If we ponder the essential elements of a successful business, we will find that most organisations focus on consistency in leadership, productive work and an upstanding financial record. With the onset of unsurmountable tech developments in the past few decades and a wholly digitised banking system, account keeping has never been more thorough. Digital transformation allows companies to closely check all the profits and expenses in a systemised manner. This led to the rise in the use of corporate credit cards.
What are corporate credit cards?
Just like a personal credit card, a corporate credit card also follows the policy of “spend first, pay later.” When businesses hit big, say several million dollars in revenue, all their employees are given a commercial credit card issued to the firm by the bank service providers or the credit card company. If any delinquency, loan or extra expenditure, the firm is held responsible instead of the employee.
Now, whenever an employee needs to travel for work purposes or go for a client dinner on behalf of the company, they can pay using a corporate credit card. Similarly, any travel & entertainment expense incurred for professional reasons can be handled with the help of a company card. In addition, depending on the policies and card’s upper limits, other costs like ordering raw materials and merchandise can also be counted on it.
The benefits of using corporate cards
Corporate cards offer multiple benefits for both employers and employees. Detailed analytics for all expenditure help businesses create an efficient business plan for the upcoming quarter. Employees can also find it easy to keep their personal and professional accounts separate. In foreign transactions, it is possible to avoid more or less reimbursement due to constant changes in the exchange rate.
Employee satisfaction
We have all heard that “Customer Satisfaction starts with Employee Satisfaction.” There’s no better way for employees to manage their company expenses than using a corporate credit card. Whether you need to order some material at your residence or travel to a site location, business credit cards cover all work-based expenses quickly.
This also eliminates the need for employees to use their accounts and submit an expense sheet at the end of the month.
Reimbursement can sometimes take a long time which ultimately leads to employee dissatisfaction. However, with corporate cards, there are no such problems as the firm itself handles the payment.
Better expenditure control and visibility
While operating a manual system, the finance team usually faced significant challenges like a detailed classification of expenses into different categories, a complete analysis report and a fixed upper limit on funds authorised. However, all these factors can be easily managed with the implementation of corporate credit cards. In addition, the finance manager can now use the final credit card statement to keep a database of all expenditures and profits.
Businesses can also set a limit on the maximum amount to be spent and set pre-approval for each expense paid. This means that only the credit card will decline any payment process that is not pre-approved by the company.
These cards can also be active only on business days and expire on a specific date fixed in the schedule. All the data compiled using the expenditure records can easily be used as a graph or a visual dashboard for the finance department to manage the budget most sustainably. If a specific category is taking up more money than it should, a brilliant strategy can be figured for the same.
Cash rebates
Banks usually offer an annual cash rebate that amounts to nearly 1-5 per cent of the amount spent. With most companies spending about 10-12 per cent of the budget on travel and entertainment, the cash amount refunded is enough to subscribe to essential tools and software or run a small department for an entire year.
Mid-level companies usually can find themselves earning nearly 5-6 digit amounts back each year for all the individual or corporate expenses incurred. For example – if a company spends almost $5 million per year through a corporate credit card, it can earn somewhere between $50,000 to $2,50,000. This is a substantial amount when considered in the final budget.
Discounts from the supplier
How many times have you heard of a company bulk-ordering raw materials and then keeping the payment on hold because of internal financial mismanagement? Even though it is a common scenario in the real-time market, suppliers do tend to offer substantial discounts and certain benefits in the case of timely payment. With the help of corporate credit cards, businesses can now promptly tally their accounts by setting up automatic and regular card payments to avoid any delay in paying the workers and suppliers. This also helps increase the trust factor and goodwill of any organisation, further leading to more professional connections.
Reduction in expense fraud
Manually handling the company’s finances might be draining all its finances, owing to business expense manipulation and exaggeration by most employees at the time of receipt submission. For example, if an employee pays cash in hand and then brings back a fake receipt to submit to the finance manager, there is less chance of catching the fraud.
Often businesses have noticed that employees return the items they have been reimbursed for, write off more extensive tips in restaurant receipts, downgrade to the economy after paying for a business class seat and so on. With a corporate credit card in use, all this extra expenditure goes nil. In some cases, the company can also set up a payment system where the card is used, and it needs to be pre-authorized.
Keep a check on real and virtual cards easily
Instead of routing through the credit card company or the bank each time, the finance manager can quickly issue a new corporate card with the help of a central dashboard. This also enables them to keep a check on expenses paid for via real or virtual cards. The administrator has the authority to add or delete members, issue virtual cards, or limit the budget. In addition, virtual cards sync up with digital banking options like Apple or Google Wallet instantly.
Easy integration with expense management systems
By integrating the corporate cards with the expense management system, financial management becomes transparent and accessible. Credit card statements can be added to the system, which then inputs all the data into ERP, thus easing client payment. This also saves the employee’s monthly hassle of submitting expense reports.
Credit card rewards
The significant advantage of owning a credit card is all the rewards points that follow. Depending on the guidelines and corporate card plan, these rewards can be issued to businesses or individual employees. Credit card companies usually offer specific incentives as a mode of gratitude or on an annual basis. Individual cardholders can even transfer these rewards to their accounts. Rewards can include credit points or discounts on airfare, accommodation, deals at specific shopping outlets or access to air lounges. However, employees would need to forfeit their rewards in case of job change or expulsion.
Though small businesses can’t possibly avail themselves of all the benefits of corporate credit cards, it is still a significant relief for many medium or large-sized companies. Even if the application process might be tenacious, the ultimate pay-off, in the end, simplifies the entire expense procedure for any organization. It also helps companies keep a check on travel and entertainment expenditures. So, in case your firm is planning a business trip, you can choose EaseMyTrip Flights – the online travel portal where they provide the best deals for corporate and group bookings.
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