The Comprehensive Guide to Corporate Credit Cards

Corporate credit cards are well-established and trusted tools for managing business expenses efficiently. They can help simplify spending and improve cash flow, while sometimes offering rewards and perks for businesses.

As useful as they are, corporate credit cards are just one of several financial solutions available to you as a business owner. They’re great at providing a structured way to handle company expenses, for example, but they also have their own limitations when it comes to lending volumes, borrowing periods and interest rates.

In this guide, we’ll look at corporate credit cards in greater detail. We’ll explain what situations they’re useful for, when to be wary of overly relying on them, and what alternatives exist for growing businesses. 

What is a corporate credit card?

A corporate credit card is a special type of credit card that you and your employees can use to pay for company-related expenses. Instead of an employee using their money and claiming it back later, your company can give them a card linked to your business’s account.

So unlike small business credit cards (which are typically used by sole traders or smaller enterprises), corporate credit cards are designed for larger businesses with multiple employees who need access to company funds to cover work-related expenses.

These cards are commonly used for business travel, procurement, operational costs, and other essential expenses.

The number of cards you can issue to your employees depends on the provider’s policies and your company’s creditworthiness. Some providers may offer more flexibility based on your spending patterns and a risk assessment.

Benefits of using corporate credit cards for businesses

Corporate credit cards offer a range of benefits that can make financial management and business operations easier to manage. These benefits include improved cash flow, simplified expense management, enhanced spending control, rewards and perks and credit building. 

Improved cash flow

Corporate credit cards enable businesses to manage short-term expenses effectively without depleting their reserves. With extended payment cycles, you can spread costs over time, maintaining better liquidity and improving your cash flow.

Simplified expense management

Tracking and categorising business expenses becomes easier with corporate credit cards. Most providers offer detailed spending reports, integrating with accounting software to simplify reconciliation and tax reporting.

Employee spending control

You can set custom limits for each cardholder, ensuring employees only spend within pre-approved budgets. This prevents unauthorised spending and enhances financial oversight.

Rewards and perks

Many corporate credit cards offer cashback, travel rewards, and discounts on business-related expenses. These incentives can translate into significant savings over time.

Credit building

Using a corporate credit card responsibly helps build your credit profile. A good credit score can improve your company’s ability to secure larger funding in the future.

How do corporate credit cards help build business credit scores?

Timely repayments on a corporate credit card can enhance your business’s credit profile. By consistently meeting payment deadlines, you establish a strong credit history, which can be beneficial when applying for additional financing or negotiating better terms with suppliers.

Some corporate credit card providers report payment activity to commercial credit bureaus, further strengthening the business’s financial reputation.

Eligibility criteria for corporate credit cards

To apply for a corporate credit card, you have to meet specific requirements. While criteria varies between providers, there are common requirements you’ll most likely need to meet:

• Business registration – The company must be a legally registered entity in the UK.
• Financial health – Providers typically require proof of stable revenue and a good financial standing.
• Credit history – A strong business credit score is often necessary. Some providers may also assess your personal credit history.
• Minimum turnover requirements – Certain providers set revenue thresholds that you must surpass to qualify for a corporate credit card.

What fees are associated with corporate credit cards?

Like any credit card, corporate credit cards come with various fees attached. Most commonly these are annual fees, interest rates, foreign transaction fees, late payment penalties and cash advance fees. You should carefully evaluate costs before selecting a provider.

• Annual fees – Many corporate credit cards charge a yearly fee per cardholder.
• Interest rates – If the balance is not paid in full each billing cycle, interest charges may apply.
• Foreign transaction fees – Businesses making international purchases should check for foreign currency transaction charges.
• Late payment fees – Missing a payment deadline can result in penalties and potential damage to the business’s credit score.
• Cash advance fees – Withdrawing cash using a corporate credit card often incurs additional charges.

What spending controls and limits do corporate credit cards offer?

Corporate credit cards provide several tools to help you control employee spending and manage expenses efficiently, like employee limits, category restrictions, monitoring capability and centralised billing. 

• Custom limits per employee – Employers can assign individual spending limits based on roles and responsibilities.
• Category restrictions – Businesses can block spending on non-business-related categories, ensuring funds are used appropriately.
• Real-time monitoring – Many providers offer real-time transaction tracking, helping companies maintain oversight of expenses.
• Centralised billing – Consolidating all employee spending into a single statement simplifies reconciliation and accounting.

How do corporate credit cards compare to other funding options?

Corporate credit cards are a convenient way to manage day-to-day business expenses, but other financial solutions – like a business loan – may be more suitable, depending on your funding needs.

Corporate credit cards

• Ideal for managing short-term, recurring business expenses.
• Offer rewards and perks but incur interest if balances are not settled in full.
• Provide flexibility but are not suitable for large investments.

Business loans (such as an iwoca Flexi-Loan)

• Designed for bigger investments and scaling operations.
• Offer fixed repayment terms sometimes with the option to repay early without penalties.
• Let you use as much or as little of your agreed limit to reduce interest costs.

What are the tax implications of corporate credit card expenses?

Corporate credit card expenses can have tax implications, and businesses must ensure compliance with UK tax laws.

• Deductible expenses – Many business-related expenses incurred on a corporate credit card can be deducted from taxable income.
• VAT reclaim – Companies may be eligible to reclaim VAT on eligible purchases made using a corporate credit card.
• Record-keeping requirements – Businesses must maintain detailed receipts and transaction records for tax reporting and compliance purposes.

Choosing the right solution to manage your business finance

Corporate credit cards are a convenient way to manage expenses, control employee spending, and improve cash flow. They offer benefits like rewards, simplified accounting, and enhanced financial oversight.

However, as with any financial tool, you should carefully assess costs, eligibility requirements, and alternative funding options before using them. If you need added flexibility, alternative options (like an iwoca Flexi-Loan) provide tailored financial support with larger loan amounts available, more flexibility and no hidden fees.

Apply for a Flex-Loan today in minutes today, with fast approval, minimal paperwork and no hidden fees, we make SME financing straightforward so you can focus on growing your business.