Running small businesses or a large-scale business requires a whole team involved for smooth business operations. Therefore, different employees will have different work descriptions relating to the business that help grow the business. The managers or employers will oversee that the different sectors of the business work as required.
Financial responsibility and management are one of the most fundamental aspects that define a business.
Thus, ensuring that every employee works to manage the financial growth of the business is a key component in running a business. With the introduction and use of credit cards for employees, business owners now have better control of their finances. Additionally, employees can use virtual credit cards for online purchases without exposing any banking information online.
Therefore, credit cards for employees are beneficial to the business, as seen from the information provided below.
Key Takeaways
· An employee credit card is one provided by an employer in a business to manage to spend on behalf of the business
· You can become an authorized user of a business credit card if you are an employee of the business
· Several employee credit cards offer the best benefits to businesses, including cashback rewards
What is an Employee’s Credit Card?
An employee’s credit card is a credit card given to an employee within a business to make some business purchases. Therefore, the credit card provided to the employee will be tied to the business card used by the employer. The employee’s credit card will earn rewards just the same as the business credit card earns rewards.
The rewards or cashback can be reinvested in the business since they are tied to the credit card account of the business.
The credit card issuer will mostly offer as many employee credit cards as the business owner needs for free. Therefore, acquiring employee credit cards does not carry any extra charges to the business owner. Each employee’s credit card will be assigned to the employee’s name as the authorized user. Therefore, the business owner will know which purchases were made by which employee through the finance team.
Credit cards for employees will offer the employer greater control of the finances since employees are limited to purchases. Therefore, the employee will not make purchases outside the business’s needs or use them for personal purchases. Thus, businesses will grow their credit scores since they use credit cards to make business purchases.
Also, using the virtual credit card for online payments will equally offer the same rewards while building credit.
Usually, the business takes liability for the credit card debt on the employee’s credit cards. Thus, funds coming into the business will be used to pay off any credit debt accumulated on the employee’s credit card. However, some business credit cards will have joint liability, where the business owner and the company will pay credit debt.
Therefore, it is important to know the terms and conditions that come with a business credit card.
How Does an Employee’s Credit Card Work?
The employee credit cards are an extension of the business credit card; hence, they all have the same terms. Thus, the employee credit card will have the same rewards, APR charges, and benefits as the primary card. Once the business owner ties the authorized card to the main business card, employees will make purchases using the business’ credit account.
Employees will not use funds from their personal bank account or checking account.
The employer will assign each credit card to the employee using the name and email address of the employee. Therefore, the employer can enforce and set spending limits on different cards, depending on the employee’s responsibilities. That way, the financial team will see which employee is spending money and what purchases they make.
Thus, the financial team can monitor expenses using real time visibility of transaction details of the available funds.
The business owner will be able to track spending from all the employees through the card issuer’s online banking app. Therefore, the employer will easily track all purchases made, whether using physical cards or a virtual credit card. After purchases, the employer will receive statements on the primary card checking account for the physical cards and virtual credit card numbers.
Thus, the employer can receive expense policies that show receipts after every purchase, including online payments.
Some employee credit cards allow business owners to group multiple employees into sharing a single card. It is most common for business credit cards that have a limit to the number of employee credit cards they can offer. Also, the employees can submit preapproval to the business manager if they need extra funds to make purchases.
Thus, all purchases and spending limits on the employee credit cards will be monitored and followed up in the business.
Differences Between a Corporate Credit Card and a Business Credit Card
A corporate credit card is a business credit card used for businesses that operate on a large scale. The expense policy and financial audits will determine whether a business is a large scale, which determines whether it qualifies for corporate cards. The company will be responsible and liable for paying the credit card bills in every billing cycle.
Additionally, the company will receive greater rewards than business credit cards, which will greatly influence the business.
Corporate credit cards do not have an APR since the card balance is repaid in full every month. Although it charges an annual fee, corporate credit cards offer better management and control of funds within a business. However, they offer fewer employee credit cards than business credit cards, limiting employees’ access to business funds.
Corporate credit cards have higher fees charged to the cards even though they have better rewards than business credit cards.
The main difference between business cards and corporate credit cards is the availability of corporate cards. The corporate cards are only available to large-scale businesses that qualify to receive a corporate card during application. Also, using a corporate card will not affect an individual’s credit score even when an employee uses the card.
Business credit cards can affect an individual’s credit score since employees are given access as authorized users of the card.
Corporate cards offer better management and control for employee cards, even on international transactions. The expense reporting on corporate cards is faster due to quicker expense management and better real time visibility on transactions. Therefore, fraud risks are much lower than those experienced on business credit cards.
Generally, managing bank information using a corporate credit card is easier due to a better accounting system.
Other Alternatives to Business Credit Cards
For many startups, business owners use prepaid cards instead of business credit cards to fund their expenses. Thus, the employer will make a direct deposit to the prepaid card, allowing the employees to spend the available funds. The business owner can include authorized users in the primary prepaid card by contacting the card issuer.
Therefore, the employer can equally distribute funds to the employees for expense management within the business.
Although business credit cards are readily available for all businesses, a prepaid card is most useful for managing startup funds. Therefore, the business will not accumulate any credit balances or debt as it grows, giving more room for expense management. However, like debit cards, prepaid cards cannot build credit since the business will not borrow credit from a credit card issuer.
The owner will add money to the prepaid card, set limits on the authorized user’s card, and spend the money until depletion.
Benefits of Using an Employee’s Credit Card
There are many benefits of having an employee’s credit card to the employer and employee within a business setting. They include the following:
Easy control of finances
Offering employees a credit card allows proper expense management within a business by giving employees financial responsibility. The employer can set limits to the types of purchases employees make with their credit cards. Also, employers can monitor the amount employees use to pay for business-related items.
Business owners can also set limits on credit limits for each authorized user, preventing overdraft charges.
Easy expense reporting
Business owners will easily track the types of purchases made from individual cards belonging to the employees. Thus, the employer will receive receipts after every purchase, whether the employee paid with a physical credit card or virtual card. The employer will note those violating the expense policy and lower their credit line.
Additionally, the employer can review all transaction details through real time visibility on the credit card account.
Easy financial bookkeeping
Employees will not access funds from their bank account since the employee’s credit card is tied to the primary business card. Therefore, the employer will monitor expenses made on behalf of the business and safeguard the business. That way, employees will only pay for necessary business-related items, which will be accounted for in the records.
Also, the employer’s and employee’s personal assets will not merge with the company’s assets and finances.
Building business credit
Since the business uses a credit card, the business has a better chance of building credit even through authorized users. Therefore, using employee cards will play a huge part in impacting the business’ credit score. Thus, employees should learn the credit card policy according to the card issuer and company to maintain a good credit history.
Good to excellent credit scores will help the business acquire a higher credit line on the business credit card.
Credit card rewards
Employee credit cards are tied to the man business credit card; hence, they will have the same rewards system. Therefore, the business will enjoy rewards like points and cashback that can be reinvested in the business. The type of rewards program on the main card is also present on the individual cards.
Alternatively, some credit card issuers allow the cash back rewards to be redeemed as statement checks which help clear credit balances.
Best Virtual Corporate Credit Cards
A few expense management platforms offer virtual corporate cards to business owners for making virtual payments. Such platforms offer rewards even though they may require you to meet certain policies based on your credit line to receive rewards. However, virtual corporate cards are easy to access as long as you meet all qualifications needed.
Thus, only large businesses and corporations that meet the set sales targets can receive virtual corporate cards.
Some of the major virtual corporate cards available include:
Divvy
Divvy will first determine whether the corporation meets all the requirements, including the owner’s credit score. Also, Divvy will require the business history and annual revenue before any virtual card is provided for the business. Once all these requirements are met, Divvy will offer virtual cards for business use, especially for making virtual payments.
Ensure the business has a US bank account as part of the requirements to receive a Divvy virtual card.
Although Divvy offers great rewards to virtual card users, you will have to use a certain amount of your credit line to access them. Also, the rewards rate will change every billing cycle according to the virtual card issuer’s policies. Companies with a weekly billing cycle will receive more rewards than those with a monthly billing cycle.
Therefore, you will have to understand how your virtual corporate card works to maximize the benefits of the card.
Generally, Divvy offers fraud protection against scammers online by protecting the company’s card information. Thus, you should enter your virtual card number and expiry date while making your virtual payments. You can set spending limits on the virtual card, allowing better control of the company’s finances.
Also, you will still enjoy rewards similar to any other corporate physical card.
Ramp
The Ramp Card is a corporate card for large corporations and businesses with a high and growing cash flow. Thus, only a few businesses can apply for or access the Ramp Card. All card balances are paid in full every month, but the business holds liability for credit balances and charges. However, the card offers straightforward rewards, allowing the business owner to cash in rewards as a statement credit.
It offers no annual or foreign transaction fees and 1.5% cash back on all purchases.
Some of the requirements needed to obtain a Ramp Card include having an existing business bank account. Also, the business owner should present their personal Social Security Number and business email address. An estimated annual income or financial audit is shown during the application to indicate whether the business qualifies for the card.
Spending on other business credit cards should also be present during the application process.
The Ramp Card is a physical card that also offers immediate use virtual credit cards for the owner and authorized users. Therefore, virtual payments are made easier and safer by using virtual card numbers and expiration dates. Additionally, you can make vendor payments using a merchant-specific card number for recurring payments that you can freeze in case of suspicious activity.
Thus, you will not worry about exposing your card information online, protecting your business from credit fraud.
Brex
Brex is one of the leading corporate credit cards in the market that offers point rewards which are redeemable for cash. Also, the Brex Card offers a huge welcome bonus and other rewards if you use Brex as your only corporate card. Aside from earning rewards on eligible purchases, users can have rewards on eligible Apple purchases through the Brex dashboard.
Additionally, users will receive discounts and deals on some vendor payments, including web subscriptions.
Any corporation can apply for the card, even those with a poor business credit score, making it easily available. However, Brex will monitor the spending patterns and investors of the businesses applying for the card to determine their creditworthiness. Also, the company will need to provide accurate bank information and be registered in the US to qualify for the card.
After approval, you can access an immediate use virtual card as you wait for your physical card to arrive.
Brex offers users a chance to increase their credit limit by increasing their credit line when the business’ cash flow increases. Therefore, you will gain even higher rewards as compared to when using traditional payment methods. However, your credit limit will fall if your cash flow reduces, although liability is on the business.
Ultimately, Brex is a good corporate card for large businesses that may locate in the US with no previous credit history.
Best Virtual Business Credit Cards
Several top virtual business credit cards available in the market offer all businesses virtual card numbers. Thus, businesses can maintain an anonymous profile while making virtual payments, protecting themselves against fraud. Many credit card issuers that offer a physical card also offer a digital payment method by generating virtual card numbers.
Therefore, having a virtual card as you pay for items online protects the bank information of the business.
To use virtual credit cards online, ensure you have the virtual credit card details, including virtual card numbers and expiration dates. Fill in the details in place of those found on your physical card to prevent exposing any credit card information. Some of the virtual credit cards for businesses include the following:
Jeeves
Jeeves is a virtual business credit card that offers virtual credit cards to all types of businesses, whether large or small. It offers unlimited virtual cards to business owners, which employees use to pay for business-related items online, including subscriptions. Additionally, business owners can set a spend limit on each virtual card assigned to different employees.
Therefore, the employer has real time visibility and spending limits to manage the funds and expenses in the business.
Jeeves offers more perks to business owners, including instant fraud detection and avoiding card blocking as you pay online. Also, employers can use accounting software such as Xero and QuickBooks to help group transactions. Business owners will enjoy cash back rewards when using the physical or virtual card, with rates depending on the location.
Travel benefits, discounts, and rewards are available for all business owners.
The Blue Business Plus Credit Card by American Express
The Blue Business Plus credit card is one of the best business credit cards, with zero annual fees or monthly fee for all types of businesses. Business owners will enjoy a points rewards program redeemed as cash and 0% intro APR for the first twelve months. Your variable APR will then be charged according to the creditworthiness of your business, among other factors.
You will need proof of business ownership to qualify for the business card during account opening.
The Blue Business Plus credit card also offers virtual credit cards assigned to different business employees. The business owner has access to the authorized cards for the primary business card, including setting limits for employees. However, the business owner should consult with the credit card issuer to know how to manage employee credit cards.
Generally, the Blue Business Plus card is the best rewards credit card for business.
Case Study
Businesses and corporations are on the rise in embracing employee credit cards for making business-related purchases. Such credit cards benefit the business, employer, and employee expense management. Therefore, employee credit cards are a necessary tool in a business for online and physical purchases.
Here is a case study in which an employer can use employee credit cards to make eligible purchases:
First, it is important to note that the employer has full control over the employee’s credit cards, including setting limits. Thus, the employer can control what the employees pay for, whether online or physically. Additionally, the employer will minimize fraud risk by having real time tracking of transaction details on the employee cards.
Therefore, the employee will be limited to the types of purchases they make, which should be business-related.
For example, an employee wants to pay for items using the employee’s credit card and make multiple purchases on the card. The employer can assign different employees to use their individual cards to make different purchases. One employee can pay for office supplies while the other can pay another vendor using each of their cards.
The employer can move funds between cards and change each card’s credit limit. Therefore, the employer will track all payments through real time visibility of the transactions made using the cards.
Additionally, the employer will receive receipts after each purchase and track expenses using accounting software. Therefore, the employer will take note if any illegitimate purchase has been made through which specific card. Alternatively, the employer can appoint an employee to supervise several other employees.
Such an employee, especially from the financial team, will offer a new card to new employees. Thus, the employer has all angles covered to prevent fraud, including purchases made without authorization.
Conclusion
Many employers and business owners are now embracing credit cards for business to manage finances better. Employees now have access to employee credit cards and authorized users of the main business card. Thus, employees have a major role to play in managing the finances of a company.
The employee credit cards will have the same rewards and benefits equal to those found in the main business cards.
Employers have greater control of their finances even as employees pay for items using employee credit cards. Employers will have real time transaction details of the money used for making purchases, including virtual payments. Thus, the employer will protect the business against fraud risk caused by unauthorized purchases using the employee’s credit card.
An employee credit card has many benefits to the business, especially for financial management.
FAQs
Who can apply for an employee’s credit card?
Anyone with a business, whether a small or large-scale business, can qualify to receive an employee’s credit card for their company. Most card issuers will require proof of business ownership to ascertain the applicant’s business. However, corporate credit cards are only available for very large companies and businesses, including corporations.
They have better benefits and financial management tools than normal business credit cards. They work similarly to business credit cards by helping employers oversee funds within the company.
What to do if your employee’s credit card application is denied?
Application for an employee credit card can be denied if the business has a low credit score or negative credit history. Most credit card issuers will conduct credit checks on the business to ensure they are legible for a card. Sometimes, the business owner’s credit score is also checked, depending on the credit card they apply for.
However, business owners can use other alternatives, such as a prepaid card, for making purchases on behalf of the company. After the application is denied, consulting with their credit card issuers is the best option.
