Corporate cards

What is a corporate card and how do they work?

Apr 05, 2024

A key part of running any business is making payments. Whether that is vendor payments, subscription purchases, or employee expenses, you can’t run a business without managing your payments. One way to take care of your business payments is by using a corporate card. You may have heard of what is a corporate card, but maybe you’re not entirely familiar with corporate card benefits just yet. 

As your business grows, you’ll inevitably make more payments. The problem is that the more payments that you make, the more difficult it gets to manage them. If you have many employees making travel and entertainment expenses, for example, it becomes harder to track who is spending on what purchases for what reasons. 

This is where corporate cards come in. Instead of having to rely on employees making out-of-pocket expenses and filing reimbursement claims, you can equip them with cards as a secure payment tool. With built-in spend controls, customizable card limits, as well as expense reporting capabilities, you can be sure that managing your business expenses will be easier with corporate cards. 

What is a corporate card?

At first glance, it may seem like a corporate card has the same functions as a personal credit or debit card. Smaller businesses, for example, will think that they see no need in using corporate cards as the owner or director of the business can simply make expenses using their personal cards and get reimbursed. 

However, sooner or later you’ll discover that using personal cards for business expenses is a hassle. The answer to what is a corporate card is that it is a payment method that will streamline and centralize purchases made on behalf of your company.

By using corporate cards, businesses will have an easier time tracking their expenses. You’ll also have the ability to issue cards for multiple employees, meaning that you can hasten time-sensitive payments.

Different types of corporate card

Corporate virtual card

It’s common to think of physical cards when you think of corporate cards. After all, with a tangible form that is shaped like a card, it’s easy to make the association. However, corporate cards can come in a different form, too. A virtual corporate card functions the same way a physical card would, with its biggest difference being that it doesn’t have a tangible physical form. 

You can use a virtual corporate card to make online purchases, whether it be buying supplies from online marketplaces, booking hotels and tickets, paying your subscriptions, or topping up your digital ads wallet.

Corporate virtual cards are also easy to generate. Once you generate one, you and your employees can immediately use it for purchase.

Corporate physical card

Oftentimes, physical cards are what people have in mind when asked what is a corporate card. Where virtual corporate cards only exist within a dashboard system, physical corporate cards are ones that you can carry around with you.

Both online and in-store business purchases can be made with a physical corporate card. Depending on the needs of your business, many physical corporate card providers on the market can also offer both debit and credit cards.

Evaluate the amount of card spending your business makes per month, the size of your business, as well as your cash flow cycle before deciding on debit or credit physical corporate cards.

Benefits of getting a corporate card

When you use personal cards to make business expenses, there’s a chance that you’ll get your expense categorization mixed up. Maybe you’ll miss one or two business expenses that you should’ve reported, or you could accidentally list a personal purchase as company spending.

With corporate cards, you won’t run into this risk. Every purchase that happens on any employee’s corporate card must be a business expense that is logged properly. When there are clear policies in place about it, you’ll decrease the likelihood of fraud and ensure that everything complies with company regulations.

The combination of getting better visibility, hastening payments, and reducing reimbursement processes for your business expenses will inevitably lead to more streamlined expense management. Modern corporate card providers also offer features that allow you to link your cards to an expense management dashboard, you can manage all your card expenses easily through a single platform.

Having all your card expenses monitored through one platform means that your finance team will have a much easier time. They can manage your business expenses effectively and monitor how your money is used.

You may know what is a corporate card, but when you feel like you can still make payments using personal cards or through reimbursements, there’s no real urgency in using a corporate card. But one thing that you should consider is that as your business grows, your old payment processes won’t be sustainable.

Reimbursements, for example, can be messy. For one, the process of settling a reimbursement can take a while. Your employees may be hesitant about making out-of-pocket company expenses. First, an employee will have to file an expense request, submit that request, and wait for the owner to make the purchase. It could take several days just to make one payment.

Some providers offer corporate card benefits like enhanced spend control features. Unlike using personal cards or relying on reimbursements, your company can actually control what your employees spend with these features. 

You’ll be able to determine card limits for each card that your employees use. Even better, you can also have the ability to restrict certain types of purchases or vendors. If an employee is out on leave, you even can temporarily freeze their card to ensure that they don’t make any personal purchases out of the office.

One of the many corporate card benefits is that tracking your business expenses becomes easier. With cards created for the specific purpose of making purchases on behalf of your business, you won’t have to worry about losing sight of how much you’re spending. 

Your personal and business expenses will be fully separated, giving you a higher level of visibility when it comes to business expenses. Naturally, better tracking and monitoring will also lead to you having better control over your spending.

When you rely on reimbursements for business expenses, one possibility that you may run into is not realizing how much money has been spent that you need to reimburse. As a result, you could run into a cash flow problem when you process all your employee reimbursements.

You won’t run into this issue when you’re making your payments with corporate cards. Most prominently, using a corporate card can also give you access to a credit line for your business expenses. Gaps in the cash flow can be solved more easily, while still maintaining a limit on how much you’re spending.

Modern corporate cards to streamline business expense management

Factors to consider when getting a corporate card for your business

1. Types of cards offered

Ideally, you want to look for a corporate card provider that offers both physical and virtual cards for all your business needs. While they function similarly, there may be times when you specifically need one type of card or the other. Having access to both through the same provider will come in handy in that case.

Regardless, you want to consider what the primary card needs for your business are. If you have many employees that make T&E spending on-ground, for example, physical corporate cards may fit the bill more.

Conversely, if you have a lot of online subscriptions that need to be managed, virtual cards can give you better visibility.

2. Ability to set spending limits

You may not want all your employees to have access to the same spending limit. Some positions or departments may need a bigger limit for their corporate card purchases, while others will only need it for small expenses. In that case, it’s helpful to be able to customize each individual card limit.

More importantly, the ability to set spending limits for your corporate cards means that you can rest easy and not have to worry about overspending. Each card’s limit will be accounted for, meaning that you won’t go over your total budget for card spending.

3. Custom approval workflow

Unlike payments made through bank transfers where every payment made must first be authorized, the way cards work is that your payment will go through as soon as you swipe your card or submit your card details. Understandably, many business owners and executives will have concerns with card payments.

However, with the right corporate card provider, you can ensure that you have certain approval workflows in place to minimize this.

Card expense reports, for example, must be monitored, reviewed, and approved by the designated approvers. If there are any out-of-policy expenses, you can easily pinpoint and deal with them before they become a big issue.

4. Accounting software integration

Oftentimes the thing that becomes an issue with corporate cards is that expenses made through them can be difficult to log and reconcile. If your accounting team is having a difficult time with card expense bookkeeping, then that defeats the purpose of getting corporate cards for easier payment processes.

You want to look for card providers that enable accounting software integration to make closing your books painless. A good provider will allow you to link your corporate cards to a platform system that you can use to not only log your expenses but also easily integrate and sync data with your accounting software.

5. Expense reporting capabilities

Logging your corporate card expenses and being able to view them through a dashboard isn’t just handy for accounting purposes. More than that, it enables easier tracking, meaning you’ll have better visibility of how much you’re spending on business expenses. You can monitor the when, where, and why your expenses are happening.

When your card provider has expense reporting capabilities, you won’t have to worry about untracked out-of-policy expenses. One thing you want to look for in a provider is the ability to report card expenses on the go, such as through a mobile app that allows you to attach receipt pictures.

The healthcare sector is one where there are numerous purchases to be made, whether it be for hospital maintenance, healthcare equipment or medical supplies. Keeping account of all expenses can become difficult. Corporate cards are an effective way to control how much money can be spent or allocated in these circumstances. Check out article on why healthcare practitioners need corporate cards to know more about the benefits.

6. Ease of applying for a card

While many people may not be fully aware yet of what is a corporate card, those who do sometimes still look away from it. The reason for this is that oftentimes there are complex requirements that prompt businesses to jump through hoops to get a corporate card. 

Luckily, the corporate card space is seeing more and more modern providers that boast easy processes. Nowadays, you’ll be able to find card providers that will allow you to get started with using your corporate cards in just a week or two. The application process doesn’t have to be lengthy or complicated.

7. Security offered

When asking what is a corporate card, a lot of the answers you get will mention that it is a form of secure payment. However, different corporate card providers will have different security measures and standards. You’ll want to be sure that the provider you’re getting your cards from is offering top security.

It’s a good idea to check if a provider has industry-standard certifications. Having them is a positive sign, ensuring that your data is safe and secure with them. Beyond that, extra features that provide an added layer of security such as the ability to restrict certain transactions, freeze, and even block cards are things that you will want to have.

How to get a corporate card for your business in India?

In this day and age, corporate card providers are no longer rare. Many major banks, for example, can issue corporate cards for your business needs. To add to that, big traditional banks aren’t the only entities that could offer cards. With the rapid growth of the fintech market, many players in the space have also started offering corporate cards in recent years.

In fact, compared to banks, fintech service providers often have a more extensive list of features attached to their corporate card offerings. Not only are plenty of fintech service providers modern businesses with more contemporary perspectives, but fintech companies that offer corporate cards often also focus on that space, meaning that they’re more attuned to their customers’ needs.

Now that you know what is a corporate card, it’s time to pick the best one for your business. With Volopay corporate cards in India, businesses can streamline their payment processes while maintaining full visibility and security. 

Equip your employees with physical cards to empower them and provide them with an easy way to make business expenses. With spend controls, submission policies, and multi-level approvals, you can guarantee that easy business expenses won’t mean overspending or card misuse. 

At the same time, manage your digital purchases and subscriptions with unlimited virtual cards. Give each subscription its individual virtual card for better visibility. Track all your card expenses through a single dashboard and monitor your budgets at all times. 

Get Volopay corporate cards for your business in India now and enable easier payments and better expense management at the same time.

Smart corporate cards to manage your business expenses