The Finance Blogger

For quite a few years, many companies provided business credit cards to their staff members who regularly traveled or incurred business expenses. For some it was almost a status symbol to have a company credit card. In the past few years, companies have cut back on expenses extensively. One of these cutbacks involved the company credit card. The company credit card was a business card. It provided cash flow to the employee instead of having to obtain a cash advance for expenses, perhaps before they went out on a business lunch or a trip.

It was a lot more convenient, and the company did not have to pay for these expenses for 45 to 60 days.  The company still has a major advantage in providing business credit cards. However, there have been cutbacks. Many people now have to use their personal cards.

Business Credit Cards Distributed to Senior People

Lower ranks are increasingly being asked to use their own credit cards to pay for lunches; hotels etc and then submit an expense claim. Senior people in the company i.e. executives and middle management still seem to have business credit cards which they are free to use for business related activities.

Salespeople who entertain customers and travel to meet with customers still use business credit cards. These cards have larger limits, meaning you can typically charge larger amounts to these cards than you would to a personal credit card.

One of the problems with business credit cards is that the impact of these cards if they are not paid on time is that they can affect your personal credit limit. The card carries the company logo, but they are in your name and on your credit. If the company is late for whatever reason when paying, you may experience a drop in your credit rating.

Most companies have a standard payment process that takes a specific amount of time once the expenses are approved. Sometimes employees forget to submit their expenses to their boss for approval and then payment gets delayed. This is something that we all have to be aware of due to the impact on your personal credit rating.

Business Credit Cards for Consultants

Typically, companies do not provide or authorize company credit cards for consultants working for them. The consultant must book all of their trips, including airfare, hotels, and meals, on their own credit card and then include these amounts in their invoice for the work that has been completed. There are several issues to be aware of in these situations.

A consultant should have a separate credit card for all of their business transactions. This is one of the best ways to keep track of and separate business-related expenses. Consultants will often have a very large limit on their cards. High limits are needed to handle the increased expenses, especially if they travel a lot.

Only Approved Expenses on Your Business Credit Card

Another issue that both employees and consultants need to be aware of is that only approved expenses should be charged. Certainly no personal items should be charged to a credit card of this type. Also only expenses that have been pre-approved should be charged to these credit cards.

This is especially true for consultants and for large expenses such as trips and equipment purchases. Trips and large pieces of equipment should always be approved ahead of time. Otherwise, the appropriate people in the company may not approve the expense, so the person is left holding the bag, so to speak, for all of these expenses.

This is probably the largest issue for people with business credit cards. When submitting expenses for payment, always make sure that the appropriate people approve them.

These cards can also be an advantage for many salespeople. Most employees do not have sufficient limits on their personal cards to handle all of the expenses associated with business travel. Like all credit cards, they must be managed with care.

For many more posts about dealing with credit cards, click here.

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