What are corporate cards and how should you use them?
Corporate cards can be confusing. So, before you start trying to compare different offers, why not take a moment to answer a few crucial questions, such as:
- What are corporate cards exactly?
- Are corporate cards right for your business?
- What pitfalls do you need to avoid?
In this guide, we’ll share everything you need to know about corporate cards.
We’ll take a look at corporate card benefits and drawbacks, and explore some corporate card best practices.
Strap yourself in.
What are corporate cards?
What is a corporate card? A corporate card is a payment card that companies issue to employees to use for business expenses, such as supplies and travel. Corporate cards allow employees to make business purchases without using their personal finances and waiting to be reimbursed by the company.
Corporate cards are often referred to as company cards, purchase cards, or corporate business cards. The term “corporate card” technically includes both credit and debit cards. However, these days, the term is typically synonymous with “corporate credit cards.”
Corporate card advantages and disadvantages
Now we’ve covered what a corporate card is precisely, let’s dive a little deeper.
In this section, we’ll explore some corporate card benefits and drawbacks – for businesses, and then for employees.
Corporate card advantages
- Less personal risk: It’s possible that employees may misuse corporate cards or commit fraud. Unlike business credit cards, corporate cards hold the company responsible for any unpaid debts. So, although they won’t prevent misuse, they will protect your personal finances.
- Advanced tracking and controls: As your business grows, it can become increasingly challenging to track business expenses. The best corporate card programs provide tools to make this easier. For example, Neat’s Visa card dashboard is designed to help businesses track, monitor, and control company expenses. It allows managers to customise spending limits for each cardholder, and employees can use the Neat App to photograph and upload receipts on-the-go.
Corporate card disadvantages
- Higher expenses: Corporate cards may also encourage some employees to spend more than they need. For example, they may visit luxury resorts or purchase upmarket dinners unnecessarily.
Corporate card advantages for employees
- No personal liability: Typically, the company is liable for payment, not the employee.
- No need to front money: Some businesses require employees to pay for expenses out of their own pockets, and then wait to be reimbursed. As a result, the employee is still responsible for the payment if the company refuses to repay them. Corporate cards don’t require employees to lend money to the company or wait to be reimbursed.
Corporate card disadvantages for employees
- No rewards: When employees pay for expenses themselves, they’re able to collect card points and miles. After the company reimburses them, they get to use these rewards on personal purchases.
11 Corporate card policy best practices
When managed effectively, corporate cards provide plenty of benefits. Here are some corporate card policy best practices to help you minimise your expenses and prevent employee fraud.
- Set clear expectations: Setting clear corporate card expectations about spending limits and acceptable purchases can help you save money in the long run. For example, only the person whose name is on the card should use it, and corporate cards should never be used for personal purchases.
- Use tools: If you sign up with a service like Neat, you’ll gain access to a dashboard that allows you to monitor, control, and guide employees’ corporate card spending.
- Create limits and restrictions: It’s essential to customise limits for each cardholder. For example, an executive travelling abroad on business will need to spend far more than an account manager having the occasional dinner with a client.
- Set spending alerts: Consider keeping a closer eye on corporate card purchases with instant spending notifications.
- Require approval for large purchases: It can sometimes be useful to require approval for larger expenses, such as long-haul flights and expensive events. Requiring authorisation will help ensure that larger expenses are justified.
- Require receipts: Without the need to be reimbursed, some employees may spend a little too freely. Requiring receipts is one way to hold employees to account for their purchases.
- Make expense reporting easy: To get the full picture, it helps when employees provide additional information about expenses, such as the vendor’s name and business purpose. However, if you want employees to track their purchases consistently, you need to make it easy. For instance, the Neat App allows employees to upload photos of receipts.
Corporate card best practices for employees
- Learn the rules: Employees should be aware of the policies and rules that govern their corporate cards. When employees know these regulations, they’re able to spend within the company’s guidelines and avoid making costly mistakes.
- Keep receipts: Every employee should be prepared to explain and justify each expense made on a corporate card. Managers may question purchases weeks or even months after they were made, so it’s vital to keep records of each transaction.
- Manage risk: Corporate cards can often have substantial limits, so employees should guard them carefully and know what to do if the card is lost or stolen.
- Spend wisely: Even if an expense complies with the company’s corporate card policy, it doesn’t mean it’s a good use of company money. Employees should strategise how best to use corporate cards to grow the business and earn their manager’s trust.
Neat’s Visa cards: Made for entrepreneurs
Neat’s Visa commercial card is made for entrepreneurs, start-ups, and small businesses.
The Neat card dashboard and app make it easy to customise spending limits, monitor purchase notifications, and track expenses – you can even integrate accounting software like Xero.
Plus, Neat’s Visa card provides perks that actually make a difference to your business, such as:
- 1% cashback on all purchases
- 25+ exclusive discounts on LinkedIn, Google Ads, and more
- Limited corporate liability and travel accident protection for cardholders
If that’s not enough, Neat provides peace of mind with no hidden charges, 24/7 chat support, and real-time expense notifications through the Neat App.
Summary: What is a corporate card?
Companies issue employees with corporate cards to use when purchasing business expenses, such as aeroplane tickets, meals, or supplies. This prevents employees from having to pay for expenses with their personal money and wait to be reimbursed.
In summary, here are some corporate card policy best practices:
- Create definitive spending rules and set clear expectations for employees
- Use tools like Neat to manage and monitor your corporate cards
- Customise limits and restrictions for individual cardholders
- Set spending alerts to monitor purchases in real-time
- Require approval for large purchases to minimise expenses
- Require receipts to ensure that employees stay accountable for purchases
- Make expense reporting easy by providing tools to your employees like the Neat App
If you’re looking for a way to improve cash flow, manage expenses, use different currencies, and more, check out Neat’s Visa card.