Company Credit Cards And The Benefits They Come With

- by Isla Williams
Exploring The World Of Credit Cards – Chapter 14

Is your business spending in the best way? Company credit cards have many benefits you should know about. Explore this article from short term lender Cashfloat.co.uk. for more info.

company credit cards = cashfloat
In this article, we will look at key benefits to businesses using company credit cards:
  • How company credit cards work
  • Interest Rates, cash-back and rewards
  • Advantages and disadvantages
  • Using a personal credit card for business

Credit cards for businesses

Although this series of articles has focused on personal credit cards for individuals, these useful financial tools are also used extensively by companies. In this article we will take a concise look at how using a company credit card can provide benefits to both large and small businesses.

Business credit cards – how they work

Company credit cards work in just the same way as personal cards. The business owner has a set credit limit, and the monthly balance can be cleared immediately or paid back over a period of time. Like standard credit cards, there is a minimum amount to pay each month.

company credit cards - Cashfloat

The business credit card account allows additional card holders. The credit limits on extra cards will depend on the business owner and the bank issuing the card. Used wisely, a company credit card can be of assistance in building up the creditworthiness of any business, whether it is new or well established.

Key benefits to businesses

Credit cards for personal use offer a host of benefits. These same benefits also apply for company cards. Small businesses can use cards to manage their cash flow as well as paying for expenses that would otherwise have to come out of a large petty cash, instead of needing to arrange cash advance loans.

You can use company credit cards used to accrue rewards such as air miles, travel insurance and cash-back. The card account can have additional cardholders besides the owner, which makes managing expenses a lot faster and simpler. The terms of business credit cards allow for itemised billing. Some offer 0% on all purchases for a specified period.

company credit cards = cashfloat

Interest rates – Company credit cards

In the same way that an interest rate forindividual cards is worked out by the credit score of the account holder, company credit cards are allocated an interest rate depending on their business credit score.

So, if your business has a good score, you can expect to get a lower APR. You may be receive offers of reward points on cards, cash-back or a longer interest free period. If the business is new, the issuer will set a rate according to the personal credit score of the owner.

Credit cards for cashback

Each company credit card has different offers of rewards and cash-back. If you will regularly use the card, a cash-back feature is going to be useful. If you pay off the balance in full each month, then this will apply.

company credit cards - Cashfloat

Some businesses involve a lot of travelling, then free travel insurance is a good feature to have for them. When cash flow is a problem, a longer interest-free period can help. So, look closely at what is on offer, and what features would be the best for your business.

Advantages – Company credit cards

There are many advantages of a business using company credit cards. See below five of the benefits:

Disadvantages – Company credit cards

There are many disadvantages of businesses using company credit cards. See below three examples:

Credit card fraud

By agreeing to give an employee a credit card you are trusting them to keep the card safe, and to use it responsibly. Failure to keep card details safe from criminals could result in the loss of thousands of pounds. If an employee has been less than vigilant, your business will have to stand the loss.

Credit limits and payments

Giving an employee a credit card is giving them trust to make the right choices when buying items for the company. Although you can set the spending limits, it always involves a risk. It could be that an employee will buy the wrong product or one that is not suitable for your needs. Each transaction will have to be honoured regardless of whether you approve of the payment. So, don’t give out a company credit card to just anyone, but only to trusted employees.

Company credit card debt

Used wisely a company credit card can be an asset. But, there is always the risk of overextending the credit. The result could be an accumulation of debt for the business.
Furthermore, if the company doesn’t pay off the balance in full each month, hefty interest rates could apply. These might also put the business into debt.


Which is the right company credit card?

Different credit cards offer a variety of features, and it depends on your own needs which one is the right one. If you fully intend to pay off the balance in full each month, a card offering cash-back would be a good choice. A cash-back card will usually offer 1% cash-back on all purchases. Some cards don’t charge for foreign transactions as long as the purchase is in the local currency.

company credit cards - Cashfloat

Most rewards cards carry an annual fee of around £30. This should be taken into account when you are weighing up whether cashback is going to be worthwhile.

If the company card is going to be used to make large value purchases and the payment is to be spread over a number of months, a card with a lower APR would be a better choice.

Using a normal card for business purposes

If the thought of acquiring yet another type of credit card is causing concern, there is a different option. If you are a one person business and want to keep your company expenses separate from your personal spending, you can choose to use a personal credit card.

company credit cards - Cashfloat

Look for a card which offers benefits on business cards, then charge all company expenses to that single card. This may be a good option especially if your business costs are low. However, the credit limit is liable to be set at a lower amount. The rewards may not be as advantageous as those offered on a specialised company credit card.

If it comes to a point where you feel the company are mis-using the credit cards, and you feel you are short on cash, there is still always the option of applying for a loan online.

Company credit cards – Summary

This brief look at company credit cards spells out the benefits and drawbacks of using this kind of credit account. You shouldn’t regard business credit cards as a frightening prospect. Look at all the features of each card. Then choose the right one to suit your own personal business circumstances.

  1. Additional cards are available on company credit card account and these usually include in the annual fee.
  2. Detailed monthly statements make it easier to keep track of the expenditure of employees.
  3. You can set the credit limit to a different amount for each additional card. Thereby giving you control of how much each cardholder spends.
  4. Rewards programmes can be very beneficial especially if your business requires employees to do a lot of travelling.
  5. Weight up the costs of the annual fee against the cash-back feature to see if it is worthwhile.
company credit cards = cashfloat
Share
About The Author
Isla Williams
A born writer, Isla had her first article published at age 9 in a local magazine. Isla's joy emerges when pen strikes paper, and she can tap into her creative self. "I love to share knowledge/information and help others to be in the know while being as friendly as I can.” Isla is an accountant by profession but has taken a break to do what she enjoys most - writing.
Blog disclaimer

We do all we can to bring you interesting, practical and valuable information. However, please understand the following:

Information and data on this blog are for information purposes only. While we work hard to ensure it is accurate, we cannot accept responsibility for the accuracy, completeness, suitability or validity of any information provided on the blog. We will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use. All information is provided with no warranties and confers no rights.

If you feel that any of the information published on our blog is not accurate, please notify us via email at compliance@cashfloat.co.uk

Bottom content

Cashfloat is a trading style of Western Circle Limited - Company Registration Number: 7581337. We are fully authorised and regulated by The Financial Conduct Authority. FCA full permission license: 714479. ICO Registration Number: Z3305234


* Cashfloat terms and conditions apply. Applicants must be 18 or over. All loans are subject to affordability, applicant verification and traditional credit checks via various national databases by Cashfloat responsible lending policy. In most cases, loan decisions may take up to 30 minutes during office working hours. If your bank does not support Faster Payments, funds will be sent to your account the same day as approval so long as you’re approved by 16:30.


Representative example: Borrow £900 for 7 months. 1st monthly repayment of £187.92, 5 monthly repayments of £250.56, last monthly repayment of £125.27. Total repayment £1,565.99. Interest rate p.a. (fixed) 198.72%. RAPR 529.09% Our APR includes all applicable fees. Daily interest is capped at 0.74%.


Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk

This site uses cookies. Find out more.