What is a corporate credit card?

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Corporate credit cards are used by companies primarily to make payments and manage expenses. 

Merchants such as Facebook, Google, Amazon, Flipkart, Ola and many others typically require a card as payment method.  As a startup or an early stage small-medium-business, most founders use their own personal credit cards for these expenses.  This would not be considered as a corporate credit card because the expense is being paid for by the individual first and reimbursed afterwards. 

When a company has minimal expenses, a personal credit card is sufficient as it’s quick and simple.  However, as a company scales and more business expenses incurred, relying on personal credit cards will lead to lots of limitations and pains. 

First problem is that the company spends more than the approved credit line which means founders have to constantly top up or pay back their credit card in order to keep the gears going.  Secondly, many employees may not have their own credit cards but need to pay for business expenses on their own.  This is especially painful if the employees are traveling and have to pay for tickets, hotels, taxis, food, etc… 

Personal card use can get even more annoying when you’re asking for large purchases, such as laptops or an expensive work trip out to the US or Europe from India. Lean startups don’t have a lot of capital to begin, and asking employees to pay first  — even if it’s for the good of the company — is quite tough to swallow. Other than having to pay for the bills first, the nightmare that most of us have gone through is the reimbursement. 

Piles of physical and virtual receipts need to be gathered, organized and carefully added up.  Then a reimbursement form has to be filled in, approved by your manager and then sent over to be processed by the finance team.  After a month or so, the reimbursement will hit the employees’ bank account.  

The value of a corporate credit card

Each founder and employee can be issued a corporate credit card.  Whenever they have a business expense, they simply swipe their own card. 

Since all expenses through the corporate credit cards are covered by the company, the individuals do not need to pay with their own money first and also eliminate entirely the exhausting reimbursement process. 

That is the beauty of a corporate credit card!  You might ask, what about when finance teams question if you have indeed used the corporate credit card on genuine business expenses?  Karbon card enables you to upload photos of your physical receipts via Whatsapp.  These photos will be attached to the corresponding transactions for ease of verification by your finance team. 

At the end of the financial year, the auditors can also access and check the transactions and receipts.  If the expense is made online, you can also upload the receipt via Karbon desktop dashboard.    

Why is it difficult for startups to apply for corporate credit card from banks?

Banks are notorious for not wanting to serve smaller companies. 

Many startups do quite well but can’t gain trust from the banks because they don’t have a long operating history.  So they naturally have a difficult time getting access to corporate credit cards.  Even if they’ve raised millions of dollars, there are a lot of hurdles to jump to get access to a corporate credit card.

But startups, just like any company, need a corporate credit card for their expenses.  Most banks in India ask for fixed deposit, personal guarantee and tons of paperwork plus months before a corporate credit card is issued. 

Furthermore, once your credit limit with a bank is set, let’s say 10L.  After you raise one more round and you ask to increase this credit limit, the banks will usually decline.  This is because they think the new round you raised could be used up soon and only find security from fixed deposits or other collaterals.

Are corporate cards more useful for larger or smaller companies?

Corporate credit cards are valuable for companies of all sizes.  However, the larger the company, the more use cases and helpful corporate credit cards can be. 

Other than the values described above, corporate credit cards enable the management team to have more visibility over corporate expenses.  With Karbon corporate credit card, you can quickly compare how much is being spent on digital marketing, SaaS, travel for the company month over month. 

You can also track how much each card holder is spending.  Should there be anything suspicious, you can filter out and examine all the expenses made by one person.  

What are the different types of corporate card?

Credit, debit, charge and prepaid cards can all be used as corporate credit cards.  The main comparison criteria would be the credit line, cashback and management functionalities offered by the corporate credit card.

What’s so special about Karbon corporate credit card?

Karbon was founded to enable easy access to corporate credit cards for Indian companies.  We do not ask for fixed deposit, personal guarantees and our cards can be issued within a day with minimal paperwork. 

We offer the corporate credit card to help startups pay for the expenses and bill everything under the company and not the individuals (founders or employees).  Once all corporate expenses are brought under one platform, management and control becomes easier.  Karbon also supports payments to vendors bank accounts. 

This revolutionary payout function makes payment and vendor management simple.  We also have numerous rewards and discounts (eg. AWS, Gsuite, Uber, etc..) for all companies.  That’s why we recommend all companies to apply for Karbon corporate credit card right away. 

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