Monday, February 26, 2024
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Benefits of Corporate Credit Cards for Small Businesses

Corporate credit cards in India

A corporate credit card is a type of payment card that a business issues for its employees to make expenses faster and conduct smoother operations. Corporate credit cards benefit a company by helping them track and control organization-wide expenses in an effective manner. 

These types of cards are a great relief to companies and employees that are tired of the tedious and inefficient process of reimbursements. Corporate cards have been slowly gaining popularity in India for their ease of use. With new corporate card providers coming into the market, this is only going to increase the rate of adoption of these tools. 

How do corporate credit cards differ from regular business credit cards?

Regular business credit cards differ from corporate credit cards based on who is eligible to receive and use them, who is liable to pay the credit, and other requirements the business must fulfill.

  • Liability – When a business owner opts for a traditional business credit card, the liability to pay the dues falls on the individual legal entity, i.e. the business owner. On the other hand, the liability to pay the dues of a corporate credit card falls completely on the corporate entity; there is no personal liability to the individual cardholder.
  • Eligibility – While the exact eligibility criteria for a business credit card and corporate credit card depends on the provider, generally speaking, you should be a limited firm, bank, small-scale business, partnership firm, or government-funded company to receive and use a corporate credit card. 
  • Requirements – The mandatory requirements for a corporate credit card are usually crucial information in the form of financial statements and your credit history to determine creditworthiness. Your business track record is also checked to identify the longevity of operations and whether your business can sustain itself to pay the dues of a corporate credit card. 

Benefits of corporate credit cards

Corporate credit cards benefit not only the company but also the employees. They function in a way that helps fix the broken expense management processes within an organization. 

Corporate credit card benefits for businesses

  • Helps streamline expense management – The traditional process of letting employees spend on business expenses and then reimbursing them came with a lot of problems. The expense reporting process is time-consuming and the verification process is tedious for the finance and accounting team. With corporate credit cards, you can streamline expense management by giving each employee a budget to spend and setting up custom controls to avoid overspending. 
  • Improves cash flow – A delay in spending can seriously affect the productivity of employees and the overall operations of the business. Budget approvals should not get in the way of an employee completing their tasks on time. With corporate credit cards where you can set up monthly refreshing budgets, employees have quick and easy access to spend responsibly and complete their operational tasks.  
  • Better transparency and control – Corporate credit cards that you issue for your employees are generally linked to a central system or platform. This platform records all the transactions in real-time so that you know where your company budgets are being spent at all times. This gives you complete transparency of business expenses and also lets you control any expenses that seem to be out of order or unnecessary. 
  • Reduced expense fraud – When issuing corporate credit cards to your employees, you can set a custom spending limit for each card. This stops any kind of overspending. Corporate credit cards also have the MCC(merchant category code) blocking feature; this lets you block employees from spending on out-of-policy expenses. Additionally, you can also make it mandatory for employees to attach a receipt of the expense made through the provider’s mobile app to verify the transactions later. 
  • Helps improve business credit score – A corporate credit card is a financial tool that helps your business build its credit history and improve the business entity’s credit score by making timely payments. This is especially useful for future financing of the business when you seek out loans. The credit history you would have built over time will showcase your creditworthiness and get you higher amounts of loans at lower interest rates. 
  • Cash Rebates – Many corporate credit card providers give their customers benefits such as cash rebates or cashback for using their cards. You can often use this cash rebate to pay the card dues or add it to the balance to your corporate credit card balance. 
  • Help increase employee satisfaction – From an organizational standpoint, you need to do everything to keep your employees happy and productive. Issuing corporate credit cards for them helps to keep their morale high and also induces a feeling of trust between the employees and the company. The responsibility of owning and using a corporate credit card helps an employee feel more valued.
  • Streamlines business travel expenses – Travel expenses are often one of the most crucial parts of any business for its employees. Traveling salesmen and other departments that may need to travel on a daily basis need quick and easy access to funds. Providing these employees with a corporate credit card can help ease the burden and streamline business travel expenses. 
  • Access to spend management tools – A corporate credit card is essentially a spend management tool that is part of a larger expense management system. This ecosystem of financial tools often includes a software platform where you can track, control, and manage all corporate credit card expenses. The provider may also have a mobile app that lets you have quick access to information, approve requests, and manage budgets. 

Best Business Credit Cards in India 2023

Corporate credit card benefits for employees

  • Convenient payments – Employees can easily make payments on behalf of the company using corporate credit cards. They do not have to wait around to get approvals for each and every expense. Employees are able to carry out their jobs faster and ensure that tasks are completed on time and not delayed due to slow management processes. 
  • No reimbursements – The traditional reimbursement process is admittedly inefficient and can cause financial burdens on an employee. Rather than making out-of-pocket expenses and facing the hassle of saving multiple receipts to submit with an expense report at the end of each month, corporate credit cards enable employees to spend wisely without it affecting their personal finances. 
  • Improved morale – The fact that a company has chosen to give its employees individual corporate cards shows that they trust them. This is a proud responsibility that employees carry to make smart spending decisions. The trust and delegation of authority shown by a business to its employees will boost their morale making them more productive and happy. 
  • Access to business capital – As an employee with a corporate credit card, you have direct access to a certain amount of company funds. This enables you to make business expenses and be responsible for how you use the allotted capital. 

How to choose a corporate credit card in India?

There is no shortage of corporate credit card providers in India. Many popular banks like SBI, HDFC, etc. provide corporate cards to businesses. FinTech companies like Volopay also offer corporate cards with advanced features like custom spending controls, auto-lock dates, real-time tracking, and a centralized software system for managing expenses. 

So how should you choose one for your business? While you need to evaluate your own business needs, there are some specific things that you should look for when choosing your card provider:

  • Custom controls: Ensure that the corporate credit cards that you get are linked to a software platform through which you can set spending controls and limits for each card. 
  • Fees and other charges: When you’re opting for a card provider, each of them may have a separate annual or monthly subscription fee depending on the plan you choose. Make sure all these charges are transparent and there are no hidden charges. 
  • Credit limit: The card provider will determine a credit limit based on your business’s financial health and credit history. Make sure that the amount that you get is enough to satisfy your daily expense requirements. 
  • Application process: The process that is followed by a corporate card provider to issue corporate credit cards to your business and its employees should be straightforward and easy to follow without much of a time delay.

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