Understand why companies adopt corporate cards for expenses

Controlling expenses is essential to the financial success of any company, and this is why corporate card can be a great ally. After all, in an environment where efficiency and transparency are fundamental, this tool simplifies and organizes day-to-day expenses.

But what exactly is a corporate card and how can it make companies' financial lives easier?

In this article, we will explain how it works, its main benefits, the different types available on the market and why more and more companies are adopting this solution.

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What is a corporate card and how does it work?

The corporate card is a tool provided by banks or financial institutions, designed specifically for use in companies.

But how exactly does the corporate card work? The process is quite simple.

The company signs a contract with the financial institution, which issues one or more corporate cards with specific credit limits.

These limits can be adjusted according to the company's needs, and the expense management is carried out in real time, with all expenses monitored through detailed reports, generally on an integrated platform and/or own application.

There are two types of corporate card: the prepaid card and the postpaid card.

Prepaid cards require the company to load a balance before use, limiting spending to the amount available on the card.

This type of card is ideal for companies that want stricter control over expenses.

On the other hand, postpaid cards allow expenses to be accumulated over a period, usually monthly, and paid later according to the card bill.

This model offers greater cash flow flexibility and is widely used by companies that need longer payment terms.

Differences between corporate cards and personal cards

Although the corporate card and personal credit card may seem similar at first glance, they have very different purposes and functionality.

The corporate card is designed exclusively for work-related expenses, while the personal card is used to cover individual expenses.

The main difference lies in the level of control and transparency offered by the corporate card.

With a corporate card, the company can monitor card bills in real time, allowing managers to have a clear view of all expenses incurred.

This makes it easier to detect any irregular activity and ensures that resources are being used according to company guidelines.

On the other hand, a personal credit card doesn't offer this level of control. Expenses are incurred without the need to report to third parties, which can lead to less disciplined use of financial resources.

Additionally, transactions carried out with a personal card are not automatically integrated into the company's accounting system, which can make expense management and accountability difficult.

Common use cases

The corporate card is used in a variety of business scenarios, making it an indispensable tool for managing expenses.

Below we will discuss some of the most common use cases.

Corporate travel

Corporate travel is one of the main use cases for the corporate card. When employees travel for business, it is common for them to need to cover expenses such as air tickets, accommodation, food and transportation.

With the corporate card, these expenses can be centralized on a single invoice, which simplifies the accountability process and allows for stricter control over expenses.

Furthermore, the corporate card ensures that resources are being used efficiently, which makes it easier to identify opportunities to save, such as negotiating lower rates with hotels and airlines.

Purchasing materials and supplies

Another common application of the corporate card is to purchase materials and supplies necessary for the company's daily operations.

Managers can use the card to quickly purchase necessary items, avoiding the bureaucracy associated with traditional purchasing processes.

Particularly useful in situations where the company needs to react quickly to production or maintenance demands.

By allowing different departments to have their own corporate cards, the company can decentralize the purchasing process while maintaining centralized control over spending.

This is possible thanks to the real-time monitoring and detailed expense reports that the platform integrated with the corporate card offers.

Payments for services and subscriptions

In the modern world, many companies rely on subscription-based services such as management software, marketing platforms and cloud services.

The corporate card is an excellent solution for managing these recurring payments, allowing the company to maintain control over its spending and avoid service interruptions due to late payments.

The use of corporate cards, prepaid or postpaid, is ideal for offering financial flexibility, allowing the company to choose the model that best adapts to its cash flow.

Furthermore, tracking expenses ensures that the company can adjust its expenses as necessary, avoiding unpleasant surprises at the end of the month.

Corporate events

Organizing corporate events, such as conferences, seminars and end-of-year parties, involves a series of expenses that can be difficult to manage.

The corporate card facilitates this process, allowing all transactions related to the event to be centralized on a single invoice.

Furthermore, the use of the corporate card at corporate events allows the company to maintain strict control over the budget, avoiding excessive expenses and ensuring that the event is held within the established financial limits.

Advantages of using corporate cards

The corporate card offers a series of benefits that make it an indispensable tool for companies that want to improve their expense management.

Below, we will discuss some of the main advantages of using a corporate card.

Control of expenses

The corporate card offers enhanced control over company expenses, allowing managers to set specific limits according to budget and operational needs. By establishing personalized spending limits for different departments or employees, the company ensures that resources are used appropriately and efficiently.

Furthermore, real-time monitoring makes it possible to quickly identify any irregularities, allowing managers to take immediate corrective measures. This not only helps prevent fraud, but also ensures that expenses are always aligned with the company's financial objectives. The ability to generate detailed expense reports also provides a clear, comprehensive view of cash flow, making it easier to make informed decisions and properly allocate resources.

Simplification of accountability

Instead of collecting and processing paper receipts, the company can access expense reports that automatically record all corporate card transactions.

This simplifies the reimbursement process, reduces bureaucracy and the risk of errors.

Simplified accountability also facilitates internal auditing, allowing the company to easily revisit past expenses and ensure that all spending complies with internal policies.

Ease of cash flow management

Cash flow management is one of the most critical areas for any company, and the corporate card can be a valuable tool in this regard.

By using corporate cards, the company can adjust its payment terms as necessary, which provides greater financial flexibility.

It is also particularly useful in times of economic uncertainty, where the ability to respond quickly to changes in the market is essential.

Security and fraud reduction

Security is a constant concern for companies, especially when it comes to expense management.

The corporate card offers a number of features to increase transaction security, including personalized spending limits and alerts for suspicious transactions.

These features allow the company to quickly detect and respond to any fraudulent activity, protecting its financial resources.

Furthermore, the use of corporate cards facilitates internal supervision, ensuring that all transactions are carried out within the guidelines established by the company.

This not only reduces the risk of fraud, but also helps the company maintain compliance with tax and accounting regulations.

Common corporate card questions

To help clarify frequently asked questions, here are some common questions and answers about the corporate card:

What are the corporate card rules?

The rules vary according to each company's internal policy and the contract signed with the financial institution. Generally, the rules include who can use the card, spending limits, permitted expense categories, and reporting procedures.

What is the corporate card limit?

The limit is defined by the company, in agreement with the financial institution. This limit may vary depending on the card user and the specific needs of the department or project.

Who is entitled to use the corporate card?

The corporate card can be used by employees authorized by the company, such as managers, directors and other team members who need to make expenses on behalf of the organization.

How to acquire a corporate card?

To purchase a corporate card, the company must contact a financial institution that offers this service. The process generally involves analyzing the company's credit, defining the terms of the contract and issuing the cards.

Who is the corporate card holder?

The holder is the company itself, but cards can be issued in the name of authorized employees to make expenses.

Who monitors the corporate card?

Inspection is the responsibility of the company itself, which must monitor the use of cards, review card invoices and ensure that all expenses are in accordance with internal policies.

How does accountability work with the corporate card?

All transactions carried out with the corporate card are automatically recorded and can be reviewed through financial reports. This simplifies the accountability process by eliminating the need to collect and process paper receipts.

Can the corporate card be used for international travel?

Yes, many corporate cards can be used for international travel, allowing expenses to be centralized and controlled in the same way as domestic transactions. However, it is important to check with the financial institution the applicable fees and policies for international use.

Final considerations

Adopting a corporate card can transform a company's expense management, offering greater control, transparency and efficiency.

With the advantages of rigorous control, simplified accountability, and improved cash flow management, the corporate card is an indispensable tool for companies seeking to optimize their financial operations.

With adequate information and a well-defined usage policy, the corporate card can be the difference your company needs to optimize its finances and achieve superior results.

Featured photo: maquininha (reproduction/publicity)