The Finance Blogger

For quite a few years many companies provided business credit cards to their staff 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.  There is still a major advantage to the company for providing business credit cards. However there have been cut backs. 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.

Sales people who are entertaining customers and travelling to meet with customers are still using a business credit card. These cards have larger limits on them, which means 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 in 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 even if the consultant is on the job for a long period of time. 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 that you will be billing back to your customer vs. those that are personal in nature. Consultants will often have a very large limit on their cards to handle the increased expenses especially if they travel a great deal.

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 placed on a business credit card. 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 purchases of equipment. Trips and large pieces of equipment should be always approved ahead of time. Otherwise that expense may be not approved by the appropriate people in the company. Asa result the person is left holding the bag so to speak for all of these expenses.

This is probably the single largest issue for people who carry business credit cards. Always make sure that your expenses will be approved by the appropriate people when they are submitted for payment.

These cards can be an advantage for many sales people as well. Since 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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