The Pros and Cons of Corporate Cards for Your Business

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Corporate cards are virtual or physical cards that companies issue to their staff that have authorization to make purchases on behalf of the business. Over the last few decades, these cards have become effective alternatives for companies to meet their payment and expense management needs. With corporate cards for your business, employees can pay for authorized expenses like flights and hotels without having to pay for them out-of-pocket.

A corporate card bears the company’s name and the designated team member’s name. To determine whether corporate cards would be a good fit for your business, you need to understand their pros and cons first.

Pros of Corporate Cards for Your Business

Below are the pros of using corporate cards for your business:

1. Easily Manages Business Expenses

One of the significant benefits of using corporate cards is their ability to ease expense management. With these cards, companies limit the amount cardholders spend on each transaction. Besides this, companies control where employees should use their corporate cards. This aspect makes it easier to restrict purchases from specific merchants, vendors, and even countries.

For staff, using corporate cards provides financial relief by eliminating the need for them to cover business-related expenses. In addition, corporate cards for your business eliminate the need for employees to perform repetitive tasks of filing receipts and submitting reimbursement claims.

2. Improves Expenditure Tracking

When your employees use corporate cards to pay for their travel expenses, expense data is sent to their managers and accountants through a digital platform. This makes expenditure tracking easier.

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This allows managers to view expenses in real-time and to confirm whether they comply with the expenditure guidelines that the company has in place. Further, accountants can generate detailed expenditure reports showing each team member’s transactions. Companies can link corporate cards to expense management software to optimize the process as well.

Since the cards eliminate reimbursement claims, accountants and managers are tasked with getting justifications for expenses from employees. This makes the management of expenditure reports a simple and quick process.

3. Secures Business Transactions

Corporate cards offer companies the benefit of securing business transactions. If a team member loses a corporate card, a company can block the card with a single click. This works well when companies give prepaid corporate cards to each team member instead of having them share one.

In such instances, blocking stolen or lost cards does not interfere with the activities of other employees. Most importantly, companies can encrypt card data to protect sensitive information. Since businesses can effortlessly track transactions, companies can eliminate attempted fraud or inconsistencies.


4. Simplifies International Payments

Corporate cards give businesses access to multiple payment options. For instance, employees can make accommodation and transport bookings and payments online. This gives them a lot of flexibility, allowing them to make payments in foreign currencies without going through exchange offices. Unlike cash, corporate cards are less likely to get lost during trips. This makes them secure and easily adaptable to team members’ needs.

Cons of Corporate Cards for Your Business

Despite the pros highlighted above, using corporate cards for your business has several drawbacks. These include:

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1. Limited Acceptance

Although using corporate cards provides effective ways of managing expenses, some merchants don’t accept them as a mode of payment or accept payments that don’t exceed specific amounts.

2. Employee Fraud

While corporate cards allow accountants and managers access to real-time information about expenses, employees may still use the cards to pay for personal expenses.

Additionally, using corporate cards may encourage staff to spend freely, like hosting extravagant dinners or staying in luxury resorts. This kind of fraud can cause businesses to lose significant amounts of revenue each year without proper safeguards.

To keep this from happening, companies must monitor corporate card spending. They must require employees to account for charges exceeding specific amounts. Companies should also establish policies that ban spending on personal items, set spending limits, and stipulate card authority.

3. Data Theft

Giving employees corporate cards can expose card data or data linked to it to theft, putting the business at risk. Aside from possibly losing money, the exposed data might also compromise the privacy of the business.

Final Thoughts

Corporate cards are credit cards that established companies issue to employees to enable them to pay for business expenses directly from a credit card account. These cards have become common among businesses. Thus, it makes expense management and payment more accessible for employers and employees.

Although they offer many benefits to businesses, corporate cards have various drawbacks. If you consider using corporate cards for your business, the pros and cons discussed above allow you to make a better decision.

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