Corporate cards

Business credit cards and charge cards are designed for small to medium sized companies. The only extra eligibility requirement (when compared with a personal credit card) is that you need to have an ABN. If your business is not incorporated, you will be personally liable for the debt. If your business is incorporated, the liability may be shared between you as a person and your business as a separate entity, or it may be a liability solely for the business. Where supplementary cards on a business card account are issued to employees, the employee may also have some liability for the spending they make using their card.

Corporate cards are intended for larger businesses. In the case of American Express, all of its corporate cards are charge cards, and Amex states that they are designed for companies with a turnover of $10 million or more. The cards are only issued to incorporated businesses, and the business has sole liability for the debt. The name of each individual employee to whom the card is issued will appear on his or her card, as well as the name of the company.

Corporate credit cards are only issued to large corporations. The company, not the company’s owners or individual cardholders, is responsible for the debt.

There are numerous. The main benefits include:

• Employees can easily pay for authorised business expenses.
• Reporting, record-keeping and consolidation of employee expenses is improved, since the monthly account statement lists individual employee expenses and company total expenses.
• Cards usually earn rewards points on spending, points which can be used by the company to reduce expenses (e.g. exchange frequent flyer points for award flights) or kept by employees personally as an incentive or compensation.
• Cards usually come with benefits tailored to large corporations, such as business-oriented travel insurance and emergency assistance, airport lounge passes or membership and special privileges or discounts with global hotel chains.
• The company will be protected against fraudulent use of the card, provided they have strict procedures in place to educate employees about card security and to check that employees are not using the card improperly.
• Business owners have no personal liability for the debt, as long as they take the required precautions against fraud and improper use.
• The company will have access to a dedicated company service representative.

The annual fee (which in many cases will apply to every additional card issued to employees) may outweigh the benefits if the card is not used regularly. Companies must have strict procedures in place to ensure that employees do not use their corporate card for personal expenses.

Yes. Supplementary cards can be controlled by varying individual credit limits.

Yes, this may be possible if the card issuer has software in place to control it. For example, a procurement officer may only be allowed to purchase business stock or equipment from certain suppliers, but not use the card for travel and entertainment.

Corporate cards offer special financial tools to help with expense tracking, budgeting, accounting and taxation. Online access means that most transactions will be visible shortly after they are made. And each individual card’s monthly transactions are itemised in detail in the monthly statement, as well as being reported in total on the account statement.

No, not usually (unlike business cards, which often have a limit of 99 cards per account). This is because very large corporations will often have more than 99 employees requiring cards, and also because there will almost certainly be an annual fee payable for each card issued.

Yes, especially if it’s an American Express Card.

Unlike a credit card, a charge card has no fixed global credit limit for the whole account (although individual spending limits for individual employee cards may be set by the corporate account owner). This does not mean that unlimited spending will be allowed on the account. The card issuer will have calculated what it thinks the company can afford to spend and repay each month, and this amount may change over time. Any spending in excess of this amount may raise a red flag, but the company’s capacity to repay is likely to grow in line with its revenue and profitability growth.

Unlike a credit card, a charge card is not a revolving line of credit. There is no option to repay less that the total amount billed on the cards each month. That is, there is no interest rate quoted because there is no possibility to carry a balance beyond the normal monthly interest-free days. Late payments are likely to incur steep fees, and extended failure to pay will be considered as a serious default and may have a significant negative impact on the company’s credit rating.

Decide whether you need a credit card (the ability to pay less than the balance owing, and be charged interest, at the end of the billing cycle) or a corporate card (more flexible spending limit and cash flow management, but account must be settled in full each month).

• Credit card interest rate: In the case of a credit card, consider the interest rate that will be charged on unpaid balance amounts.
• Annual fee: Consider the annual fee payable for each card, plus any additional fees payable for belonging to a rewards program, and decide whether each card will earn its keep in terms of convenience and the value of any rewards points, insurance and other perks.
• Rewards points: Can rewards points be earned on purchases?
• Bonus points: Are there any sign-up bonus points offered?
• Complimentary benefits: Are there any other perks, such as travel insurance, airport lounge access, free flights, hotel benefits, concierge assistance, emergency assistance, dedicated account manager?
• Insurance cover: Compare any insurance cover offered by reading the insurance cover product disclosure statement in detail. Complimentary corporate insurance cover can vary greatly from card to card, and truly comprehensive cover could save the company the many thousands of dollars otherwise spent on insuring employees travelling on company business.
• Expense reporting functionality: Check the amount of detail available in the monthly card account report. At the very least it should list each employee’s purchases item by item, as well as consolidating them by expense type for each employee and the business as a whole, to arrive at a global total for the month.
• Accounting system compatibility: Is the card’s reporting system compatible with your company’s accounting software, so that charges are visible online as soon as they are made, and/or can be downloaded in total at month-end, instead of having to rely on paper statements?

Your personal credit rating has no impact at all on whether or not you can have a corporate card. The card issuer will assess the company’s creditworthiness, not the credit rating of business owners, to decide on eligibility and deemed spending limits. So it’s the company that needs a good credit rating.

You will be asked to provide your company’s ABN and its most recent financial statements (Profit & Loss and Balance Sheet) in order to demonstrate its size (i.e. an annual turnover of at least several millions of dollars) and financial status. In some cases you may have to provide several years’ worth of financial statements. You may also be asked for corporate credit references from company suppliers, to show that your company has regularly paid suppliers large amounts within the credit periods allowed