Are you thinking of getting a corporate payment card for your business? Here are some pros and cons to help you make up your mind. Corporate payment cards can be a great way to track and manage your company’s spending, but they also have some drawbacks.
PROS:
1. Separates business and personal expenses- This can be helpful for tax purposes and keeping track of how much your business spends each month.
2. Can help build business credit- If you make sure to pay your bill on time and in full each month, you can start to build up your business credit score. This can be useful down the line if you ever require to take out a loan for your company.
3. It can offer rewards and perks- Some corporate payments cards come with great rewards programs, such as cashback or points that can be redeemed for travel. Perks might include free checked bags or priority boarding on flights.
4. Besides this, cards can help you manage employee spending- If you give company cards to your employees, you can easily track and manage their spending. This can help keep tabs on expenses and ensure that company money is spent wisely.
5. The cards have dedicated or on-call customer service representatives. For this, you can get help with any queries or issues with your card. So, this is an advantage over personal credit cards that don’t offer this type of service.
6. You can earn rewards and benefits that help the company, including travel and entertainment perks.
7. The company can get discounts on specific products and services using a corporate payment card. So, this can save the company money on business costs.
CONS:
1. There is a risk of fraud or misuse- If company payment cards are stolen or employees misuse them, it can cost the business a lot of money.
2. Can be expensive- Some corporate payment cards arrive with annual payments that can be rather high.
3. There is a potential for abuse- If you give company payment cards to employees, there is always the potential for them to abuse the privilege by making personal purchases or spending more than they should.
4. There is a potential for abuse- If you don’t manage your corporate payment card responsibly, it can quickly get out of control. Make sure you have a clear spending policy to avoid any problems.
5. You might have to pay an annual fee- Some corporate payment cards come with an annual fee, which can be a downside if you’re trying to save money. However, many of these cards also come with great rewards and perks that can offset the cost of the fee.
6. It can be challenging to get approved- Unless your business has been established for a while, getting approved for a corporate payment card can be challenging. Be prepared to provide financial statements and other documentation to the issuer.
7. Employees cannot earn their rewards- One downside of corporate payment cards is that employees cannot earn their rewards. This means they will not be able to take advantage of travel or cash-back programs. Instead, the company will receive the benefits.
8. You might have to pay higher interest rates- If you carry a balance on your corporate credit card, you will likely have to pay higher interest rates than a personal credit card. This is because business payment cards usually have higher APRs.
9. There can be restrictions on how you use the card- Some corporate payment cards have restrictions on how they can be used. For example, some cards can only be utilized for business expenses, while others might limit monthly spending.
Overall, you can say that corporate cards or virtual credit cards for business offer both pros and cons. It’s crucial to weigh the advantages and disadvantages carefully before deciding if a corporate payment card is right for your business.
Final Thoughts
You need to decide what is best for your company regarding company cards. If you think that the pros outweigh the cons, then getting a company payment card might be a good idea. So long as you use it responsibly, a corporate payment card can be a great way to manage your company’s spending!
