Corporate Cards

Updated 22 September 2020

Working in a similar way to business cards, corporate cards offer large organisations access to credit, typically providing unlimited cards for employees to use. What sets business cards and corporate cards apart however, is their liability and eligibility. In terms of liability, it is typically the company that is liable for a corporate card, while business cards may feature individual or joint liability among sole traders, business owners or partners.

As for eligibility, business cards may be issued to any approved applicant with an ABN, while corporate cards are typically only offered to incorporated businesses, often with a minimum turnover requirement in place. And credit? On business card applications, the card provider will usually assess the business owner’s credit, while on corporate card applications, it will be the business’s credit history that counts.

So, what can a corporate card offer? Choosing between a credit card or charge card structure, businesses will have any number of extras at their fingertips. While there are low cost basic options that keep things simple, there are plenty of other options with much higher annual fees, providing everything from uncapped rewards earning to free flights, insurance cover, lounge access and discounted hotel membership.

Aside from those extras, corporate cards are designed to provide employees access to credit, making it easier to manage cash flow, while keeping track of employee spending. Corporate cards generally allow businesses to set individual cardholder spending limits, with expense tracking and accounting management tools offered as standard.

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Would Your Business Benefit From A Corporate Card?

Allowing you to take advantage of handy tools and useful extras tailored specifically for large organisations, a corporate card could be just what your business needs. Allowing for effective cash flow management and hassle-free expense tracking, a corporate card account provides access to credit to employees who need it, with liability placed on the business, not the business owner.

Corporate Cards: The Basics

Designed to suit larger businesses, corporate cards allow organisations to provide access to credit to employees who need it. Allowing employees to pay for authorised business expenses, such as flights and hotel stays, this spending is tracked within the corporate account, making reporting, record-keeping and consolidation of employee expenses much easier to manage.

Aside from effective cash flow management and expense tracking, corporate cards can also offer a number of enticing extras. Typically tailored to suit large corporations, these extras may include business-oriented travel insurance and emergency assistance, airport lounge access, or membership and special privileges or discounts with global hotel chains.

Corporate cards can also earn rewards. Just like personal and business cards, corporate cards offer tiered earning, with higher earning cards typically featuring a higher annual fee. Rewards programs vary according to the provider, for example American Express corporate cards tend to focus on Membership Rewards, while other providers may allow access to Qantas Frequent Flyer and other popular programs.

And cost? Just like any other type of card, corporate cards charge an annual fee each year, which varies according to the features and rewards on offer. On credit cards, interest may also be applied, however, many corporate cards offer interest free periods to accountholders that pay off their balance each month by the due date.

Corporate Credit Cards vs. Business Credit Cards

So, what is the difference between a business card and a corporate card? While each provider will have its own eligibility requirements, for the most part, corporate cards are typically offered to incorporated businesses with a larger turnover. While a business card may suit a small or medium-sized business – or even a sole trader – corporate cards are designed for use within much larger organisations.

Liability is another differentiating factor. When applying for a business card, business owners can choose to take on individual liability or joint liability within a partnership. That not only makes the business owner (and partners) personally liable for any debt on the account, it also means card providers will typically look to the business owner’s credit history to establish creditworthiness.

A corporate card account, on the other hand, features corporate liability. That places liability for debt on the business, while at the same time, card providers will assess the credit of the business rather than the business owner on application.

Corporate Credit Card Benefits

You can manage cash flow more effectively

With access to credit, you can manage cash flow within your business. And, making use of your card’s interest free days, you can do this without paying any interest.

You can manage your expenses more easily

Providing access to credit to employees who need it, a corporate card makes tracking and managing that spending easy as well. You can set spending limits on each individual employee, while also controlling what type of purchases are made and where. At the end of the month, you’ll receive an account statement that lists both individual employee expenses and the company’s expenses overall.

You can benefit from extras

Corporate cards offer an enticing array of extras designed to suit larger businesses. These could include travel insurance, free flights, hotel perks and lounge access. You may also have access to a dedicated company service representative. On the other hand, if you don’t need extras, you can opt for a basic corporate card to keep costs down.

You can earn rewards

Corporate cards can allow businesses to earn big rewards on their big business spend. Rewards can then be used to cover further business travel, or to reward employees who deserve it.

You can benefit from corporate liability

Instead of being personally liable for your employees’ spending, it is the business that takes liability on a corporate card account. In the same vein, it is the business that is assessed for credit worthiness on application, not you as the business owner.

You’ll be protected against fraudulent use of the card

As long as you have strict procedures in place regarding employee use of the cards – and the cards are not being used improperly – you will be covered against any fraudulent transactions.

Corporate Credit Card Drawbacks

Employees may spend more freely

Unless you have procedures in place to manage employee spending, some employees may spend more than they would otherwise as they use the company’s money and not their own.

The costs may outweigh the benefits

If you choose the wrong corporate card, you may find you are paying more for its use than you are getting back in value. To avoid this, consider what you really need from the card, what it offers, and how much it will cost. This is especially true with rewards cards.

Charge Card or Credit Card?

When comparing corporate cards, you will have the option to choose between a charge card and credit card structure. So, what type of card is right for your business?

With a credit card, you are allocated an overall credit limit as a business. Employee spending as a whole must not exceed this limit. While you must make a minimum repayment each month, you can in effect, have a revolving balance. Doing this will result in interest being applied, and no interest free days will be offered.

With a charge card, there is no set spending limit. Instead, the card provider will approve each transaction based on the business’s credit history, turnover, repayment history and spending pattern. The entire balance must be paid off by the due date each month or penalties will apply.

Making It Work

If you’re considering applying for a corporate card, it’s a good idea to have a solid set of procedures in place, both for employee card use and management of the account.

You could ask employees to provide receipts for purchases over a certain amount.

You could establish a corporate cardholder policy for employees. This could include a ban on using the card for personal expenses, a ban on certain types of transactions, or rules regarding spending limits and use of the card by authorised employees only.

You could ask employees who have access to a corporate card to sign an agreement. This document would outline the company’s expectations for card use, and what penalties are in place for misuse.

You should review card statements regularly to look closely at each cardholder’s charges. It’s also a good idea to keep track of overall use of the card account to make sure the credit limit is not exceeded.

Each of the big banks in Australia offers a corporate card range, including ANZ, CommBank, Westpac and NAB. American Express also provides an extensive corporate card range, while smaller providers and other internationals are also worth checking out.

The process of comparing corporate cards is much the same as comparing any other type of credit card or charge card. The key to making the right choice lies in understanding what your business needs, and how much it can afford to pay out.

Intro Offers: Introductory offers can add value to a card, often in the form of bonus rewards points or a reduced annual fee. Keep an eye out for any small print (for example, a spend requirement on bonus points), and make sure the offer doesn’t entice you into applying for a card that’s not right for your business in the long term.

Annual Fees: Consider how much you will pay each year in annual fees, and whether this is more or less than the value of the features and rewards on offer. In terms of additional cardholders, you will usually find corporate cards offer unlimited additional cardholders at no extra cost, but this is something worth checking before you apply.

Interest: If you think you may carry over your balance month to month, pay close attention to the card’s purchase rate. On the other hand, if you know you will clear your balance each month, check how many interest free days it offers.

Features: If features are important to you, look at what your allocated budget in annual fees could get you. Check out what’s on offer in the way of business tools, insurance covers, and travel perks such as lounge access, travel credit and free flights.

Rewards: If you’re interested in earning rewards, consider how much you will spend and on what. Check the small print to find out if there are any caps on points earning, whether points expire, whether there is a fee to enrol in the rewards program, and what the earn rate is on different types of spending (including government spending). Also look at the suitability of the rewards program, and whether it offers value to your business.

Expense Reporting Functionality: Find out how much info – and what level of detail – is included in the monthly card account report. Make sure it allows for efficient management and tracking of employee spending.

Accounting System Compatibility: Make sure the card’s reporting system is compatible with your company’s accounting software. With compatible software, charges could be visible online as soon as they’re made, to then be downloaded at the end of the month.

Whether you apply for a corporate credit card or corporate charge card will really depend on how you plan to use the card. If you know you will always clear the balance at the end of the month, and you know you would benefit from having no set spending limit, a charge card may be the right call.

On the other hand, if you think you might carry a balance now and then, a credit card may be a safer option.

As it will be your business’s credit that is assessed when you apply for the card, your personal credit rating should have no bearing on whether or not you can have a corporate card. With that in mind, your business will need to have a good credit rating in order to be approved.

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