Types Of Corporate Cards In Singapore For Growing Businesses

Singapore offers a variety of resources to help businesses grow, but the true success of any company boils down to how the resources are utilized by a business. Corporate cards are one such resource that demands innovative utilization for the burgeoning success of growing businesses.

What’s a corporate card?

As a business owner in Singapore, it’s time to explore this valuable resource if you’re unsure of the concept of corporate cards. Corporate cards are business tools that help streamline financial operations for a business. Functionally, they operate similarly to personal cards, but with a distinct focus on catering to businesses’ unique needs and demands.

Corporate cards can be broadly classified as either debit or credit cards. A corporate debit card Singapore is the one using which transactions are directly linked to the company’s bank account. A transaction using a debit corporate card directly deducts the corresponding amount from the company’s available funds.

On the other hand, a corporate credit card is similar to personal credit cards, where the amount is borrowed from the card issuer rather than being drawn from the company’s bank account. The borrowed amount needs to be paid off within a designated billing cycle.

What can corporate cards be used for?

Corporate cards are usually issued to employees in a physical or virtual form to enable employees to make purchases on behalf of the company. Issuing corporate cards empowers employees to make out-of-pocket expenses safely without having to file for reimbursements. Both cards can come with a spending limit to prevent employees from overspending. Additionally, both cards can fund regular and occasional expenses, but only corporate credit cards enable a business to build or increase its credit score.

A credit score is a three-digit number that signifies the creditworthiness of an individual or business. The higher the credit score, the more an entity would be eligible for loans and other forms of credit at a possibly lower interest rate.

The key differences between a corporate debit and credit card:

Extraction of amount:

The amount is directly deducted from the company’s bank account when a transaction is made with a corporate debit card. In comparison, the amount processed through a corporate credit card is borrowed from the card provider and is supposed to be repaid at the end of the billing cycle.

Interest rates:

There are usually no interest amounts to pay when a payment is made through a corporate debit card. On the other hand, a corporate credit card provider is likely to charge interest on the amount processed.

Access to cards:

For companies with a lower credit score, getting a corporate debit card issued would be relatively easier than a corporate credit card. Corporate credit card issuing companies usually demand high credit scores when a business successfully wants to apply for a corporate card.

Impact on credit scores:

A corporate debit card, like a personal debit card, won’t impact the credit score as no form of credit is involved when purchasing goods through a corporate debit card. But, as discussed earlier, using a corporate credit card will impact the credit score depending on the proactiveness of the business to repay the credit card bill. Since corporate credit cards involve borrowing funds from the issuing company, they risk a business getting into long-term debt if the credit bills are not handled mindfully.

Security:

Most corporate debit cards have standard fraud protection, whereas corporate credit cards may have advanced security and fraud protection activated.

The best practices for using a corporate card:

Using corporate credit cards can be highly beneficial for companies looking to upgrade to a smarter expense management system, but their potential is only realized when used in the best way possible.

●Set spending limits:

A business owner should adjust the spending limits on each card depending on the authority of the employee who will get the card. It’s not advisable to set the same spending limit on each card.

●Set a validity:

Like personal payment cards, corporate cards come with an expiration date. Usually, this date is set by the issuing company when a business requests to issue a physical card. However, in the case of virtual cards, the business owner can set the validity of each card depending on its purpose.

To conclude, businesses broadly use two types of corporate cards to set up a robust expense management process. Each type of card comes with its benefits and considerations. Thus, each business needs to issue these cards under discretion.