Your complete guide to corporate credit cards

It’s the ideal scenario for a small business owner: Your company is experiencing year-over-year growth, your business is profitable and revenue increases every quarter. This is the kind of growth most small-business owners dream of.

When you start to see your company shift from a small startup to an established corporation, it’s time to think about transitioning your financial tools. This might mean switching from a business credit card to a corporate credit card — but before you begin the lengthy corporate credit card application process, it’s worth asking yourself whether a corporate card is really the right choice for your business.

What is a corporate credit card?

Because of this, corporate cards are generally only issued to large companies with a track record of success and an established business credit history. If your business is an LLC, S-Corp or C-Corp with a solid business credit score and revenue in the millions, your company might be eligible for a corporate credit card.

Corporate credit cards may come with certain beneficial perks, such as cash rebates and frequent flyer miles. However, the biggest benefit to a corporate credit card is that individual employees can be issued their own cards to pay for work-specific business expenses. Whether it’s paying for plane tickets or renting office space, having a corporate card can make handling business expenses for a large corporation much more efficient.

Corporate credit cards vs. small business credit cards

Corporate credit cards and small-business credit cards are not one and the same:

• Corporate cards are designed for corporations with multiple employees and revenue in the millions.
• Business credit cards are designed to meet the needs of small-business owners, including freelancers and those with side hustles.

If you have a side hustle, run a freelance business or have a small business with revenue of less than a million dollars per year, you’ll probably want a business credit card. Business credit cards have a lot of advantages, including the ability to earn rewards on business expenses and build your business credit score. If you have employees who need access to your business line of credit, you can make them authorized users on your business credit card.

Another major difference between these two card types is liability. Business credit cards require a personal guarantee, which means you are personally liable for any charges made on the account (including authorized user charges). If your business does not bring in enough money to pay off your business credit card bill, expect to make payments out of pocket.

However, if your business is legally classified as a corporation, has revenue in the millions and has multiple employees who need access to a corporate credit account, it might be time to consider a corporate credit card.

Corporate cards do not require a personal guarantee, so it’s a good idea to make sure your business has built up a solid credit history before applying.

Types of corporate credit cards

In many ways, corporate credit cards function a lot like personal credit cards or small-business credit cards. You can use your corporate credit card to make purchases for your business, and many corporate cards allow your business to earn rewards on purchases. Your business will need to make regular payments on your corporate credit card account, and your corporate card usage and payment history will factor into your business credit score.

While there are many different types of corporate credit cards, the primary difference is who has responsibility for paying the bill — the employee or the employer.

• Individual liability cards

  With an individual liability card, the employee is responsible for directly paying the balance of the card. Generally, the employee can submit an expense report to the company for reimbursement. The issuer will run a soft credit inquiry of the employee’s credit, which doesn’t negatively affect the employee’s credit score.

  Unlike being an authorized user on a small-business card, having a corporate card in your name should not impact your personal credit, regardless of how your company ultimately handles the account. However, employees can see impacts on their personal credit if the primary cardholder fails to handle the account responsibly.

• Corporate liability cards

  With a corporate liability card, the bill is paid by the corporation, and it’s the company’s responsibility to monitor for unauthorized transactions by the employee with the card. Corporations generally utilize expense reports to monitor spending.

  The employee’s credit is not checked before issuing the card, so the responsibility falls entirely on the company. The employee’s personal credit won’t be affected, but they could face adverse consequences from the company if they abuse their spending privileges.

• Card programs

  Corporate cards don’t necessarily have the same functionality as a standard credit card. They can be limited to necessary business expenses by categories. Here are some of the different card programs corporations can use to meet their needs:

  • All-in-one cards: These types of cards resemble standard credit cards, covering all types of purchases.
  • Purchasing cards: These cards are generally used for procurement and necessary everyday expenses like office supplies and equipment.
  • Travel and entertainment cards: These cards are meant to organize business travel and entertainment needs.
  • Virtual cards: Businesses can generate single-purpose cards to automate recurring expenses and manage other accounts payable.
  • Single-category cards: These cards can be used for spending in a specific category, such as meals or fuel purchases.
  • Payroll cards: Reloadable debit cards can be used to pay salaries and other compensation, giving employees immediate access to funds.

Benefits of corporate credit cards

Corporate credit cards can provide many benefits to both employees and the business. Businesses can easily organize, control and manage expenses. Employees can avoid time-consuming expense reports, take advantage of the benefits the card offers and, in some instances, may be able to keep the rewards earned on their cards.

Corporate credit cards also come with several features that small-business credit cards may not offer. These include:

• Issuing employee credit cards without them assuming personal liability for the charges
• Access to accounting software and services designed to help your business manage its corporate line of credit
• Discounts on common business expenses and retailers
• Better organization of tax records
• Eliminates the need for expense reports and reimbursements
• Better fraud monitoring
• Employees can take advantage of travel perks or elite status and potentially keep their earned rewards

How do you qualify for a corporate credit card?

To find out whether your business will qualify for a corporate credit card, contact a corporate credit card issuer directly. Unlike consumer credit cards, corporate credit cards often include lengthy application processes — and you may be required to provide documentation proving that your business’ income and expenses are high enough to justify taking out a corporate line of credit. The application may even include a financial audit, so be prepared.

Can you get a corporate credit card with bad credit? Technically, yes. Because corporate credit cards don’t require a personal guarantee, you could have a low personal credit score and still have your business qualify for a corporate credit card.

On the other hand, if your business has bad credit or has only developed a limited credit history, you might have a harder time taking out a corporate line of credit.

How does a corporate credit card affect your credit?

Your corporate credit card usage will impact your business credit score the same way using a personal card will impact your personal score. If you fail to make minimum payments or make late payments, your business credit score will take a hit.

On the other hand, a corporate credit card can also help you continue to build your business credit history. Credit bureaus — Experian, Equifax and Dun & Bradstreet for business credit scores — consider things like on-time payments and the age of your company when factoring your score, so the longer you keep your corporate credit card open and in good standing, the more your business credit score will improve.

Tips for managing a corporate credit card

Corporate credit cards come with more perks, but they also come with more factors to manage. To begin using your corporate credit card wisely, you should:

• Establish policies for all cardholders

  When you open a corporate credit card, be ready to talk to your employees about your company’s new credit card policies, as well as how to use their company cards. Ensure that employees understand that they should only make business purchases on the card, as well as the importance of keeping up with payments and tracking receipts.

• Monitor and manage expenses

  Managing funds for large corporations takes work, but most corporate credit cards come with high-level expense reporting tools that can make that work a little easier. Whether you want to track expenses by category, monitor employee spending or reallocate your budget in real time, the best way to manage your corporate credit card is to take full advantage of these tools.

  And if your business is large enough to have a corporate line of credit, it’s probably large enough to have an accountant (or accounting department) who can help you understand where your business’ money is going, whether you are staying within your budget and what you need to do to keep your corporate line of credit in good standing.

What are the best corporate credit cards?

The best corporate credit cards are the ones that offer flexibility, rewards and expense tracking your business requires. They also enable you and your employees to pay for the materials and supplies you need while getting rewarded for them.

Typically, these types of cards require full payment of the balance every month, which keeps you from accruing interest but could create some cash flow issues for more fledgling companies. Here are a few Bankrate’s recommendations for the best corporate cards:

• Ramp Business Card
• Brex Card*
• American Express® Corporate Platinum® Card, Corporate Gold Card or Corporate Green Card*

The bottom line

Many successful small-business owners may wonder whether it’s time to transition from a business credit card to a corporate credit card. If your business has a team of employees, a solid credit history and — most importantly — annual revenue in the millions, it might be time to consider applying for a corporate line of credit.

If your business is doing well but isn’t yet hitting that kind of revenue, a small business credit card is still probably your best option.

*Information about the Brex Card, American Express Corporate Platinum Card®, Corporate Gold Card and Corporate Green Card has been collected independently by Bankrate.com. The card details have not been approved or reviewed by the issuer.