What Is a Corporate Credit Card?

A corporate credit card, or a corporate charge card, allows a large business to issue individual cards to their employees for work-related expenses.

How do corporate cards work?

Corporate cards are for large companies and are available as credit cards or charge cards (sometimes called ‘corporate purchasing cards’). All allow employees to make work-related expenses using credit.

Corporate cards come with plenty of features and benefits for larger companies. For instance, points earned from flying can be redeemed by an individual or held by the company to use as needed.

This type of card offers lots of flexibility, too. Account holders can increase or decrease credit limits and allocate cards to different employees.

To manage a corporate card, the issuing bank will provide digital tools to help monitor the card and its associated transactions, streamlining expense tracking and control.

What’s the difference between credit cards and charge cards?

Credit cards charge interest and come with a credit limit, but you can choose only to make the minimum repayment and carry a balance from one month to the next.
Charge cards do not have a pre-set spending limit and do not calculate interest on balances because they must be repaid every month.

How to use a corporate card

Corporate cards can be used in person and online, with many banks also offering virtual card options for digital payments.

There’s no special way to use a corporate card. You use it in the same way you’d use a personal credit card for online or in-store transactions. The only real difference is that any charges appear on the company’s credit card statement, so keeping track of expenses is much easier.

Individual cards reflect the name of the executive or employee authorised to use the card. Employees must sign the back of their allocated card as they would when activating a personal card.

When it comes time for a credit card reconciliation, employees must also provide receipts for any purchases they make on the card to enable the finance department to crosscheck all expenses against internal finance records.

» MORE: Why do you need receipts for corporate credit cards?

Corporate cards vs. business credit cards

Corporate and business credit cards dispense with the need for employees to use personal credit cards for work-related expenses and then wait to be reimbursed.

How to compare

A few different aspects are worth comparing when deciding between a business and a corporate card.

Eligibility

Generally, only large, more established companies with higher turnovers and a substantial employee base are eligible for corporate cards. For example, American Express only offers corporate cards to companies with an annual turnover of over $10 million.

Business credit cards are for small-to-medium enterprises. So, they’d be more suitable if you’re starting your own business, for example.

Liability

The most crucial difference is that with corporate cards, the company is liable for any debts incurred when using the card.

On the other hand, a business card has different liability structures, including personal and joint liability, meaning one or more than one business owner is held personally liable for any debts associated with the card rather than the company. That liability structure has legal implications and could affect the credit score of those involved.

Credit limits

Compared to business credit cards, corporate credit cards offer much higher credit limits than business credit cards. Or, in the case of corporate charge cards, there’s no pre-set spending limit at all.

Accounting tools

Both cards have extra features that can make cash flow management easier. However, corporate cards tend to offer more features and digital tools that speed up the process of expense reporting and reconciliation, such as

Individual spending limits
The ability to cancel cards issued to specific employees
Customised monthly statements
Access to lodge cards for centralised travel bookings
Procurement expenditure accounts
Support for managing GST and FBT requirements.

Rewards

Finally, there are rewards — ranging from premium corporate cards that earn points to business cards with frequent flyer perks.

Both business and corporate cards may boast travel card features, such as airport lounge access and other benefits, like complimentary travel insurance.

Remember, everything comes with a price, and reward cards tend to mean higher annual fees and interest rates. It’s best to weigh up your business card needs with the associated costs before deciding between a corporate and a business card.

How to choose

First, you must determine whether you’re eligible for a corporate or business card. You can then look at the rewards and benefits, interest rates and fees associated with a few specific options before deciding which is right for your business.

Financial institutions have dedicated teams devoted to business clients who can best explain the ins and outs of their corporate and business cards and help you choose the card that best suits your needs.

When applying for either type of card, you’ll need to provide detailed financial statements, tax information and information regarding how your business is structured.

» MORE: When are business credit cards worth it?

Yes. Annual fees and interest charges are tax-deductible if you can prove that you use the card for business expenses.

» MORE: Working from home? Know your tax deductions.

There should be little to no effect on your credit score if you’re an authorised user of a corporate credit card. However, the issuer may need to check your personal credit report before you’re registered as an authorised user — even though the card’s payment history will go into your company’s credit history, not yours.

» MORE: What happens when a lender checks your credit report?