How do business credit cards work

To learn more about corporate credit cards, and whether one is right for your business, check out WalletHub’s guide on corporate credit cards. In general, there are two types of corporate credit card relationships that are actually attainable for the vast majority of the business community. The main distinction is whether or not employees must actually pay for the purchases they make. Business credit cards, on the other hand, are geared more toward small businesses, startups, and even sole proprietors.

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. Newer small business owners are in the early stages of building a business credit profile. If you are one of them, lenders may look at your personal credit score as an indicator of how you’ll handle a business credit card. A secured credit card may be a good option if you’re looking to establish your credit. Secured credit cards require a deposit that serves as collateral against purchases made on the card.

Corporate prepaid cards help businesses control costs effectively by allocating specific budgets to employees. They allow employees to charge travel-related expenses like flights, accommodations, and meals directly to the company. Corporate travel cards are designed specifically for business-related travel expenses. Also, if debt on a corporate card is overdue, it may show up on the credit report of an individual cardholder.

However, the biggest benefit to a corporate credit card is that individual employees can be issued their own cards to pay for work-specific business expenses. Whether it’s paying for plane tickets or renting office space, having a corporate card can make handling business expenses for a large corporation much more efficient. Smaller companies that don’t fit the criteria for a corporate credit card may still find a business credit card that suits their needs.

If the card features what’s known as individual liability, the cardholder is responsible for paying monthly bills, then getting reimbursed for those expenses. Unlike being an authorized user on a small-business card, having a corporate card in your name should not impact your personal credit, regardless of how your company ultimately handles the account. However, employees can see impacts on their personal credit if the primary cardholder fails to handle the account responsibly.

In terms of fees, corporate credit cards can have high annual, service, and interchange fees, whereas business credit cards will vary by lender. Note that secured business credit cards will often charge annual fees, late payment fees, and returned-check fees in addition to interest. Corporate cards (like the Ramp card) place liability on the company only, whereas business credit cards may hold either the individual business owner or the company responsible for the charges. Corporate cards are primarily issued to employees of organizations for covering business-related expenses such as travel, client meetings, and office supplies. These cards are designed to help organizations manage their finances with features like spending limits and integrations with accounting platforms. Essentially, they are like personal credit cards but offer features tailored for business use, such as higher credit limits, expense tracking, and rewards on business related purchases.

Corporate credit cards:

By implementing the best practices of corporate card management, businesses can ensure compliance with company policies while minimizing the risk of misuse. To issue corporate credit cards for them, all you have to do is head to your admin dashboard, fill in the necessary details and submit the request for new cards. Do not choose a corporate card program that does not give you the functionality to track and control how your money is being spent by employees.

If you’re going to pay back employees in the form of reimbursements, you might as well give them smart corporate cards. Most organizations are worried about employees making expenses that are not allowed. Your Volopay corporate cards can be used to make business expenses as soon as you receive them.

Explore our business credit cards

These cards streamline the expense reporting process, reducing paperwork and administrative efforts for both employees and finance teams. To enhance global operations and simplify spending, selecting the right virtual card provider is crucial. Check out our blog on Best virtual credit card providers in the US for 2025 for top recommendations. The categorization is crucial for accounting and expense tracking, allowing for more efficient financial management.

Streamline Expense Management

These cards are handy for companies with multiple employees who must make business-related purchases. Finally, you or your finance team should set up controls on employee card accounts. This involves configuring spending limits and restrictions based on each cardholder’s role and your company’s budget. For example, you can set daily or monthly spending limits, limit transactions from certain types of vendors, or require approval for expenditures over a certain amount.

A longer application process

Additionally, corporate credit cards often come with advanced financial controls, flexible spending limits, and automated expense reporting, making them ideal for businesses with multiple departments and employees. Businesses should carefully evaluate their needs, credit standing, and financial goals before selecting the correct type of credit card. Business credit cards typically depend on individual liability, meaning the business owner is personally responsible for the debt. In contrast, corporate credit cards rely on corporate liability, where the company assumes responsibility for managing and repaying expenses. Business credit cards provide flexibility and easy approval, making them ideal for startups and small enterprises.

• Your funds are always safeguarded in line with the local regulations where Airwallex operates.
• It’s also worth noting that certain fintech companies are making corporate cards easier for smaller businesses to qualify for.
• Corporate cards provide detailed transaction data, simplifying expense tracking and reporting.
• To ensure the standards are met, the application process may consider the financial health of the company.
• Business credit cards, targeted towards SMEs and entrepreneurs, are used for similar purposes but have different eligibility criteria.

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If you know you’ll carry balances on the card from month to month, consider the card’s what is corporate credit card interest rate, which may vary over time. Some cards offer a 0% APR for balance transfers or new purchases, which can make them attractive if you carry a balance on a card with a high interest rate or need to make a large purchase. Combine your travel, entertainment, online business purchases and accounts payable into a single payment solution that makes doing business easier.

• One of the key benefits of virtual cards is enhanced security, as each card can be linked to specific budgets or vendors, reducing fraud risk and improving financial control.
• This is why many small companies rely on business credit cards to help keep things running smoothly.
• In other words, the issuer can go after funds held in savings accounts, certificates of deposit (CDs), etc.
• Companies with lower turnover can apply for corporate credit cards against secured collateral such as fixed deposits, bank guarantees, etc.

Credit limits also tend to be higher, and the card is held in your company’s name, not your own. A corporate card is a payment card, sometimes a credit card, that employees receive to use in their day-to-day role for work-related expenses. All transactions are tied to the business entity rather than specific employees or the owners. The primary purpose of these cards is to provide a convenient payment method for employees while enabling the company to monitor and control spending effectively through corporate credit card management. Credit limits on a corporate credit card are determined by several factors, including the company’s revenue and credit history.

A Corporate Credit Card is a specialised financial tool issued to employees of a company or organisation. These cards are intended to cover approved company expenses, such as travel, supplies, and client entertainment. Unlike personal Credit Cards, they are issued in the company’s name, reflecting the Corporate Card as a business expenditure solution. The primary difference between corporate cards and small-business cards is who is liable for debt and fees. With small-business cards, the primary cardholder is personally liable; with corporate cards, the company is liable. Many credit card companies allow you to issue additional cards Which can be used to add employees who can use their card to make purchases on behalf of the business.

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. The offers that appear on this site are from companies from which CreditCards.com receives compensation. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within listing categories.

If you’re an employee looking to understand your company’s corporate credit card policy, you too can find everything you need to know below. In particular, we’ll tell you how to use your corporate credit card responsibly while reaping all the benefits you can. We’ll also highlight some of the best cards to consider if your arrangement involves submitting expense reports for work-related purchases made with a card of your choosing. But in a more colloquial sense, a corporate credit card is what you might call the card that an employee receives as an authorized user on a company’s business credit card account. Some people also use it as a synonym for “business credit card.” And they’re not wrong. Other than matters relating to who’s legally responsible for paying the bill, there’s really no difference.