All You Need To Know About Corporate Credit Cards in Singapore
Tracking expenses can be a bane for large companies. As businesses rack up millions of revenues, they are also splurging wads of cash via indirect spend such as corporate travel, office rental, and IT equipment, to name a few. While necessary to keep the business going, these expenses can pave the way to potential compliance risks if not managed properly.
This is where a corporate credit card comes in handy. Designed to ease the burden on a company’s finance unit, these portable rectangular plastic cards offer companies benefits beyond swiping at the employees’ convenience.
What is a corporate credit card?
According to Investopedia, a corporate credit card is issued to employees by established companies or organizations for authorized business expenses such as accommodations and plane tickets. Also called a commercial credit card, a corporate credit card allows an employee to spend on business-related items without having to use their personal cash. It functions the same way a personal credit card does, but with a bevvy of lucrative perks in tow. These perks come in the form of cashback or cash credits, shopping vouchers, complimentary travel insurance, air miles, waived foreign currency charges, and more.
This card is typically issued between the employee and the company, with the former’s name printed on the card itself. All verified transactions and the annual fee are paid for by the company, although the process of payment hinges on the account’s liability terms.
Corporate Card vs. Business Card
A corporate credit card is a great way to improve a business’ expense management. That is why knowing which corporate card suits your company is essential to ensuring that you reap the best benefits for every swipe. A corporate credit card is often confused with a business credit card, which also allows employees to pay for business-related items without having to use their personal cash. But these two types of cards have key differences in three areas: eligibility, usage, and liability. Let us take a look at each.
Typically, only large and established companies with an annual revenue of at least US$4 million and annual expenses of no less than US$250,000 can apply for a corporate credit card. These companies must also have at least 15 authorized cardholders to qualify. As such, companies need to be structured and have a good credit score. Big credit card issuers such as Citibank and American Express may take a look at the company’s financial profile, including liquidity and cash flow when approving applications.
On the other hand, a small business credit card caters to companies that do not meet the threshold mentioned above. Smaller companies and sole proprietors in Singapore, regardless of years of operation and size, can apply for a business credit card. Financial institutions do not usually require an audit when screening applications under this type of expense card, but business owners must provide information such as tax identification numbers. Businesses likewise need to have a good credit standing and a personal guarantee, which is a legally binding commitment to repay credit.
Applying for a corporate or a small business credit card varies per provider. Citibank Singapore, for example, requires a company to have a minimum net worth of S$50,000 depending on the number of years of operation to qualify for a corporate credit card. Expense management software Spenmo, meanwhile, provides more straightforward processing and offers corporate credit cards in Singapore that function much like a debit card.
Liability comes in two forms for corporate credit cards. First is a corporate liability card, where the responsibility of paying off the expenses at the end of the billing period and the annual fee rests on the company itself. The other is an individual liability card, where the employee is in charge of paying off the bill and claiming a reimbursement from the employer. In both cases, the employer must always keep track of expenses to ensure that all items reconcile with each other.
Financial institutions typically do not check on the employee’s credit standing when approving corporate liability credit cards since contactless payments are directly made by the employer. Employees are also not impacted by any delinquency issues associated with their corporate credit cards, meaning their personal credit standing is unaffected if the company card defaults unless the debt is under shared liability.
For business credit cards, liability lies on the primary cardmember or the business owner, who must issue a personal guarantee and take responsibility for all repayments, including the annual fee. Most financial institutions will check on the primary cardholder’s personal credit standing and keep track of their account activity. Small business owners can use this type of card to boost their credit standing and apply for a corporate card once they meet the threshold.
Another key difference between a corporate credit card and a business credit card is how it is being used. While both cards let businesses assign a credit limit, corporate credit cards get more control. They are also built with analytical tools to help with tracking expenses.
Spenmo, for example, provides corporate credit cards that work much like a debit card, where the company pre-loads each card with funds from its bank account. Spenmo has smart features built into its corporate credit cards such as merchant lock, which blocks purchases from unauthorized vendors.
Other financial institutions like Citibank, UOB, or American Express also incorporate analytics tools into their systems, including a policy compliance monitor, an expense tracker, and reports.
Holders of business cards typically enjoy the perks and rewards from their purchases. On the other hand, some corporate credit cards do not allow the individual cardmember to keep the cash back or points they accumulate despite having shared repayment liability. However, corporate credit cards usually enjoy the advantage of having dedicated agents in charge of liaising between the provider and the company for any transaction issues. This relationship is important for corporate credit cards that do transactions at scale.
What are the benefits of issuing a corporate card to your employees in Singapore?
Businesses walk a tightrope when managing different types of expenses at once. One wrong move could derail your business efficiency, as well as prevent you from realizing a wealth of cost-saving opportunities. But thanks to corporate credit cards, tracking employee expenses such as plane tickets, hotel accommodation, or business-related dining has become easier. Here are some of the main benefits of employing a corporate-issued credit card.
Increased visibility and control of expenses
Unchecked spending on top of tons of receipts to review is a headache waiting to happen, especially from the perspective of the finance department. With a corporate card, companies can set a credit limit on how much an employee can spend so they can stay within budget. Companies can also set a spending cap on certain categories using these cards. Additionally, they can limit purchases to specific merchants, types of vendors, and geography. For Spenmo, a merchant lock mechanism is triggered to block transactions involving certain merchants identified by the company.
Corporate-issued credit cards have another layer of protection compared to personal credit cards. These built-in tools and services will help detect fraud, theft, and misuse, as well as provide extra security in case of loss. The corporate credit card’s security features benefit both the employee and employer.
The DBS World Business Card, for example, has travel insurance coverage of up to S$1 million, and an employee misuse coverage, making it one of the few financial institutions that offer this perk. The Maybank Business Platinum Card, which supports Mastercard, also provides free travel insurance and improved cash flow features.
Corporate credit cards also prevent potential frauds that could come out of giving the spending autonomy to the employee. The company simply has to download the billing statements, making it nearly impossible for the employee to tweak the receipts.
Avoid out-of-pocket expenses
With a corporate credit card, employees no longer have to shell out money on business-related expenses. That eliminates the often arduous process of reimbursement, a pain point for both the employee and the finance department. For employees who are travelling, they can get away with converting large amounts of money into foreign currency, thereby minimizing security risks.
Improved expense management
Gone are the days when the finance department still had to double-check every line item on the billing statement against the expense report. Today, corporate credit cards are integrated into a company’s expense management system. That means all transactions are being fed into the system, allowing the employees and finance auditors or managers to review without any barriers.
At Spenmo, for example, all payment details are integrated into accounting software Xero for centralized reconciliation. As a result, all payments made via Spenmo can flow into Xero at a click of a button, minimizing the possibility of human errors, automating payouts, and streamlining the entire contactless payment process.
Other credit cards like AmEx also allow employees to convert their transactions in expenditure via an expense management app. This is done by reconciling transactions with their respective expenses based on a host of predetermined factors such as the amount or date of purchase.
Unlimited cards for employees
A corporate credit card can be issued to as many employees as needed in a company. This is great for large enterprises that have staff who are often traveling or are likely to spend on business needs. Card issuers like Spenmo can provide unlimited physical and virtual cards so no two employees have to share a swipe.
Another excellent benefit of getting a corporate crest card is reaping the rewards that come with it. The most common reward is the annual cash rebate or cashback, which varies per issuer. Typically, this rebate ranges from 1% to 5% depending on the issuer and the type of purchase made.
The Citi Corporate Card in Singapore provides an annual cashback of 3%, regardless of the type of transaction. Meanwhile, the DBS World Business Card lets users enjoy a 2% cash rebate on overseas spending only. Identifying where your frequent purchases would likely fall under is helpful when deciding on which corporate credit card to sign up for, a process we will expound on later.
Other rewards tied to these cards are dining and fuel discounts, shopping vouchers, complimentary air miles, and business travel protection. Plus, cardholders get to enjoy exclusive perks such as access to airport lounges and concierge services. Corporate credit cards and business credit cards in Singapore often incur an annual fee of S$150 to $S450, but depending on your agreement with your provider, these charges can be waived.
In addition, corporate cards tied to an expense management system like Spenmo can take advantage of extra cash rebates, no monthly fees, and the lowest foreign-exchange rates. Rebates from this tie-up can be used to pay for the use of the system, which in turn helps your company track and manage your business expenses better. Spenmo clients save more than 50 hours and S$10,000 every month through the system. Click here to talk to a Spenmo representative and learn how you can integrate your expenses into the system.
Ease of use
Employees sent overseas for assignments will find a corporate card or a business credit card very useful and convenient as most of their transactions are done through swiping, meaning there is no need for them to worry too much about carrying cash on hand or thinking about converting their local money to foreign currency. Corporate credit cards in Singapore that support Visa and Mastercard like UOB, DBS or Maybank are also widely accepted by most merchants, regardless of where you are, making them ideal for travel-related expenses.
Who should be issued a corporate card in your team
Issuing a corporate card is no longer limited to managers and company directors. Companies now have more liberty to assign credit cards to other employees as they see fit. But flexibility comes with risks, too. Credit card issuers like UOB in Singapore or American Express require corporations to have at least 15 cardholders. So, how do you determine which among your employees need to be issued a card?
The first thing to consider is whether an employee is travelling frequently. One of the primary reasons for applying for a corporate credit card in Singapore or elsewhere is business travel. From flight tickets and local public transportation to meals and hotel accommodations, business-related expenses can be a headache once you need to do the paperwork for them.
With a corporate card, not only can employees enjoy exclusive perks like airport lounge access, air miles from flag carriers such as Singapore Airlines, and travel insurance, they also do not need to convert large sums of money when in a foreign country since a corporate card is acceptable in most major establishments that support Visa and Mastercard. Plus, foreign fees are sometimes waived using these cards, enabling large-scale companies to save on expensive transactional charges.
Another factor to consider is whether or not an employee handles large and frequent business-related purchases. Instead of having to manually list every item, your employee can use an automated corporate card to ease the process of tracking and managing these business expenses, reducing human errors to zero by ensuring that every receipt is uploaded to the system for easy reconciliation.
Salespersons who regularly meet with clients, C-level positions, and other executives are typically given a corporate credit card for these reasons.
Lastly, issuing a corporate card entails another level of responsibility as funds mismanagement by an employee could lead to costly and time-consuming lawsuits. To avoid this, your company should draw up a set of rules on the proper use of corporate credit cards.
You could set a credit limit and restrict the use of the card depending on the employee’s seniority level or department. You could also consider how long the employee has been in your company when deciding on eligibility. For example, only a salesperson who has served at least two years in your business can qualify for a business card, establishing a level of trust between both parties and ensuring that no favouritism gets in the way.
How to apply for a corporate card in Singapore
The requirements for acquiring a corporate credit card vary per issuer. In Singapore, the biggest financial institutions that provide these cards include UOB, DBS, Citi, Maybank, American Express, and Standard Chartered.
Once you have determined your company’s eligibility, the next step is reviewing your credit score. Issuers do not usually take a look at the individual cardholder’s credit standing in the approval process and instead factor in the applicant-company’s own credit score. Once you have submitted all the requirements to your desired issuer, wait for a callback regarding the status of your application. In some cases, you might get follow-up calls requiring you to submit additional documents. On average, approval may take two weeks or more.
The process, however, is much straightforward and simpler with contactless payment management systems like Spenmo. First, go to the website and schedule a demo with a Spenmo representative. The next and final step is the sign-up process, after which you can already start using Spenmo within the day and enjoy a wealth of perks and features such as expenses categorization, adding a credit limit, expense flows, and real-time tracking of your cardholder’s spend, to name a few.
Choosing the best corporate card for your business
Ultimately, getting a corporate credit card puts your company one step closer to efficient finance management. To choose the right corporate card for your company, you have to determine your business expenditures. What type of purchases will the card be used the most? Will you assign them to employees who often travel?
Perhaps, getting a corporate card that gives generous air miles from carriers such as Singapore Airlines and waives foreign currency conversion charges is a great idea. Or maybe your cardholders are mostly salespersons who often meet up with clients over lunch or dinner? Then a corporate card big on cashback or cash rebate may be best for your needs. If your cardholders are often driving on the road, you could also consider an issuer that is best for gas purchases and rebates.
You likewise need to weigh the benefits of every card issuer prospect. For example, the DBS World Business Card in Singapore offers as much as S$1 million in business travel insurance, including luggage and flight delays, hospitalisation, and accidents. The UOB Platinum Business Car, on the other hand, has no annual fee and extends payment terms by up to 51 days.
The card’s built-in expense management tools should also be considered when choosing which provider and what type of corporate card to get. After all, the primary reason for using corporate credit cards is to ease the process of tracking and managing an employee’s expenses. Some providers produce summaries of transactions per month, quarter or annum. Others also send out alerts in real-time when an unusual transaction has been detected.
Corporate credit cards are designed to streamline the processes between the finance and employees and are tied to other expense management systems for improved data reconciliation.
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