In the U.S., people have increasingly turned away from cash and checks in favor of credit and debit cards for purchases. While businesses have been slower to catch up, they are now also embracing credit and debit cards as a preferred payment method.
There is an average of $4,878 of credit card debt for every adult in the U.S. The total outstanding revolving debt in the U.S. in 2015 was $887.9 billion. In another study among businesses, 58.8 percent reported that they had used small business credit cards, and 43.5 percent of small business owners used personal credit cards to make business purchases.
While credit cards may offer some benefits to businesses, they can also cause companies to go into debt. Some businesses may also have trouble qualifying for credit cards because they haven’t been operating for long enough, or their owners have marks on their personal credit histories.
Statistics and trends on company credit cards demonstrate that the payments industry is constantly evolving, People are now using mobile wallets to make payments in retail stores. Businesses are finding creative financing methods through peer-to-peer lending platforms, and other technologies are changing the way that we do business.
Company credit cards
Some businesses give their employees credit cards to use. These cards are designed to meet the needs of businesses. Some may give discounts on certain common business purchases and rewards such as miles. Company credit cards have several pros and cons, however.
When you choose to get a credit card for company needs, it can help your business if you have an occasional cash flow issue. However, the advantages of company credit cards are outweighed by the disadvantages of company cards.
Businesses that issue credit cards to their employees may have trouble getting them to turn in their expense reports on time. The employees may lose credit card receipts for the purchases that they have made. Some employees use the cards to make unauthorized purchases and may claim that they simply made a mistake.
Some companies avoid these problems by asking their employees to use their own cards to make purchases for the company and then to request reimbursements. This can also cause some other problems, however. While employees may be likelier to turn in their expense reports on time when it involves their own money, the processing time can take several weeks before the reimbursement checks are issued. This might make the employees resentful when they have to wait to be repaid the money that they are owed.
Employees may also submit fraudulent reimbursement requests for personal purchases. A better choice for businesses may be to choose a debit card for company needs that has extensive controls. Debit cards may be restricted to be used for specific types of purchases from certain merchants. This can allow businesses to eliminate expense reports and reimbursements while also reducing their business expenses.
Company debit cards
Company debit cards are debit cards that are used by firms to cover purchases and expenses. Some of these cards offer extensive spending control features that allow businesses to control the types of purchases that their employees can make with the cards, where the employees can use the cards, and when the cards can be used.
Company debit cards are linked to the businesses’ debit accounts. When the employees use their cards to make purchases, the costs are subtracted from their own account balances instead of being added to revolving credit lines. This means that purchases that are made with debit cards for company needs will not increase a business’s level of debt.
The advantages of company debit card include the following:
- Do not require credit checks since they are not credit cards
- Will not add to debt
- Offer extensive expense controls
- Allow businesses to keep their business and personal expenses separate
There are a couple of disadvantages of company debit cards. Debit cards are not lines of credit, so they won’t help businesses that are experiencing cash shortfalls. They also will not help to increase a business’s credit score, but they may build credit in other ways such as by increasing goodwill.
Reloadable company cards
Reloadable credit cards are not truly credit cards. Instead, a reloadable company card is a type of debit card. When businesses get reloadable credit cards, they can decide how much money to deposit onto them. The amounts that are deposited on the reloadable cards will serve as the account balances.
Businesses can issue reloadable credit cards to their employees to use to make purchases for the businesses. When the funds on the reloadable credit cards are depleted, the businesses can add funds to the cards. The amounts that the companies allocate to the refillable credit cards will serve as the spending limits.
There are several benefits of reloadable debit cards. Businesses can control how much money is spent by choosing to limit the amounts that they place on the cards. Some reloadable cards also offer businesses the ability to turn the cards off or on remotely and to see how the money is being spent in real time.
Reloadable company cards offer features that are designed to meet the needs of businesses. By contrast, reloadable consumer cards may not allow restrictions to be placed on the cards and may be associated with specific retailers.
Corporate cards are credit cards that are designed for established companies with higher annual revenues. The primary way they differ from small business cards is that they only hold the corporations liable rather than requiring personal guarantees from designated people.
Corporate cards offer some advantages to businesses that are able to qualify for them. Some of the advantages of corporate cards include the following:
- Better record-keeping and reporting
- More efficient expensing
- Ability to set spending limits
- Perks and rewards
A corporate card for business may be a debit card or a credit card. Debit cards may offer the same efficiencies and abilities to set spending limits while also not adding to the business debt. If companies do elect to get credit cards, it is important for them to develop strong credit card policies.
A good credit card policy should clearly outline the types of expenses that are authorized and unauthorized. All of the employees should be trained in the policy before they are issued their cards. Businesses should make certain to regularly audit the statements and address any problems that they see promptly.
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Corporate credit cards
Businesses that have built sufficient corporate credit to qualify for credit cards should look for cards with the best features. The best corporate credit cards should allow companies to set spending restrictions on the cards that they give to their employees.
The cards should upload information about the spending that occurs automatically into the company’s software. This type of feature can help to streamline accounts payable and to make tracking expenses much simpler.
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Debit cards for corporations
Corporate debit cards are debit cards that help businesses to track and manage expenses. Debit cards for business can allow companies to establish restrictions on the cards before they are given out to the employees. For example, a business owner can set restrictions by merchant category codes and determine how much money to allow each employee to spend.
Some debit cards for business allow business owners to set individual spending limits by the day or the week and to turn cards off or on remotely at any time. This type of feature can help business owners who identify problems with how their money is being spent. Instead of having to worry about securing the return of a card, the business owner can instead turn the card off instantly so that it will no longer work.
The advantages of corporate debit card include the following:
- Track expenses by the employee or by the department
- Streamline payments processes
- Automatic uploading of transaction data
- Ability to photograph and submit receipts electronically
- Will not add to the debt
The disadvantages of corporate debit cards include the following:
- Do not offer easy financing
- Won’t help to make it through cash shortfalls
Corporate credit cards vs. corporate debit cards
A corporate credit card may have some advantages over debit cards in certain instances. However, the benefits of debit cards outweigh the drawbacks. Unlike credit cards, purchases that are made on debit cards do not incur interest charges, and the best debit cards do not charge high annual fees.
Debit cards can be restricted by the business, and limits can be set by the day or hour. With credit cards, employees could spend up to the credit limit, and the business owner may be unable to turn an individual card off remotely. Debit cards can be turned off when the employees are not at work, and the businesses can see what has been spent in real time from their secure dashboards.
Corporate prepaid cards
Corporate prepaid cards are different from debit cards. Debit cards are linked to a deposit account. By contrast, corporate prepaid cards are not linked to an account. Instead, a business owner can purchase corporate prepaid cards, and the purchase price for the cards will establish the spending limits on each card.
Businesses can get prepaid corporate cards online or in person. Prepaid cards for corporations may be sold by retailers or offered by banks. Some prepaid business cards can only be used to make purchases at specific merchants.
A prepaid corporate credit card can help businesses to manage their expenses. Since they can choose how much money to fund their prepaid cards for business with, they can prevent their employees from spending more than what the company has budgeted.
Bento for Business offers prepaid business debit cards and does not offer corporate prepaid cards. The corporate debit cards at Bento are linked to a deposit account, and business owners choose how much money to make available on each card from the funds in their accounts.
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Commercial cards include a corporate debit card or a credit card. The cards are issued to businesses and have features that are specific to their needs.
Commercial business cards can be used to make purchases wherever credit cards are accepted. If they are credit cards, the purchases will be added to the attached credit lines. If they are debit cards, the purchases will be subtracted from the company’s existing funds.
Commercial business cards
Commercial business cards may include commercial business debit cards or commercial business credit cards. Credit cards require businesses to submit applications and undergo credit checks. Many companies require the business owners to personally guarantee the account balances, which means that they may be personally liable for the charges that are made.
Debit cards do not require credit checks because they are not attached to revolving lines of credit. The purchases are subtracted from the account balances rather than being added to the debt. This means that purchases made with debit cards will not incur interest, and some companies also do not charge high annual fees.
Commercial credit cards
A commercial credit card is not right for every business. Some businesses may want to avoid debt, and credit cards can quickly add to debt if the balances are not paid in full every month. Credit cards that are issued to businesses also do not have the same protections under the Card Act that consumers enjoy. This means that the fees and interest rates can be changed at any time and with little notice.
Businesses might be better off by choosing debit cards. The cards may offer better controls and help to prevent losses from abuse, thefts, and waste. Debit cards are ideal for companies that are debt-averse as well as those that want to avoid incurring interest charges.
Commercial prepaid cards
Commercial prepaid cards are not the same as commercial debit cards. They are not linked to checking accounts but are instead directly funded with money. Businesses can use commercial prepaid cards to manage their expenses, but the cards do not have the same ability to set daily or weekly spending limits.
Businesses that want to get prepaid cards can order them online or purchase them directly from retailers. Prepaid cards do not incur interest charges, but there may be high fees associated with them at the time that they are purchased or that are charged for each transaction.
Company credit card fraud
Company credit card fraud is a real issue. Businesses may be the victims of company fraud with their credit cards both externally and internally. The FBI has a list of guidelines for how to avoid company credit card fraud and consumer fraud.
Company credit card fraud may occur when employees make fraudulent purchases with their cards. It can also happen when the credit cards are used at locations at which card skimmers have been installed.
Businesses can understand their fraud risks by using a fraud calculator. They can also gain a better understanding of the types of occupational fraud that occurs by reading fraud eBooks. They should then implement company fraud detection methods to catch fraud early and to prevent it from happening.
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Company cards from Bento for Business are Visa debit cards that come with built-in controls. The controls allow you to restrict how much an employee can spend and where he or she can spend your money with the card.
The cards also allow you to turn them on or off and to restrict the types of purchases that can be made. You can set spending limits by the interval of your choice and track your expenses with the trackable company debit business cards from Bento.
- A business Visa card can save your business both time and money
- Start a free 60 day trial of company cards
Learn more about company cards
Bento for Business has established itself as a leader in the business payments industry. The company offers extensive controls to businesses so that they can get the spending at their companies under control, prevent fraud, and grow their businesses.
Bento has received excellent reviews from national publications, including the Wall Street Journal and Forbes. It has a five out of five ranking on Capterra and thousands of satisfied business customers. Businesses can enjoy a 60-day free trial so that they can see how the cards work for them in practice. To learn more, call us today at 866.220.8455.