Employees of well-established organisations are given a corporate or business card, which they may use to charge their allowed work expenses—like hotel stays and airfare—without using their cards or cash. These cards, usually called business credit cards, may help employees manage to spend, and many of them come with benefits like frequent flyer miles and airport lounges.
Corporate credit cards are created to fulfil the demands of established businesses, often those with estimated annual charges of INR 20 million or more, at least INR 30 million in annual sales, and at least 15 cardholders. Small company credit cards are available to most companies, including sole proprietorships and DBAs, whereas corporate cards are only available to corporations. It implies that the business must be set up and registered as an S or C corporation to qualify.
Depending on who would be accountable for payments and debts, corporate credit cards are either classified as individual liability cards or corporate liability cards.
Individual liability cards:
The cardholder employee must pay for charges. He must also submit a claim for reimbursement from the employer for business expenses. Before granting this card to the employees, the credit card company analyses their credit history. However, using their company cards has no impact on their credit score.
Corporate liability cards:
In this instance, the employer controls payment charges. The employee is still to inform management of those costs. The employer can then reconcile the card statements. Before granting this card to the employee, the credit card firm analyses the business’ credit history.
A business credit card’s ability to simplify cost management for employers and workers is one of its main benefits. A corporate card allows businesses to limit the amount cardholders spend on a transaction, a category of purchases, or all together. The card issuer can also restrict purchases to a limited number of merchants, types, and locations.
A corporate liability card can provide financial relief for employees since it avoids the need to pay for business-related costs upfront and then wait for refunds. Another advantage is that some business credit cards enable electronic cost reporting, which makes it simpler to file accurate and timely business expenditure reports by automatically populating expense reports with purchase information.
Another significant benefit is the possibility of keeping any benefits earned when using a corporate credit card, depending on the business. For instance, they could accrue and use points for a frequent flier programme or a regular visitor programme at a hotel. Of course, the company can maintain the benefits to cover yearly business expenses or give top-performing workers incentives. However, since doing so might raise employee morale, many more prominent organisations still let employees take advantage of incentive schemes.
Employees in charge of paying their credit card accounts should be aware that their credit scores might suffer if they fall behind on payments. This is true even if they understand and abide by company policies regarding spending caps, the kinds of expenses permitted, and how expense reports are handled.