Difference Between Corporate and Small Business Cards?
Most of the business credit cards offered openly on credit lending sites are target toward owners of small businesses. A small business is not always a little store or mom and pop operation.
It can include many sales people and employees authorized to use the credit card and can carry a significant spending limit if the credit rating of the business qualifies and the business type is one that needs to make large purchases on occasion.
The requirements for corporate cards are a bit different. Large companies, government agencies at the state and federal levels and non-profit organizations need efficient buying power and huge credit lines to supply the goods and services their business requires.
Products and Lenders
Requirements for corporate cards are often very specific to the corporation seeking such an account. For this reason, these credit card accounts are tailored to the needs of the large organization.
Small business credit accounts are fairly general and designed to meet the needs of the majority of small business owners. These accounts don’t suit the requirements for corporate cards where specific needs cannot be filled with an out of the box solution.
The options for corporations are much like the options offered with health insurance. There are many choices to make and in the end the corporate card account is unlike any other company’s credit card accounts.
One of the common requirements for corporate cards is for special tools to track employee expenditures provide information for reimbursement by or to employees and to divide the charges made into very specific categories.
It is the tracking ability that allows a huge corporation to have an overview of not only the cost of a particular employee or that particular job but also the overall cost of providing certain services in its daily business activity.
For a small business credit card, many accounts are issued in the name of the business but are financially backed by the owner’s name as well. Corporate accounts are issued in the name of the corporation, the non-profit or the government involved.
Corporations are considered to be individuals under U.S. corporate law. Such customized accounts are in the name of the corporation, non-profit or government agency and the liability is on that entity and not on the individuals who may be using those credit cards.
Lenders Meeting the Requirements
You will not be surprised to learn that the major lending banks in the U.S. are also the lenders who provide customized credit cards for huge corporations. One of the most coveted accounts is for the credit cards used by federal government employees.
The number of government employees has doubled in the past 10 years. Of course the majority of federal employees are not issued credit cards but the number of job positions where cards are used by individual employees is staggering.
Throughout the USA last year, employees of hundreds of U.S. government agencies pulled out a Chase card to pay for hotel expenses, meals, supplies, travel, etc.
It is unknown how much money was charged and paid for that was not authorized use but personal charges slipped through with lack of oversight by agency officials. What is certain is that Chase profited from every transaction made.
In 2007, it was estimated the federal government paid over $27 billion in credit card purchases and this included an estimated $433 millions paid in credit card fees.
Each of the major lending institutions competes for meeting the requirements for corporate credit accounts. Some corporations choose more than one lending banks while others may change lending agreements from one bank to another every year or two.
The government agencies may be similar to a bidding type situation but this is an area where competition can be fierce. Corporations are more likely to carefully monitor employee charges than government agencies are.
Every audit done on various government agencies has resulted in revelations of government credit accounts misused by employees. This is costly for taxpayers but provide highly value accounts for the lending bank.
Requirements for corporate credit accounts are usually set by the corporation, non-profit or government. These entities list their needs and negotiate with the lender to establish a credit solution with the spending and tracking abilities the company needs.