Commercial or corporate cards have become one of the most common and effective business payment methods for companies of all sizes. Offering various benefits over traditional methods like checks and cash payments, commercial cards can help streamline operations and provide key financial insights for businesses. This article examines the features and benefits of commercial cards and why they have become such an essential B2B payment tool.
A commercial card is a charge or credit card issued to businesses and corporations to pay for various expenses related to company operations. Unlike personal cards, commercial cards are issued in the company’s name and can be used by multiple employees for approved business purchases. There are generally two main types of commercial cards:
– Corporate Cards: These resemble personal credit cards but are issued to and liability falls under the company. They are often used for travel and entertainment expenses.
– Purchasing/Procurement Cards: Also known as P-cards, these are meant primarily for non-travel purchases like office and computer supplies. They can be set up to restrict purchases to specific merchant categories.
Both card types consolidate billing so a company receives just one statement each month rather than dealing with multiple vendor invoices. They also offer robust reporting features to track spend by employee, department and expense type.
Benefits of Commercial Cards
There are numerous advantages commercial cards provide over traditional B2B payment methods:
Increased control and oversight – Cards centralize billing and allow setting of spending controls and limits by employee or merchant category. This gives finance teams tighter control over expenses.
Improved cash flow management – Cards provide a significant days payable outstanding advantage over checks by eliminating the lag time between purchase and payment. This frees up working capital.
Robust reporting – Detailed spend analytics and customizable reports offer real-time visibility into spending patterns across the company. This helps with budgeting, project cost tracking and auditing.
Volume discounts – Leveraging aggregate company spend, card providers negotiate discounts, rebates and rewards that lower the overall cost of making purchases.
Automated expense management – Integrations with accounting software allow automated matching of receipts to statements to streamline expense reports and reimbursements.
Acceptance – Commercial cards are widely accepted domestically and internationally at both in-person and online merchants, allowing flexibility for employee purchases.
Reduced processing costs – Compared to checks, cards lower processing and administration costs through electronic payment rails and digital record-keeping.
Additional Benefits like rewards, insurance and extended warranties make cards an effective employee perk as well. Overall, the benefits help improve operational efficiency, lower costs and boost cash flows for businesses.
Selecting the Right Commercial Card Program
With various card issuers in the market, selecting the optimal commercial card program requires evaluating key criteria:
– Pricing – Look at total costs including annual, transaction and late fees as well as any purchase rebates on offer.
– Controls – Compare ways to define spending rules like limits by employee, category blocks etc.
– Reporting – Evaluate types, frequency and customization of reports and dashboards available.
– Integrations – Check compatibility with accounting, travel and expense software for automated reconciliation.
– Cards & Services – Consider needs for corporate, procurement, travel cards plus additional value-added services.
– Support – Compare 24/7 phone, online and mobile support available for assistance.
– Credit limit – Evaluate processes to increase limits as needed to avoid disruptions.
Choosing a partner with industry experience, competitive rates and robust digital capabilities ensures maximizing benefits from commercial cards. Issuers like American Express, Citi and Chase offer highly customizable programs.
Implementing Commercial Cards
While benefits are clear, a successful Commercial or Corporate Card deployment requires thorough preparation including:
– Stakeholder buy-in – Approval from CFO, controller and approvers ensures adoption and oversight.
– Pilot program – Implementing with a sample group allows testing controls and processes before full rollout.
– User training – Instruct employees on proper use, expense reporting and account protection.
– Vendor enablement – Work with providers to optimize integration and acceptance of new payments.
– Control framework – Establish clear guidelines on spending rules, reconciliation workflows etc.
– Communications plan – Inform employees about program, card security best practices and changes to existing processes.
– Metrics and benchmarks – Set KPIs to measure ROI and oversight effectiveness over program lifetime.
Going through these steps enables seamless integration of cards into daily workflows and cash conversion cycles. Ongoing monitoring ensures continued compliance with policy and extraction of insights.
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it