How Can I Set Up a Corporate Credit Card?

By Dave MurrowLast Updated Jun 24, 2020 7:18:43 PM ET
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Finances are a critical component in running a business. Without ample cash flow to pay for things like supplies, advertising and even utilities, many of the daily functions of the business would grind to a halt. Unfortunately, the money your business receives for its work doesn’t always arrive exactly when you need it, which is why it’s often essential for business owners to set up corporate credit card accounts.

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Business credit card accounts give owners the flexibility they need to always pay their bills on time, even when they’re waiting on payments themselves. Proper management of a corporate credit account also helps the business establish its own credit, which can make all the difference to a lender the next time the company needs capital or an expanded credit line to help the business grow.

What Is Corporate Credit?

By definition, corporate credit — also interchangeably referred to as business credit — is the amount of financial access a company has to cash in the form of credit. Business credit gives a business a certain amount of financial flexibility in operating the business. The owner can use the credit to pay for necessary expenses and develop business partnerships with vendors, banks and other organizations that can help the business grow.

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Beyond providing necessary cash when needed, corporate credit is also an important tool for establishing the creditworthiness that banks, business partners and clients all require when they review a business’ credit profile before extending future credit. How a company manages its credit profile determines its financial reliability and overall financial health. Similar to consumers, a company's credit profile is overseen by major business credit reporting agencies like Dun & Bradstreet, Equifax and Experian. The ratings a company subsequently receives from these agencies affects its ability to get loans to support and expand the company's operations.

Why Does Your Business Need a Corporate Credit Card?

When a company establishes and successfully manages a business line of credit and a company credit card, this creates real, documented evidence that the company is on solid footing and capable of managing its operations. Charging monthly expenses to a company credit card takes away the burden of worrying about fluctuating cash balances throughout the month and minimizes the risk of needing to use personal funds to pay for necessary items for the business. Additionally, using a company credit card can help an owner efficiently track expenses, pay off higher interest debts, pay for utilities and office expenses, and buy raw materials and business supplies to keep the business up and running.

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Setting Up a Corporate Credit Card

Maybe you just launched your company, or maybe you operate a business that has been up and running for a while. Perhaps you bootstrapped the company using your personal credit. Regardless, now that your company is experiencing growth, you may quickly find that you need a corporate credit card to help with cash flow and expense management.

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What steps do you need to take before applying for a corporate credit card? The specifics can vary from lender to lender, but you will generally need to complete several steps related to key financial issues. Start by gathering your company’s financial information and have it ready to present to credit card issuers. Be sure to pay particular attention to critical areas like your personal credit score and your key financial details.

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The Importance of a Personal Credit Score

Unless your company has already established an impeccable business credit history, your personal credit score will be evaluated when you apply for a corporate credit card account. Your score should certainly be at least in the fair range — the higher, the better. Very good scores are generally required to receive an extensive credit limit.

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It's best if your credit history doesn't include any bankruptcies, particularly not bankruptcies associated with former businesses, or any other negative remarks associated with past or current accounts. If you have derogatory marks on your credit, expect some pushback from credit card lenders. They could outright refuse to grant credit or request detailed information about the negative marks for evaluation purposes. The better your personal credit score, the more likely your application will be approved for a business credit card.

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Business Financial Details You Must Provide

The next step involves providing financial information about your company, its operations, its products and how you intend to use the corporate credit card. Most business credit card applications require a significant amount of detailed information. In the different sections, you will have to include details about the legal organization of the company — sole proprietorship, partnership, limited liability company (LLC) or corporation — the number of months or years you’ve been in business, the industry your business operates in, the amount of credit card funds you expect to use on a monthly basis, the average number of employees on the company’s payroll and the expected annual business revenue for the company.

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Applying for a Business Credit Card

After conducting your initial research, you should know the strength of your personal credit score, the relevant details about your business and the corporate credit card that's right for your business. With all this in place, you’re ready to apply for the corporate credit card you want.

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Application forms for many corporate credit cards are available online, which means you can easily manage this task at home on a weekend, if necessary. Once you provide the necessary information, you may receive a notice of approval fairly quickly, possibly within a minute or so. If the credit card issuer needs additional information or has questions about your application, you may receive a notice telling you that further information is required, and you will be contacted soon.

If you are approved, you can typically receive your card within days. Use the card wisely for business expenses, and you will soon build a valuable business credit profile for your company.

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