On the other hand, a corporate credit card can also help you continue to build your business credit history. If your small business is legally classified as a corporation, has revenue in the millions and has multiple employees who need access to a corporate credit what is corporate credit card account, it might be time to consider a corporate credit card. Corporate cards do not require a personal guarantee, so it’s a good idea to make sure your business has built up a solid credit history before applying. If you’re interested in a corporate credit card, you’ll generally have to contact a card issuer directly.
Corporate credit cards don’t require a personal guarantee, so a credit issuer likely won’t do a hard inquiry into your personal credit file. According to the Office of the Comptroller of the Currency, the lack of interest charges tends to make corporate cards less profitable for issuers than other cards. Instead of interest, they earn most of their money from annual fees, service fees, and the interchange fees charged to merchants. Business credit cards also require a personal guarantee, which means you are personally liable for any charges made on the account (including authorized users’ charges).
That means the business entity, not the business owner, is legally responsible for all charges made on the card. Once approved for an extension of credit from an issuing financial institution, a company distributes commercial cards to their employees. Employees can then make work-related purchases, such as travel, entertainment and business-to-business expenses.
Usage Guidelines for Corporate Credit Cards
If you have a side hustle, run a freelance business or have a small business with revenue of less than a million dollars per year, you’ll probably want a business credit card. Business credit cards have a lot of advantages, including the ability to earn rewards on business expenses and build your business credit score. If you have employees who need access to your business line of credit, you can make them authorized users on your business credit card. Company guidelines can help businesses better manage employee expenses, but it’s also important to make sure employees know the rules to prevent misunderstandings and unauthorized charges.
Eligibility and Documents Required for Kotak Corporate Credit Card
- Corporate credit cards, otherwise known as purchasing cards or “P-Cards,” serve as an excellent tool for improving a company’s expense oversight, while helping to reduce costs and making payment processes more efficient.
- This involves reviewing statements, reconciling expenses, and identifying any discrepancies or unauthorised charges promptly.
- It is important for any company to engage with its trusted commercial bank relationship manager, treasury management specialist or dedicated bank client service professional when evaluating if corporate credit cards could benefit a business.
- Most major credit card issuers, such as American Express, Capital One, J.P. Morgan Chase, Citibank, and Wells Fargo, offer corporate credit cards.
- The company’s name will be on the card along with the employee’s name as a designated cardholder.
With small-business cards, the primary cardholder is personally liable; with corporate cards, the company is liable. Introducing the Airtel Axis Bank Credit Card, which offers benefits such as airport lounge access, annual savings up to ₹18,000, discounts when you pay bills or recharge using Airtel Thanks mobile wallet app, lower interest rates and a lot more. Businesses should establish internal controls and oversight mechanisms to monitor corporate card usage effectively.
Corporate Credit Card benefits to Your Orgenization
Kotak Mahindra Bank does not control or endorse such websites, and bears no responsibility for them. With Kotak’s Corporate Credit Card, you can now waive your surcharges on railway and fuel subject to the limits specified. Cross-border payments are growing quickly thanks to API advancements, improved visibility and transparency, virtual account solutions and partnerships. Three emerging megatrends across payments, technology and risk will transform the cross-border payments landscape and help create new opportunities for FIs. A card number that is stored, shared within the organization and reused is called a ghost card and has its own unique risks and benefits.
Fees related to deposit accounts, debit and credit cards, business loans and other merchant services include payroll, credit card and check collection, processing, reconciliation and reporting. Earnings credit rates are paid on the deposits a company holds with a bank, and larger deposit balances help to lower bank fees. Large companies have expenses that employees make on its behalf, and these purchases need to be managed effectively. Corporate credit cards, otherwise known as purchasing cards or “P-Cards,” serve as an excellent tool for improving a company’s expense oversight, while helping to reduce costs and making payment processes more efficient. A corporate credit card is a card companies issue to employees to make work-related purchases.
The company can also control where a card can be used, limiting purchases to specific merchants, types of merchants, and locations. Since corporate credit cards don’t require a personal guarantee, a credit issuer probably won’t do a hard inquiry on your personal credit. This means that you could have a low personal credit score and still have your business qualify for a corporate credit card. On the other hand, if your business has bad credit or has only developed a limited credit history, you might have a harder time taking out a corporate line of credit.
Types of Corporate Credit Cards
However, corporate credit cards also come with several features that small business credit cards may not offer. These include the ability to issue employee credit cards without having to assume personal liability for the charges. Corporate credit cards also often include access to accounting software and services designed to help your business manage its corporate line of credit, and your company may receive discounts on common business expenses and retailers.
Before starting a corporate card program, businesses should assess the features they want in a corporate credit card program and what types of rewards or rebates suit the company best. Organizations should also examine the corporate card agreement’s fees, and make sure the right technological infrastructure is in place to gain the full benefits of a corporate card program. Before a corporate credit card is activated, an employer may offer (or require) in-person or online training sessions designed to help employees learn the policies. In addition, an employer may post and update policies on its internal website. It’s always a good idea to stay informed, follow the rules, and avoid doing anything that could result in extra paperwork or be construed as fraud. Cardholders who have questions about their employer’s policies should contact the person (or department) that manages the program.
The business receives and pays the bill for all approved charges, and is responsible for all debts. However, depending on a company’s corporate credit card guidelines, their employees may have to pay unauthorized expenses out of pocket, and may still be responsible for filing regular expense reports. Corporate credit card issuers with corporate liability generally won’t check each employee’s credit, and such cards won’t affect employee credit scores for better or worse.
Unlike personal credit cards, which individuals use for personal purchases, corporate credit cards are intended exclusively for business purposes. These cards are typically issued under the company’s name and are linked to a centralised corporate account. For example, Company ABC currently processes purchase orders of around $250,000 each year and generates $2 Million in annual revenues. Although XYZ offers really great deposit services, they may not offer corporate credit cards.
Employees should treat their corporate credit card with care and keep it in a safe place to prevent theft or loss, as they would with any credit card. If the card is lost or stolen, they should report that as soon as possible, so it can be canceled and replaced. It’s best not to mix personal expenses with business spending on a corporate card. The company’s name will be on the card along with the employee’s name as a designated cardholder. The employee’s signature goes on the back of the card, just as it would on a personal credit card.
This means that the business entity, not the business owner, is legally responsible for all charges made on the card. Because of this, corporate credit cards are generally only issued to large companies with a track record of success and an established business credit history. If your business is an LLC, S-Corp or C-Corp with a solid business credit score and revenue in the millions, your company might be eligible for a corporate credit card. Unlike consumer and small business credit cards, corporate credit cards cannot be simply applied for online or at a bank branch.
We’ve picked the best credit cards in a way designed to be the most helpful to the widest variety of readers. At the end of each billing cycle, the company can make a consolidated payment for all the cardholders, rather than managing dozens—if not hundreds or thousands—of individual employee statements. In other scenarios, some companies may choose to be billed specific to each individual cardholder’s spend. Information on transactions across the program can feed into accounting and Enterprise Resource Planning systems (ERPs), giving the company real-time visibility into its expenses and making reporting more efficient. On the other hand, if your business has bad credit or has only developed a limited credit history, you’ll have a harder time.