There are times when employees are required to spend out of their own pockets to fulfil a company’s requirements, especially when it comes to minor projects or business trips. As a business owner or employee, you understand the inconvenience of producing invoices and bills, verifying them, and carrying out the reimbursement. Hence, credit cards can be huge support systems that eliminate this hassle entirely.
Under this umbrella, you will find two credit cards: business credit cards and corporate credit cards. While these terms are used interchangeably, you must understand that both differ greatly. This difference remains in terms of rewards, privileges, eligibility, spending limits, integration of tracking systems, and more.
What is a Business Card?
A business card enables you, as a business owner or authorised employee, to bear company expenses like travel/utility bills, dining expenses, office supplies, etc. Like most credit cards, business cards also allow you to earn cashbacks, discounts, and reward points on the purchases you make. Typically, these credit cards have higher credit limits as compared to basic credit cards.
Should You Use a Business Card?
As a business owner or employee, you must know that business credit cards can be used by companies of all ages, revenue sources, and workforce sizes. Any registered entity, right from a freelancer to proprietors, can get this credit card. If you are the business owner, you will need to give a personal guarantee on behalf of your company. This means that if your company goes bankrupt or is weighed down by a debt, you personally will be liable to repay the debt.
Benefits of a Business Card
Here are the benefits of getting a business card:
- You can build a business credit profile which is helpful when you borrow in the future
- You can set spending limits to ensure that you have control over the money your company spends
- You are able to keep a clean track of your company’s expenses
- You could get access to VIP lounges on business trips, discounts on hotel reservations, etc.
- You can earn 5000+ reward points for touching milestone spends
- You could get cashbacks after crossing a specific spending threshold
What is a Corporate Credit Card?
While a business credit card can be used by anyone, right from a small business to larger corporations, corporate credit cards can only be used by companies that have a high revenue. This card requires less than 15 users to qualify for it. Hence, if you apply for a corporate credit card, the issuer will take a look at your company’s credit history.
While in most cases, the repayment responsibility lies in the hands of the business owner or the business, a credit card like this holds any authorised cardholder liable to repay the debt, be it an employee or an owner. You also have the option of instilling joint liability where two or more authorised cardholders can be responsible for repayment
Should You Get a Corporate Credit Card?
The eligibility criteria for a corporate credit is stricter as compared to a business credit card. Applications are open for corporations that have a healthy credit history. If you are willing to let liabilities fall onto your company and other authorised cardholders, you can apply for this card. Moreover, the minimum company revenue required to qualify can differ from issuer to issuer.
The Benefits of a Corporate Credit Card
Here are the benefits of getting this credit card.
- You can keep a close eye on your company’s spending patterns
- The credit card can automatically enter transaction data into your accounting software or system
- You will have dedicated customer support since most cards come with an assigned manager or representative
- An employee does not have to shell out any money from their pockets and wait for the company to reimburse the money later
- There’s no room for any individual to scam you with fake reimbursement proofs like faux invoices and bills
- You can allow your employees to individually earn reward points for crossing milestone spends
- You can also choose to transfer reward points to business at large
The Key Differences Between a Business Credit Card and a Corporate Credit Card
In the table below, you will find a comparison between both credit card categories which can make both concepts easy to understand.
|Business Credit Card||Corporate Credit Card|
|Accessible by all kinds of business owners||Available for larger corporations only|
|Requires no minimum number of employees, annual revenue threshold, etc.||A corporation needs to cover ₹10 Crores or more in revenue to qualify|
|Business owner holds personal guarantee and is responsible for repayment||Business owner is not required to give personal guarantee and employees can hold repayment rights|
|Business owner undergoes credit checks||If employees share liability, they can undergo credit checks|
|Main cardholder or account holder is held liable for spending and debt||Employees can be personally held liable in case of personal spending|
|Spending limits are set on all expenses made through the card and cannot be categorised||Spending limits can be categorically for each individual cardholder|
|Tracking and reporting of expenses are carried with basic tools||Recording and tracking is carried out through automated tracking and real-time spending notifications, etc.|
|Can integrate the company’s accounting software||Can integrate the company’s accounting software|
|Reward points, cashbacks, discounts, etc. mirror those of a basic credit card||Reward points, cashbacks, and discounts are earned on a substantial level|
As a business owner or authorised employee, you now know the basics of business credit cards and corporate credit cards. The eligibility criteria makes the case an open and shut one; if your company has a revenue of ₹10 Crores and above, you can apply for a corporate credit card without hesitation. However, if you’re starting out with a new, smaller business, you need not worry. The business credit card has your back. You can be sure of one thing: with the help of credit cards like these, you can rest assured knowing that your company’s expenses are well-managed and under control.