rules.
● Implement Spending Limits
Collaborate with team leaders to establish spending limits for individual employees. Predefined limits promote adherence to company expense guidelines.
● Monitor and Analyse Spending Patterns
Real-time tracking of an employee spending cash from the credit card is a feature of corporate credit cards. Capitalise on this by diligently monitoring and analysing expenditure habits. This data can inform important decisions later on.
By following these guidelines, you can efficiently manage corporate credit card expenses, promoting transparency and optimal financial control.
Also Read: Top Reasons To Avoid Credit Card Late Payments
Conclusion
A corporate card simplifies your business expenses by consolidating them into a single statement. This statement details each transaction, including the employee responsible for the expense. Corporate credit cards have become a crucial asset for business expansion and achievement. From contributing to cash flow management and mitigating expense fraud, a corporate card is a valuable tool for your business.
