How to set corporate credit card limits and its benefits
A business must spend money to make money. Every entrepreneur knows this. Corporate credit cards are being rapidly adopted by companies to carry out their daily expenditures over traditional methods. As your organization starts scaling, growth in your employee base and recurring business expenses is inevitable.
In such situations, setting up employee corporate cards becomes essential to help them carry out the everyday operations smoothly while still being able to track how your money is spent and maintaining control over your budget. When speaking of control, establishing proper limits is an important feature to look for while choosing a provider for corporate credit cards.
How does corporate credit card limit work?
The way limits are set on corporate credit cards for employees is quite simple. You simply have to log in as an admin user on the platform of your credit provider and set the maximum amount a particular card assigned to an employee can spend from the allotted budget.
Let’s take a small example to understand this better - John is a member of the marketing team in your business. On a monthly basis, he needs access to $1000 to execute Facebook ads. Whoever you assign as an admin on the provider platform, could be you or your finance head, will then go ahead and create a virtual or physical card for John and set the corporate credit card limit to $1000.
So now, when John uses this card, he will not be able to spend more than $1000 in a month. If he needs additional funds, he will have to request the admin to change the limit settings through the dashboard.
Who are eligible to get corporate credit cards?
Your eligibility to get corporate credit cards for employees depends on the provider you choose. Certain common criteria that are considered when determining whether you can get employee corporate cards are as follows:
● The number of users/employees you have is often a factor that decides whether you can opt for a corporate card program. A common number many providers follow is 15 people. You would be eligible if you have a minimum of 15 or more employees. In some cases, certain providers do not have any minimum number of users required for you to receive corporate credit cards.
● Your business must also be able to forecast and show a certain amount of credit charge as a form of expected expenditure.
● Another condition many providers have is that the annual revenue of your business should be a minimum of $4 million.
● An annual expense of more than $250,000 is also a prerequisite for most providers to ensure that you’ll be using the corporate cards on a consistent basis or at least use them for higher amounts.
When it comes to Volopay, your business will be eligible for our corporate card program when you fulfill the following conditions:
● Your business should be registered in a market we currently serve.
● Provide your latest business profile.
● Complete due diligence - KYB forms for certain businesses.
● Other necessary financial and tax documents.
Once the verification process is completed, an invite link will be sent to you and our customer success team will help you complete the onboarding process and solve any other queries you might have.
Also, to ensure effective card usage and management, it’s essential to have clear guidelines on eligibility and usage policies. Check out our guide to corporate credit card management for detailed insights on managing corporate cards efficiently.
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Setting limits on corporate credit cards - Why is it important for employees?
Eligibility
An ‘eligibility clause’ is also a form of limit that is set on corporate credit cards. You should ensure that your employees know who is eligible to receive a corporate card from the business.
You can do this by enabling a company finance policy on the provider platform so that each employee knows whether they will receive a card or not. This acts as the first line of defense to protect your credit from new or a lower-level employee who cannot be given the responsibility to handle a company card yet.
Your employees don’t need entire credit amount
None of your employees need access to the entire credit amount from your corporate credit program. This is one of the major reasons to set business credit card limits.
Avoid unauthorized transactions
Be it by accident or on purpose, setting limits to each corporate card helps avoid unauthorized transactions.
Tracking and monitoring spending
A great thing about employee corporate cards is their transparent nature. It allows the finance team to gauge if allocated budgets are being utilized to their full potential.
It will give your team a good idea of whether more or less budget is required and help in forecasting budgets moving forward. This level of transparency helps an employee to always be aware of the expenses they are incurring.
Know about liability
Most corporate credit card programs come with the option to select a type of liability to pay the credit amount. In the case that there is a joint liability (where the employee as well as the corporate pay the credit together) then the employees have to pay for expenses out of their own pocket and get reimbursed later by filling expense reports. Doing this ensures that employees don’t overspend or spend on the wrong things as they’ll be more cautious with personal finance.
Expense reporting
As mentioned earlier, if there comes a need to file expense reports, it automatically makes employees more cautious and accountable for the transactions their reports will reflect.
Setting spending limits
One of the most prominent features to control your budget is to literally set individual limits to each card on how much they can spend. This is a great way to stop problems from arising right at the source.
Make employee expenses easier with corporate credit cards from Volopay
Volopay can help your business avail corporate cards both physical and virtual that’ll make life easier for you and your employees in many different ways:
● You can set separate budgets for each team or department and even every individual who will be using a corporate card which acts as a preliminary form of limit to control your funds.
● Using the approval policy feature you would be able to maintain complete control by setting an approval flow for each transaction. This way, your employees won’t be able to spend without getting the purchase approved first.
● You then get to set particular spending limits for each card and also have the option to freeze or block the card from the Volopay dashboard.
● Real-time reporting enables complete transparency allowing you to see who is executing which transactions and for what purpose.
● Finally, every transaction gets automatically synced to your company’s accounting software for efficient bookkeeping.
Related pages
Learn how to identify business credit card fraud and take effective steps to prevent it. Protect your business with these essential tips and strategies!
Discover the best practices and guidelines for creating a corporate credit card policy that ensures efficient and secure business expense management.
Learn how to choose the right corporate card program for your business. Compare features, benefits, and tips to find the perfect fit for your needs!
Take control of your employee spending with corporate cards
FAQs
All expenses conducted through the corporate cards are automatically collated in an expenses tab on the Volopay dashboard.
Yes, you have the ability to go to each card and ‘Freeze’ the card temporarily or block and disable it permanently.
Yes, each card that is created, be it physical or virtual can be allotted a certain amount of spending limit.
Approval policies on Volopay allow an admin to delegate approvers based on a specific payment range. The admins can add multiple range limits inside each policy and set different approvers based on these limits.
No, your personal credit score or report will not be affected while using a corporate card.