Corporate purchasing cards are charge cards issued by a bank or financial institution to a business. Unlike personal credit cards, corporate cards do not extend a line of credit – the balance must be paid in full each month.
Corporate cards provide businesses with a flexible and efficient way to purchase and manage expenses. Employees are issued cards that are tied to the company’s master account. Limits and restrictions can be set for each cardholder based on role, needs, and spending allowance.
How Corporate Cards Differ from Personal Cards?
Corporate cards are fundamentally different from personal credit cards in some key ways:
- They are designed to be used for business expenses only. Corporate cards have restrictions in place, such as limited merchant categories, to ensure they are only used for approved purchases.
- They typically have higher spending limits than personal cards. While personal cards may max out at a few thousand dollars, corporate cards often exceed tens of thousands of dollars or higher. This enables employees to make large purchases for business needs.
- Corporate cards offer centralized billing and reporting. Instead of individual bills, all employee spending is consolidated into one statement for the company. This simplifies accounting and enables better visibility and control over expenditures.
- Spending on corporate cards is subject to policy and oversight. Companies set policies on acceptable uses and categories and monitor activity to flag irregularities. This helps mitigate fraud and abuse of corporate cards.
- Companies receive rebates and rewards. Many corporate card programs offer kickbacks and rewards based on total spend volume. These can lead to major cost savings and value.
Benefits of a Corporate Purchasing Card
Corporate cards provide numerous advantages over other payment methods like cash or personal cards. Here are some of the key benefits:
Streamlined expense reporting: Corporate cards integrate with expense management systems, allowing transactions to flow seamlessly into reports. Employees can avoid manually tracking receipts, and accounting can automate approvals and reimbursements.
Rewards and rebates: Most corporate card providers offer generous rewards programs and rebates based on total spending. Companies can earn back a percentage on every purchase. Popular options include cash back, airline miles, and point systems to redeem gift cards.
Enhanced data and analytics: Corporate card programs generate a wealth of data on spending patterns. Companies gain visibility into expenses by category, vendor, location, employee, etc. This helps inform budgeting, forecasting, and other financial decisions.
Simplified billing and reconciliation: Instead of approving thousands of individual expense reports, accounting can pay one consolidated corporate card statement. This saves significant time and effort.
Superior reporting and fraud protection: Corporate cards provide much stronger reporting and security features than personal cards. Companies can set customized limits, alerts, and other safeguards.
Key Features of Corporate Cards
Corporate cards offer a variety of features tailored for business use that make them distinct from personal credit cards. Some key features to highlight include:
Preset Spending Limits
Corporate cards allow companies to set customized spending limits for each cardholder based on their expected business expenses. This helps control individual and overall company spending. Spending limits can be set per transaction, per billing cycle, and other time periods. Limits may also vary for different merchant categories.
Category Exclusions
Companies can configure corporate cards to restrict or block certain types of purchases, like entertainment, travel, restaurants, etc. This prevents misuse of cards. Plus, exclusions ensure employees only make purchases relevant for business purposes within policy.
Fraud Monitoring
Corporate cards provide enhanced fraud monitoring capabilities relative to consumer cards. Suspicious transactions trigger alerts. Cards can be set to decline potentially fraudulent international or high-risk transactions until verified by the company. This prevents costly fraud. Their backend systems analyze transactions in real-time to detect anomalies and possible threats. This provides an added layer of protection and visibility.
Purchasing Card vs Corporate Card
A purchasing card vs corporate card is a comparison that comes with the key elements:
Differences in functionality: Purchasing cards are designed for procurement use cases like ordering supplies or managing vendor payments. They provide controls over merchant categories and spending limits. Corporate cards are optimized for travel and entertainment expenses like airfare, hotels, meals, and conferences. They focus on easy integration with expense management.
Target users: Purchasing cards are usually assigned to procurement teams and certain employees who frequently make purchases for the company. Corporate cards are widely distributed to employees who travel for business. The target users are broader.
Spending flexibility: Purchasing cards tend to have tighter restrictions around where they can be used, with limits on merchant categories. Corporate cards allow more flexibility in expenses since travel and entertainment span many merchant categories. However, corporate card programs still allow for merchant category exclusions.
Managing and Optimizing a Card Program
Once a corporate purchasing card program is implemented, ongoing management is crucial to ensure it runs smoothly and provides maximum value. Companies should focus on these key areas:
Auditing Card Usage
Regular audits of corporate purchasing card spending help identify any misuse or fraud. Analyze transactions to ensure employees adhere to policies and spending aligns with budgets. Audit reports from the card provider give visibility into high-risk transactions, declines, and suspicious patterns. Automated alerts can flag issues for further review.
Promoting Adoption
Get the most out of a card program by driving employee adoption. Offer training and share best practices on using cards. Highlight the benefits and process for getting a card. Tie card usage to performance incentives. Recognize top adopters. Promote the card as the preferred payment method for business expenses. Address any objections that hinder adoption.
Renegotiating Terms
As a program matures, revisit contract terms with the card issuer. Look for ways to reduce costs through lower interest rates or annual fees. Seek opportunities to earn rebates or cashback based on higher volume. Negotiate better interchange rates. Review liability protections, reporting, integrations, and other features to maximize program value. The stronger the relationship and usage, the more leverage for improved terms over time.
Get ITILITE’s Purchasing Card
A corporate purchasing card offers numerous advantages, making it an intelligent financial solution for businesses of all sizes. With minimal effort to implement, corporate card programs enable companies to reduce administrative costs, improve compliance, and gain valuable spending analytics.
Get ITILITE’s corporate purchasing card to experience these benefits yourself. Book a free demo today!
