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Running a small business is no easy feat, and we understand that your time is valuable. This is why we want to introduce you to a solution that can make your life as a small business owner easier.
Employee credit cards give your employees the freedom to pay for business expenses while keeping you in control of their spending. No more headaches from managing reimbursements. With employee credit cards, you can streamline your expenses and get back to doing what you do best - running your business.
What is an employee credit card?
An employee credit card is a company-issued card that enables employees or partners to make purchases on behalf of the company. This can be incredibly helpful for managing business expenses and streamlining the reimbursement process. With an employee credit card, you can reduce the need for manual expense tracking and reimbursements, which saves you time and reduces the risk of errors.
What types of credit cards are available for employees?
There are several types of credit cards available for employees. Depending on the needs of your company, you may choose to take out a small business credit card, corporate credit card, or a personal credit card. Each type of credit card comes with its own set of benefits and drawbacks, so it's important to consider your options carefully before making a decision.
Small business credit cards
Small business credit cards are a popular choice for business owners who need easy access to a revolving line of credit with a set credit limit. With a small business credit card, you can make purchases and withdraw cash up to your credit limit, giving you the flexibility to manage your business expenses as needed.
These cards are typically designed for companies with fewer employees, making them an excellent choice for startups and small businesses. Many small business credit cards offer additional employee cards to streamline expense management.
While small business credit cards typically offer lower credit limits and more basic features than corporate credit cards, they can still be a valuable tool for managing expenses and earning rewards. However, it's important to note that like personal credit cards, a small business credit card carries an interest charge if the balance is not repaid in full each billing cycle.
Corporate credit cards
Corporate credit cards are designed for larger companies with more extensive financial needs. These cards often offer higher credit limits, more robust expense tracking features, and customized reporting options.
Corporate credit cards are typically owned by the company, with the liability falling on the company itself. Therefore, if your business cannot pay its corporate credit card debts, you are not usually personally responsible for paying them. However, some corporate credit cards may require collateral from the business which would allow them to collect sums owed from property owned by the business in the event of the business becoming insolvent.
Personal credit cards
Personal credit cards are not specifically designed for business use. Employees can use their own personal credit cards to make business-related purchases and then be reimbursed. While personal credit cards may offer more flexible reward programs and other perks, they may also come with higher interest rates and fewer business-specific features.
You should be cautious if you allow employees to use personal credit cards for business expenses, as it can be difficult to track and manage expenses effectively.
Benefits of employee credit cards
Employee credit cards can offer a range of benefits for both business owners and employees. Some potential advantages include:
Simplified expense management: Employee credit cards can streamline the expense management process by allowing business owners to set spending limits, track expenses, and automate reimbursements. This can save time and reduce the risk of errors.
Increased flexibility: Providing employees with a company credit card can give them greater flexibility when it comes to making necessary purchases on behalf of your company. This can help to ensure that employees have the resources they need to do their jobs effectively.
Enhanced control: With an employee credit card, you can maintain greater control over company spending, ensuring that purchases are aligned with your goals and priorities.
Improved cash flow: Employee credit cards can help to improve cash flow by reducing the need for employees to use their own money to make business purchases and wait for reimbursement.
How do employee credit cards work?
Employee credit cards function similarly to regular credit cards, but they are designed specifically for business expenses and are linked to a company’s business account.
To obtain employee credit cards, you can apply to banks or credit card companies, set spending limits, and assign cards to specific employees. Employees can then use the cards for authorized company expenses such as travel, office supplies, or client entertainment.
You can receive statements outlining all charges made during the billing cycle. You can then choose to pay the balance in full or carry a balance and pay interest on any unpaid charges.
What to look for in a business card for multiple employees?
When choosing the best business credit card for multiple employees, it's important to look for features that will help you manage your business finances effectively:
Reporting tools
It's crucial to have access to detailed reporting tools that allow you to track expenses, monitor spending trends, and identify areas where you can save money.
When choosing an employee credit card, consider the type of reporting tools that are available and how easy they are to use.
The Capital on Tap Business Credit Card, issued by WebBank, offers accounting integration tools that allow you to track spending across all your employee cards, download reports, and categorize expenses. Our tools are designed to help you streamline your expense management process and make informed decisions about your business spending.
Spending control
To ensure employees stay within budget, make sure to choose a card that allows you to set individual spending limits for each employee to help you control expenses and prevent overspending. Many employee credit cards also allow account holders to set a transaction spend limit, allowing them to control how much an employee can spend in one transaction.
Extra fees
Some credit card providers charge additional fees for adding supplementary employee cards, which can quickly add up and eat into your bottom line.
We understand the importance of keeping costs low and providing affordable solutions for businesses of all sizes. That's why we offer free employee cards for all your staff with accounts connected to the Capital on Tap Business Credit Card, issued by WebBank.
Interest rates
As a small business owner, it's crucial to carefully evaluate the interest rates associated with any supplementary cards you might be considering for your employees.
Some providers charge higher interest rates for supplementary cards than they do for primary cards which could lead to unanticipated expenses if you don’t exercise caution. With the Capital on Tap Business Credit Card, issued by WebBank, you’ll receive the same interest rates across both your own and your employee cards.
Rewards
While many credit card companies offer rewards, some may not extend those benefits to supplementary employee cards.
With the Capital on Tap Business Credit Card, issued by WebBank, you can earn 1.5% cash back on both your main and employee cards, maximizing your rewards potential. Plus, with no cap on rewards and no annual fee, our rewards program is a great way to save money and earn valuable perks.
Virtual cards
Virtual cards offer a convenient and secure way to access your funds without the need for a physical card. Once created they can often be used immediately online or in-store via Apple Pay or Google Pay.
Virtual cards also mitigate the risk of losing a physical card. With a virtual card, employees can add their card information to mobile payment systems like Google Pay or Apple Pay, giving them the flexibility to make purchases both in-store and online.
Please note, that in some cases, for security reasons, virtual cards can only be issued after the first physical card has been activated.
Customer service
When choosing a credit card for your small business, it's important to consider the customer service provided by the credit card issuer. As a small business owner, you may encounter unexpected issues or have questions about your account, or supplementary cards. It's crucial to have reliable and responsive customer support to address these concerns.
Should you give employees a credit card?
Deciding whether or not to give employees a credit card can be a difficult decision for business owners. While there are certainly benefits to providing employees with a company credit card, there are things you should consider.
For example, if an employee misuses the card or makes unauthorized purchases, it could lead to financial loss for your business. However, many employee credit cards allow business owners to set spending limits and track employee spending.
An employee credit card can also make it easier for employees to make necessary purchases on behalf of the company without having to use their own money or wait for reimbursement.
Ultimately, whether or not to give employees a credit card depends on the needs and goals of your individual business. It's important for you to carefully consider the potential benefits and risks before making a decision.
Frequently asked questions:
What if an employee uses a company credit card for personal use?
If an employee uses a company credit card for personal use, it's important you address the situation as soon as possible.
First, you should remind the employee of your company's policies regarding the use of the card and make it clear what expenses are and aren’t allowed.
In order to prevent similar incidents from happening in the future, you can also consider setting up spending limits, regularly reviewing employee transaction history, and employing corrective measures for unapproved card activity.
Is a person with an employee card the same as an authorized user?
No, an employee card is a type of credit card that is issued to an employee by their employer for business-related expenses.
An authorized user, on the other hand, is an individual, such as a personal assistant, who has been given permission by the primary cardholder to use their business credit card for business purchases.
What can I put on my company credit card?
What you can put on your company credit card depends on the terms of your credit card agreement and your company's expense policy.
Company credit cards should only be used for legitimate business expenses, such as office supplies, travel expenses, and software subscriptions.
Is it a crime to use a company credit card for personal use?
Using a company credit card for personal use is not technically a crime, but it may be against the terms of your credit card agreement which can, in some cases, constitute fraud.
While it might be tempting to use a company card for personal expenses, it's important to remember that the card is intended for business expenses only.
Furthermore, if employees use a supplementary company credit card for personal expenses, it can lead to confusion and potentially cause issues with bookkeeping and taxes. Therefore, it is recommended that businesses establish clear guidelines and policies around the use of company credit cards to avoid any confusion or misuse.
Can a company credit card hurt your credit?
Yes, a company credit card can affect your business’ credit score, but the extent to which it does depends on how it is used.
Using the card responsibly, like paying the balance in full and on time, can actually help establish and build business credit.
However, if payments are missed or late, it can hurt your business’ credit score and damage its creditworthiness. Additionally, if your company has a personal guarantee attached to the card, any missed payments or default will affect the business owner's personal credit score as well.
It's important to carefully monitor spending and payments on your company credit card to ensure it's helping, rather than hurting, your business’ credit score.
It’s time to streamline your expense management and earn rewards while you’re at it. The Capital on Tap Business Credit Card, issued by WebBank, offers free employee cards for all your staff, with uncapped 1.5% cash back on all spending.
This does not constitute financial advice. If you want to understand credit financing options in detail, you should speak to your financial advisor or accountant.
