Should You Issue Corporate Credit Cards? The Answer is Maybe.
Will your business issue corporate credit cards to employees or have them use personal cards and submit expense reports for approval and reimbursement? You probably have an answer already. Before you make a final decision, though, it’s important to understand the pros and cons of either option:
Pros and Cons of Corporate Credit Cards
- Pros – Employees don’t have to prepare and submit expense reports, reducing the amount of paperwork they need to complete. They don’t have to wait for reimbursement, either, which helps preserve a positive relationship between employer and employee. For employers, putting all purchases on corporate credit cards makes it easier to track and manage expenses since they are all in one place and don’t require manual consolidation – which takes time and causes errors – after the fact.
- Cons – There’s always the risk that employees will use corporate cards for non-approved expenses (though some cards let employers define “approved” purchases). Some employees also prefer using their own cards to get “points” with their purchases. Smaller businesses may not be eligible for certain cards. And for any-size employer, the accumulated cardholder fees can become a significant expense.
Pros and Cons of Personal Credit Cards
- Pros – By charging company expenses to personal cards, employees can earn various perks that act as a small bonus on top of their normal compensation package. Employees are also less likely to lose or otherwise mishandle their own credit card than one issued by their employer. Foregoing corporate credit cards also means one less card for employees to manage so that expenses don’t get split between two cards and complicate expense tracking unnecessarily.
- Cons – No one likes filling out expense reports, dealing with issues over approved expenses, or waiting (sometimes a long time) to get reimbursed. Also, asking employees to use their own cards to pay for business expenses can feel like an inappropriate request. Perhaps the biggest con, however, is having to integrate dozens or hundreds of expense reports to get visibility into spending.
Final Considerations
The right choice isn’t as simple as it seems. Consider a survey that showed 70% of respondents with corporate credit cards still use their personal cards for some business expenses. That would suggest neither option checks all the boxes…at least not in the past.
Recent advances make it much easier for both employees and employers to manage business purchases. Ramp and Airbase are two examples of virtual card programs that make corporate credit cards an option for any small business. Alternatively, tools like Expensify take the hassle out of completing, submitting, and approving expense reports.
So which option should you choose? The better question to ask is how your business will manage expenses as part of a broader accounting and financial management strategy. Proseer can help answer that question, supplying analysis, insight, and guidance to identify the best approach to everything. Contact us to set up a meeting.
