What are Modern Corporate Credit Cards?

As an employee of any company- both big and small- you are probably more than familiar with the term “corporate credit card.” Whether or not all employees get to use a corporate card varies by organization, but at the very least, most executives always have one on-hand. Why? Usually, to make business-related purchases as expenses pop up for themselves or for employees that don’t have their own business credit card. These expenses could be anything from travel necessities, to supply purchases, or to subscriptions services.  

Given the spend frequency of typical corporate credit cards, transactions are often in abundance and at random. Thankfully for several companies across different industries, today’s technological payment capabilities are simplifying the way businesses can spend while simultaneously tracking each transaction. They are taking the burden of managing multiple corporate cards and giving company executives more control and efficiency over their financial spending operations. 

How do Traditional Corporate Credit Cards Work?  

Traditional corporate business credit cards are frequently used credit cards by business employees and executives for expense-related transactions. Throughout the years, an increasing number of companies have switched to a model that allows each employee to have their own company credit card on-hand for business expenses. It was quite common among companies beforehand to reimburse their employees for any work-related expenses they incurred. The delay (waiting period), however, became increasingly frustrating for employees to pay out-of-pocket for supplies then wait until months end just to receive their repayment; business owners sought out corporate credit cards as the alternative. Aside from avoiding reimbursement, companies felt corporate cards were another way to empower employees with trust and responsibility; similar to a “company incentive.”  Now instead of companies collecting receipts for reimbursement, it became companies collecting receipts to verify every dollar spent out of the company’s account. On the other hand, as companies grew, it became more impractical to keep up with reimbursement as different employees joined their workforce.  

Another reason corporate credit card programs are growing (especially over a debit-based model): cost savings and reward offerings on eligible purchases. As employees and executives are spending on a corporate card, most offer high-value rewards that put money back into the company’s “pocket”.  

As people are using traditional corporate credit cards, admins will monitor their spending by referencing end-of-month bank statements, expense reports, or physical receipts. Some more traditional employee expense cards give admins the opportunity to shut cards on or off from a smartphone app; however, this capability varies by bank.  

The Benefits of Modern Corporate Credit Cards 

Although traditional corporate credit cards serve as a viable option to employee expense reimbursement or petty cash disbursement, they aren’t nearly as accommodating to executives when it comes to expense management. The natural concerns that coincide with giving employees their own traditional corporate card:  

While these can always be put into question regarding traditional corporate cards, modern corporate credit cards can diminish these concerns. With modern corporate cards, admins are better adept at tracking spend and real-time reporting. These cards allow admins to set specific boundaries on each commercial credit card based on the company’s corporate credit card policy. They each have spend limits (to avoid overspending), card controls to prevent misuse of funds, and a live view of every transaction as they happen.  

How are Modern Corporate Credit Cards Creating Better Streamlined Business Expenses? 

Here are the top 4 reasons why modern corporate credit cards are changing how businesses handle their expenses:   

1. Customizable Card Names

Instead of creating credit cards in an employee or business name, modern credit cards give admins the ability to create unique cards with customizable names. Some organizations still prefer to simply create company credit cards under each individual employee, which is still an option; however, a modern corporate credit card program also allows admins to create generic names (I.e. “fuel card 1”). Essentially, you can create cards by use case (or spend type) instead.  

Why is this significant? From a backend perspective, this ability allows you to easily track spend type for each use case from a real-time analytics bank statement. For example, a fleet company prefers to create a corporate card for truck 1. They can simply name the card “truck 1” and reorganize who can use that card based on whose driving it. As that card is being used, you’ll know which truck needs gas or repairs in a given moment. You’ll also be able to track which vehicles are costing you more, and for which reasons. This versatility can save your financial department time in the reconciliation process, as it will be easier to identify spend type and to which corporate credit card the transactions were charged to.  

2. Customizable Spend Controls

Instead of freely giving out corporate credit cards to each employee with little spending boundaries, modern corporate cards give admins the ability to set specific merchant spend categories that keeps spending in-check.

For example, if employees should only use a card for gas expenses, you can simply only allow a “gas” merchant category for spend. If an employee or any other individual were to use that company credit card outside of its intended purpose, the transaction will decline, and you’ll be notified instantly.

Why care? There’s no concern of overspending. There’s a set limit that can’t be overspent unless admins adjust spend limits in real-time.

3. Customizable Spend Limits

Budget-setting capabilities, here. No more word-of-mouth budget setting with your organization or “mutual understanding;” modern corporate cards allow you to create spend limits, so your company budget policies are enforced through these cards.

Why care? There’s no concern of overspending. There’s a set limit that can’t be overspent unless admins adjust spend limits in real-time.

4. Virtual Card Option

This is a capability that can change how quickly you get funds to specific employees when they need it. Outside of adjusting a spend limit, a modern card can also be a virtual corporate credit card created on-the-spot if there are unforeseen or additional expenses that come up.

Why is this significant? You can get funds instantly to employees as they’re out on a job without having to change their spend limits on their regular corporate spending card.

In hindsight, modern credit cards offer the same or similar rewards as traditional corporate credit card programs but add more efficient ways to manage company expenses.

Traditional vs Modern Corporate Credit Cards 

After learning how each type of corporate credit can function, it’s important to identify the key differences between them in each respective category of significance: 

Versatility

traditional corporate credit cards simply don’t have the kind of versatility that modern credit cards do. There is little ability to customize their name; usually they go straight into an individual’s name. There’s also a much easier way- as mentioned previously- to get funds from employer to employee when employees are out traveling with a modern option. A simple smartphone app connected to the cards can allow admins to change, edit, reissue, or recreate cards for use instantly. If an employee using a traditional card loses their card, or if they need more than their allotted amount, they typically will pay-out-of-pocket and later be reimbursed.  

Transaction tracking

traditional credit cards don’t provide near the real-time visibility to track spending that modern credit cards with U.S. Bank Spend Management do. Limited transaction visibility can cause financial mishaps and overspending, making it difficult to truly protect your cash assets. End-of-month bank statements are the best way at that point to balance your spending. Real-time transaction tracking with modern credit cards makes it easier to identify different spend types, assess cash outflow, track individual spending, scale, and make smarter spending decisions much quicker.  

Cash flow protection

traditional credit cards typically don’t have customizable spend controls , making it difficult to protect cash flow. Spending can happen at any time, and before you’re able to get to it, you need a layer of protection to prevent spend; modern credit cards do, however. To coincide with real-time transaction tracking, spend boundaries are an extra layer of protection that won’t allow spending outside of the allowed categories. 

The Bottom Line 

Without proper expense tracking, companies may lose touch with their day-to-day expenses. This is why they’re beginning to embrace modern corporate credit cards to avoid loose spending or other inconsistencies.  

The days of an older credit card option are over for businesses prioritizing the organization of their expenses. Modern credit cards with U.S. Bank Spend Management are best for streamlining company expenses while simultaneously giving employees a strong payment option without incurring out-of-pocket expenses. This spend management platform can make your company expense operations more efficient from point-of-spend to transaction tracking and coding. It’s a solution aimed at creating a seamless experience for company admins and employees alike that can save you time, money, and effort.