Know Your Limits

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Are you hurting your employees' credit?

It sounds so simple: Employees who must spend money in the course of their jobs just use their personal credit cards, and by the time the bill comes, you've reimbursed them. But even though they make payments on time and in full each month, they could be risking their personal credit rating. That's because some lenders perceive a high credit balance as a red flag, even though the payment record is good. And employees may not find out about the problem until they have trouble getting a loan.

The solution is to issue corporate credit cards, says Mie-Yun Lee, editor of the Business Consumer Guide, a national publication that evaluates office products and services. "While similar to consumer credit cards, corporate cards have many added features to help businesses track and control spending," Lee says. "In addition, they offer an excellent opportunity for businesses to establish their own credit history."

A corporate credit card can also help you control employee spending and manage expenses better. You can set different credit limits for various employees. Card issuers also offer a range of reports that break down spending patterns.

Lee says it pays to shop around for corporate credit cards because the rates and service packages vary--and can often be negotiated. Also, she advises, create spending guidelines before issuing the cards to employees. The Business ConsumerGuide's report on commercial credit cards can be purchased for $25 by calling (800) 938-0088 or by visiting

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This article was originally published in the October 1998 print edition of Entrepreneur with the headline: Know Your Limits.

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