Popular Types of Corporate Cards for Small Businesses in Singapore

Types Of Corporate Cards For Small Businesses

Multi currency cards

If you engage in international business, you may find yourself dedicating considerable time and financial resources to currency exchanges. Also, managing various bank accounts across different countries can become complicated if you do transactions involving multiple currencies.

Fortunately, a multi currency card can help alleviate the confusion, inconvenience, and expenses associated with handling multiple currencies on a regular basis. Multicurrency cards enable businesses that frequently engage in cross-border transactions to send/receive swift digital payments at lower forex rates.

Pros

One can easily transact in multiple currencies without needing separate bank accounts or multiple cards. This service streamlines international payments and eliminates the complexity of managing various currencies. It allows businesses to make simple, convenient, cost-effective, protected, and quick foreign financial transactions.

Cons

Multi Currency cards may come with high minimum balances, low interest, and various fees, including issuance, currency conversion, withdrawal, and transaction fees. Although they are widely accepted, some merchants/suppliers may not accept card payments or have limitations on the currencies they accept. Also, it's crucial to assess the card provider's reliability, reputation, and customer service to ensure a smooth experience for the business and its employees.

Debit cards

Debit cards for businesses, or corporate debit cards, provide an alternative payment method to traditional credit cards or cash.

Pros

They allow easy access to funds available in the associated business bank account, eliminate the need for handling cash, are helpful for small businesses or those with strict budget constraints, do not involve borrowing money or incurring interest charges, and permit real-time tracking of transactions through online banking or mobile apps.

Cons

Debit cards typically provide fewer purchase protections, and the level of fraud protection may be lower compared to credit cards. Using a debit card may result in overdraft fees if a business's bank account has insufficient funds to cover a transaction. They generally offer fewer rewards programs and benefits, and their usage does not directly contribute to building a business credit history.

Credit cards

Credit cards for businesses provide a revolving line of credit that can be used for various business expenses.

Pros

They provide a temporary cash flow boost for immediate business needs and can help manage expenses more efficiently, aligning payments with incoming revenue. Many providers offer detailed transaction reports and online tools to categorize expenses, making monitoring and analyzing spending patterns easier. Certain consumer protections, rewards, and purchase benefits, such as extended warranties, dispute resolution assistance, and fraud protection, are other commendable credit card features.

Cons

Borrowing money comes at a cost, and interest charges can accrue if the balance is not paid in full each month. High-interest rates or carrying a revolving balance can lead to significant debt and financial strain for the business. Overspending can negatively impact credit scores, various fees associated with the card, and personal guarantee requirements can lower the cost-effectiveness of using the card.

Virtual cards

Virtual cards for businesses are digital payment solutions specifically designed for corporate use. They function similarly to physical credit or debit cards but exist digitally, enabling companies to make online purchases and transactions securely and conveniently.

Pros

They can be issued instantly, eliminating the need for physical card production and delivery, and used for online purchases, subscription services, or virtual payments in mobile apps. This flexibility allows businesses to adapt to the evolving digital landscape and facilitates smoother financial operations. Plus, they can be easily deactivated/canceled if compromised, giving companies greater control over their finances.

Cons

They do not offer physical card benefits such as in-person transactions or ATM cash withdrawals. Businesses that heavily rely on these features may find virtual cards less appealing.

With technical issues or disruptions, companies may face challenges in making payments or accessing funds, as virtual cards rely on technology and digital infrastructure. Integrating virtual cards into existing financial systems or accounting software may require some adjustments or technical support.

Individual liability cards

They are also known as personal liability cards, they are credit cards issued to individual employees rather than the business entity itself.

Pros

They allow for a clear separation between personal and business expenses, often come with rewards programs tailored to the individual cardholder, promote transparency and accountability, help identify potential misuse or spending discrepancies, and allow employees to make business-related purchases without seeking authorization for every transaction.

Cons

The employee using the card is typically responsible for the debt incurred. Using these cards can result in a lack of consistency and control over spending practices. The positive credit activity is reflected on the individual employee's credit report rather than the business's credit profile.

Corporate liability cards

Company liability cards are credit cards issued to the business entity, with the company assuming liability for the charges.

Pros

Businesses can consolidate all business-related expenses onto a single account, making tracking, categorizing, and reconciling transactions easier. This simplifies accounting, financial reporting, and tax compliance. They help establish clear accountability for business expenses and allow businesses to extend payment terms, taking advantage of the credit cycle the card issuer offers.

Cons

Managing corporate liability cards requires additional administrative effort. Some corporate liability cards may require personal guarantees from business owners or executives. Late payments or excessive credit utilization on corporate liability cards can hamper the business's creditworthiness and credit score.

Purchasing cards

Purchasing cards, also known as procurement cards or P-cards, are specialized credit cards designed specifically for making business purchases.

Pros

They simplify the procurement process by providing a dedicated payment method for business purchases and helping eliminate the need for traditional purchase orders, invoices, and manual check payments, reducing paperwork, streamlining approvals, and expediting the purchasing cycle, thereby improving operational efficiency.

Cons

Some smaller or specialized vendors may not accept purchasing cards or may have restrictions on their usage. It's essential to consider the card's acceptance network and ensure compatibility with the business's preferred suppliers. Also, there is a risk of duplicate payments if invoices are not correctly matched with corresponding card transactions.

Travel & entertainment cards

T&E cards, also known as corporate travel cards or business expense cards, are specifically designed to facilitate business-related travel expenses and entertainment expenditures.

Pros

They are particularly useful for employees who frequently travel for business purposes and help reduce the burden of reimbursement processes. These cards often come with travel-related benefits and perks such as airline miles, hotel rewards, airport lounge access, or travel insurance coverage.

Cons

They may have limitations or restrictions on other types of business expenditures, potentially requiring businesses to use additional payment methods or cards for other categories of expenses. T&E card usage may have a limited impact on building the business's credit history since it focuses on a specific expense category.

Now that we know the different types of corporate cards that exist, let’s try to understand some of the benefits corporate cards have to offer to businesses:

Corporate card advantages

Corporate cards offer several features that cater to the specific demands of managing business expenses:

1. Expense tracking/reporting

Corporate cards provide a convenient way to track and categorize business expenses. They generate detailed statements that can be easily integrated into accounting systems, simplifying expense management and financial reporting.

2. Spending controls

Corporate cards often come with customizable spending controls and restrictions. Companies can set limits on individual cardholder spending, specify merchant categories where the card can be used, and enforce policy compliance, thereby maintaining control over company expenditures.

3. Vendor relationships

Businesses can consolidate spending and negotiate better terms with vendors by using corporate cards for purchases. The ability to leverage spending volume can result in discounted pricing, extended payment terms, or other incentives.

4. Streamlined reimbursement process

Corporate cards eliminate the need for employees to use personal funds for business expenses. Instead, companies can directly pay the card issuer for approved transactions, streamlining the reimbursement process and reducing administrative overhead.

5. Business credit building

Responsible use of corporate cards can help businesses establish and build their credit history. Consistently paying off card balances on time and maintaining a good credit utilization ratio can positively impact a company's credit profile, improving its borrowing capacity in the future.

6. Enhanced security

Corporate cards typically offer advanced security features, such as fraud monitoring, purchase protection, and liability protection. These measures help protect businesses from unauthorized transactions and fraudulent activities.

7. Travel and entertainment management

Corporate cards are particularly useful for managing travel and entertainment expenses. They can offer benefits like spending on hotel, airline bookings, and expense reporting tools, simplifying travel arrangements and tracking expenses.

8. Rewards and benefits

Many corporate cards provide rewards programs tailored to business needs. Companies can earn cashback, travel rewards, discounts on business-related expenses, or other incentives, generating cost savings and additional value.

In short, corporate cards for businesses provide specialized features and benefits that align with a company's unique needs, offering improved control, efficiency, security, and many other financial advantages.

The benefits might seem positively overwhelming. However, not every card comes with all the above features. Weigh the benefits and drawbacks to select the right cards for your business and employees.

Conclusion

Small businesses in Singapore should carefully assess their specific needs, financial goals, and the corporate card benefits offered by various payment service providers. By selecting the most suitable corporate card and leveraging its benefits, small businesses can gain better control over their finances, simplify operations, and enhance their overall financial management capabilities.

Growing businesses should consider empowering their teams with Aspire corporate cards to gain real-time control and visibility on business spend and save significantly on forex fees on international transactions while receiving 1% cashback on business spends.