What Are the Benefits of Commercial Cards?
28.4% of Americans have poor or fair credit, according to Experian. Yet, many businesses rely on their employees to use their personal credit cards for business expenses. Of course, the intent is to reimburse those employees in a timely manner… but things don’t always go as planned.
There’s a better way. As a part of a comprehensive commercial lending and deposits system, businesses should enable their team members to perform their roles without straining their personal credit. Corporate credit cards are a commercial lending solution that solves this common issue. In this guide, we explore the terminology surrounding commercial credit options, so your team can make an informed and beneficial decision.
What Is Considered a Commercial Card?
Commercial cards are a type of credit card that allow for employees to make purchases on behalf of a business. Businesses can issue commercial cards to employees to streamline purchasing and reimbursement procedures. Instead of employees making business purchases on their personal credit cards—such as for travel expenses—and needing to submit receipts to a lengthy reimbursement process, they can charge those expenses directly to the business the first time.
While exploring different types of commercial cards, business owners will need to compare commercial card vs corporate card vs business credit card options. The primary difference between these options is liability. For business credit cards, the business owner may need to take out the card in their name, which makes them liable as an individual for payments. In contrast, commercial and corporate cards place liability on the business as a separate entity from the individuals that own it, which adds a layer of protection.
If you’re exploring credit options for your business, start with IMCU. Our team is ready to help yours when making impactful financial decisions. Contact us today to learn more.
What Is a Commercial Credit Card Used For?
Commercial credit cards enable employees to make business purchases. These purchases are typically smaller in nature. For example, team members often use commercial credit cards to cover the following expenses:
- Travel
- Entertainment
- Client Meetings
- Business Supplies
In other words, if an employee would be responsible for completing a transaction, a commercial credit card is an extremely useful tool. Contact our team to find out more about how issuing commercial credit cards can help your team.
What Are the Benefits of a Commercial Card?
Commercial cards can offer numerous benefits for both businesses and employees, including:
- Protection for Employees
- Streamlined Purchasing
- Enhanced Tracking and Budgeting
- Rewards
- Improved Business Credit Score (For Commercial Credit Cards)
When you issue commercial cards to your team members, they’ll appreciate not needing to use their personal cards for business purposes. When employees have to take on business expenses—even temporarily—it can cause tension between those employees and the business, especially if reimbursement takes longer than expected. Commercial cards streamline this process by covering business expenses with business funds (or a line of credit) the first time.
Commercial cards aren’t just for reducing employee stress—they can also make for more effective decision making. When team members make purchases using a commercial card, the business can track those expenses. This makes for more efficient budgeting because the finance team can see exactly how much money is being spent and on what.
Set your team up for success with commercial credit cards. Connect with our lending experts to see how.
What Is the Difference between a Commercial Card and a Purchasing Card?
Purchasing cards are another option that businesses have for streamlining purchases, but they are used for different types of transactions than commercial cards. Typically, businesses use purchasing cards to process orders from suppliers or service providers, such as for equipment installation.
In contrast, commercial cards are for employees to use when making smaller purchases. Another way of looking at the difference between these types of cards is that purchasing cards are for transactions that are essential to the business’s operation, while commercial cards are often used for individual team members to cover business-related expenses.
What Is the Difference between Commercial Credit and Personal Credit?
The key difference between commercial credit and personal credit is who is liable for ensuring repayment. For personal credit, individuals are responsible for making payments plus any interest. On the other hand, commercial credit is typically tied to a business entity instead of an individual, so that entity is responsible for making payments. Commercial credit is another tool that business owners have to reduce personal liability while helping their business operate more efficiently.
IMCU: Your Trusted Partner for Commercial Card Services
Commercial cards can give your business insightful data, build your credit score, and even help provide your team members with peace of mind. With so many potential benefits, it’s important to choose a lender that has your best interests at heart. Fortunately, credit unions offer an exciting opportunity for businesses to benefit from both favorable lending rates and exceptional customer service. These organizations are member-owned, meaning that the credit union’s success depends on that of their members.
To see how partnering with a credit union can benefit your business, reach out or stop by your local IMCU branch.