I regularly review business credit cards and corporate card offers on this blog, and I often need to clear up the difference when I’m describing a corporate card offer. Here, I decided to create a resource that explains the differences between corporate vs business credit cards to refer readers and coaching students to.
I’ll explain the differences in a way that’s super easy to understand, and point you to some relevant content so that you can learn more about specific card offers. And, I’ll answer the questions that I hear most often from my coaching students.
This is what’s in store:
- The Difference Between Corporate Cards & Business Credit Cards
- The Advantages of a Corporate Card
- The Advantages of a Business Credit Card
- Frequently Asked Questions
- Final Thoughts
The Difference Between Corporate Cards & Business Credit Cards
Right out the gate, there is one core difference between corporate cards and business credit cards. What is the difference between a corporate card and a business credit card?
While both are used by businesses to improve cash flow, and may come with a line of credit to improve cash flow, the key distinction is in the payment terms:
- Business credit cards have a revolving credit line, so you can carry a balance each month and make a minimum payment if you choose.
- Corporate cards must be paid in full each billing cycle, whether that be every 30 days (net 30), 60 days (net 60), or a different time frame.
At first glance, it may seem like an easy choice if you’re deciding which card to apply for. Who wants the obligation to pay off your balance when you could have the freedom to pay it off over time?
Well, it’s not that simple — Corporate cards are not inferior to business credit cards by any means. Let’s look closer.
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The Advantages of a Corporate Card
The point of a corporate credit card is to streamline financial transactions and manage expenses effectively. Rather than relying on personal credit cards for work-related costs, companies often issue corporate credit cards to employees.
This not only provides a level of convenience by eliminating the need for individuals to front their own money but also facilitates a smoother expense tracking system. A corporate card typically comes equipped with features that helps businesses:
- Monitor and manage budgets
- Ensure a transparent expense record
- Simplify reimbursements
- Separate personal and business expenses
- Get accurate financial reporting, taxation, and accounting
Furthermore, companies can implement access controls by setting spending limits and specifying where the card can be used, thereby ensuring that expenditures align with approved purposes.
In essence, a corporate credit card serves as a financial tool to enhance the efficiency of business operations, providing both convenience for employees and effective financial management for the company.
Plus, many corporate cards come with added perks like savings on software costs or ad spend. And, many of the newer corporate cards are completely free because of partnerships. So, obtaining one of these cards is like having a membership that offers exclusive access to discounts within a niche business network.
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Can a Small Business Get a Corporate Credit Card?
There is a widely-believed myth that corporate cards are for enterprises and credit cards are for small businesses. The truth is that small businesses can, absolutely, obtain corporate cards.
Corporate cards are typically issued based on business income, not necessarily credit scores. So, if your small business meets the revenue requirements, and you want the card, you might as well apply.
Many corporate cards require at least $4 millions in annual revenue, but some of the newer corporate cards will accept you with as little as $5K per month.
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The Advantages of a Business Credit Card
A business credit card is a line of credit crafted to meet the unique needs of a business. It functions similarly to a personal credit card but is tailored to streamline financial management for companies.
The primary objective is to offer businesses a convenient and efficient way to:
- Make purchases
- Cover expenses
- Maintain financial control
- Free-up your personal credit
- Get access to substantial lines of credit
Like its corporate counterpart, a business credit card usually provides features such as detailed expense tracking and a streamlined reimbursement process, which contribute to effective financial oversight.
And, some business credit cards offer the ability to issue additional cards to employees with preset spending limits.
The inclusion of rewards and incentives, specifically designed for business-related expenses, adds another layer of appeal. Moreover, responsible use of a business credit card contributes to building the credit profile of the business itself, separate from the personal credit of the business owner.
In a nutshell, a business credit card is a tailored financial tool that enhances the efficiency of business operations by simplifying expense management and providing flexibility in financial transactions.
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Is Your Business Card a Corporate Card?
As a business owner, if your credit card is in your company’s name, features detailed expense tracking, and you pay the balance in full each billing cycle, it’s likely a corporate card. However, if it’s in your personal or business name, issued by a bank, and involves revolving reimbursement, it’s probably a business credit card.
Keep in mind, if payments are due in full each billing cycle, it might be a secured business credit card – For clarification, check your card issuer’s information or contact customer service.
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Frequently Asked Questions
Does a corporate card hurt your credit score?
No, a corporate credit card typically doesn’t impact your personal credit score. Since it’s usually issued in the company’s name and is the responsibility of the business for repayment, your personal credit history remains separate. However, if you do not pay as agreed, and the card comes with a personal guarantee, this could have a negative impact on your score.
Who is eligible for a corporate credit card?
Businesses that meet the revenue requirements, which may be as high as $4 million per year, are eligible for corporate card accounts. The businesses can then implement their own eligibility requirements and spending limits for staff and employees.
Can I use my corporate credit card for personal use?
Using a corporate credit card for personal expenses is generally discouraged. Corporate cards are intended for business-related transactions. Mixing personal and business expenses can complicate accounting. And, it’s super important to follow company policies regarding card usage.
Who pays for the corporate credit card?
The company is responsible for paying the expenses incurred on a corporate credit card. Corporate cards are issued by the company to streamline business-related transactions, and the company covers the costs directly.
What's a good credit card for a small business?
There are several options for small business credit cards. Popular choices include the Chase Ink Business Preferred and several options from Bank of America. Some of my favorites are from small community banks and credit unions. The best card depends on your business’s specific needs, such as rewards, expense management features, and credit limits. See the best credit cards for entrepreneurs.
So, corporate cards and business credit cards are a bit different. Business credit cards let you carry a balance, but corporate cards need full payment each month.
Corporate cards are awesome—they make business money matters smooth, help track expenses, and even come with cool perks. And, small businesses, not just big ones, can get corporate cards.
Business credit cards are cool too—they’re like personal cards but for your business. They’re handy for buying stuff, covering expenses, and earning rewards.
Check out different cards based on what your business needs. Got questions? We’ve got answers, from credit scores to who foots the bill. Whether you go corporate or stick with business, there’s a card for every business owner’s wallet.
Want to learn how to obtain up to $100K in business credit in as few as 30 days? Join Business Credit Workshop today!