In most companies, employees take care of business travel expenses and office supplies purchases out of their pockets. They later report these expenses to claim reimbursements. Although this has been an age-old practice, its complexity and risk-averse nature had business owners look for better alternatives. One option that has emerged in the last few years is the corporate credit card. With a corporate card, employees don’t have to use their cash, making it easy for organizations to manage their spending. If utilized properly, corporate credit cards can be a potent financial tool that helps companies maintain their financial health by avoiding budget overruns and fraudulent expenses.
In this article, we will explore the role of corporate credit cards in helping businesses simplify expense management by discussing its pros and cons.
Pros and Cons of Corporate Credit Card
Corporate cards can be a boon for small and medium-sized businesses as they introduce standardization to the way you handle business expenses. However, they do come with a set of limitations that may not sit well with some companies. For your benefit, we have listed the top pros and cons of a corporate credit card below.
Pros:
Access to credit line
One major advantage of a corporate card is its financial flexibility. With this card, you get access to a short-term loan without any interest, helping you to keep your cash flow stable. Traditionally, companies will have to burn their cash for corporate expenses, and its uncertainty affects the financial hygiene of the company. This can be avoided by using this a corporate card to pay for the outstanding invoices. Since you get a grace period to pay back the credit card bill, it gives you time to manage your cash reserves. You can use this ‘digital float’ to fund your growth plans with additional capital.
Control your spending
With a corporate credit card, you can eradicate the lack of visibility into how your employees are spending money. Corporate card issuers offer a dashboard that gives you a real-time view of your spending allowing you to take control of expense management. With the Zaggle Corporate Credit Card, you can implement an expense policy to avoid illegitimate purchases and budget overshoots.
Analyze spending & save costs
Corporate cards allow you to analyze your spending across categories and departments by generating detailed reports. These analytics will further assist you in identifying trends, uncovering irregularities, and learning spending behavior across the organization. You can also churn this data to optimize your spending by recognizing cost-saving opportunities through renegotiations with vendors. It will also give you the ability to make accurate forecasts of your spending for the near future, which will refine your decision-making process. Zaggle Corporate Card comes integrated with spend analytics solution Zatix which opens up a whole new realm of insights into your cash flow.
Cons
The hassle of acquiring a corporate card
Unlike a business credit card, getting hold of a corporate card can be a tedious process. Only businesses that have a certain annual revenue are eligible to get this card. Additionally, card issuers require you to submit several documents to validate the creditworthiness of your business. However, some cards like Zaggle Corporate Credit Card make the entire process customer-friendly and easy.
Employees can’t earn their rewards
When employees use a corporate credit card, the rewards and other perks that are earned for every transaction remain with the company. It means employees can’t earn loyalty points or flyer miles that they would upon using their cards for business expenditures.
Issue of liability
Companies can be held liable for any illegal transactions that employees make using a corporate card. But this can be avoided by implementing a tight corporate expense policy restricting purchases for certain categories or setting a transaction limit.
Make business expenses simple with Zaggle Corporate Credit Card
Corporate credit cards can give companies a competitive edge over their competitors. However, a standalone card could limit your ability to control your spending due to the lack of insights. Therefore, you must find a spend analytics solution to integrate your corporate credit card with. YES Bank Zaggle Corporate Credit Card comes integrated with ZatiX Insights so that you can easily track and monitor your expenses.Learn more about the Zaggle corporate card here.