A growing number of startups are using corporate credit cards to better manage their business expenses. Corporate credit cards have become more convenient, and companies can provision virtual cards very quickly, allowing employees to use them to pay for authorized business expenses. Small businesses will sign up with a corporate credit card company and create virtual cards for their employees, which typically have low limits, to control expenses and minimize fraud risk. 

Switching to corporate cards instead of expense reports offers a number of benefits:

  • Efficiency. While filing an expense report provides a high degree of accountability, the expense process can be time-consuming. Using a corporate credit card can eliminate expense documentation, approval levels, and other bureaucracy that takes time away from core business operations. 
  • Easing cash flow for employees. With corporate cards, employees don’t have to wait to get an expense report approved and get the money deposited to their bank accounts. An expense process may take two or three weeks before the money is reimbursed. Typically, the credit card bills the company directly, which puts less financial pressure on employees. 
  • Centralized expense tracking. Using corporate cards allows companies to get all employee expenses on a single statement. And many card issuers have automated expense reconciliation solutions, to help accountants pair receipts with transactions and save time. Spending patterns can be easily analyzed to control expenses.
  • Organization. Corporate credit cards also help employees and upper management stay organized. Anyone who has filed expense reports over the years has probably lost receipts, or forgotten to submit expenses, or even chosen not to expense small purchases to avoid the paperwork. 
  • Cost savings. Expense report software can involve monthly fees in addition to setup costs. While some card programs charge fees, most corporate credit cards are free.  

A corporate card program can also help founders who are paying for business expenses using their personal credit cards. These expenses really should be documented. The IRS frequently targets transactions between founders and companies for audit, so using a personal credit card for business expenses increases the company’s audit risk. 

Manage your startup’s expense more easily

Providing employees with a corporate credit card helps startups manage expenses effectively, and credit card companies are expanding into this market. Companies like Brex, Ramp, Expensify, bill.com, Airbase, and others are offering virtual credit card functionality. The ability to set spending limits and automate expense reporting can save startup companies time and money. If you have questions about corporate credit card programs and how they can work for your startup, please contact us.