Corporate Cards vs. Centralized Billing for Travel

Managing payments is one of the most challenging aspects of any corporate travel program. The method you choose has a direct impact on your financial visibility, administrative workload, and employee satisfaction. The two primary models for handling travel payments are issuing individual corporate cards and using a centralized billing system.

While corporate cards have been a longtime staple, a centralized payment model, often called a "central travel account" or "ghost card," offers powerful advantages in control and efficiency. Understanding the differences is key to building a modern, streamlined travel program.

The Traditional Model: Individual Corporate Cards

In this model, the company issues a physical credit card to frequent travelers. Employees use this card to pay for their flights, hotels, meals, and other T&E expenses.

Pros of Corporate Cards

• Convenience for the Traveler: The employee has a dedicated card for all business expenses, keeping them separate from their personal funds.
• Transaction Data: The card feed provides the finance team with a stream of transaction data, which can be imported into an expense management system.

Cons of Corporate Cards

• Administrative Burden: Managing a corporate card program is a significant administrative task. This includes issuing new cards, canceling cards for departing employees, managing credit limits, and dealing with lost or stolen cards.
• Lack of Pre-Trip Control: A corporate card is a blank check. You have no control over what is purchased with it. You only see the expense after it has been made. An employee can book a first-class flight or a luxury hotel, and you won't know until the charge appears on the statement.
• Reconciliation Challenges: While you get a data feed, you still have to reconcile the transactions. The finance team must match each charge to an approved expense report and ensure it complies with the travel policy.
• Fraud and Misuse Risk: Every physical card is a potential point of fraud. It can also be misused for personal expenses, creating an HR and accounting headache.
• Doesn't Solve Reimbursements: Corporate cards don't cover everything. Employees still end up paying for some things out-of-pocket (like taxis or meals if there's no card), so you still have to manage a reimbursement process.

The Modern Model: Centralized Travel Account (CTA)

In a centralized model, you don't issue cards to individual employees. Instead, a single, central payment method is lodged within your travel management platform. This could be a "ghost card" (a card number that isn't a physical card), a virtual card, or a direct billing arrangement. When an employee books a flight or hotel on the platform, the platform uses this central account to pay the supplier directly.

Pros of Centralized Billing

• Ultimate Pre-Trip Control: This is the biggest advantage. Since the payment method is inside the booking tool, a payment cannot be made unless the booking is compliant with your travel policy and has gone through the necessary approval workflow. It makes out-of-policy booking impossible.
• Eliminates Most Expense Reports: For all travel booked through the platform (flights, hotels, car rentals), the expense is automatically captured, reconciled, and paid by the company. The employee never has to file an expense report for these items. This dramatically reduces the administrative workload for both travelers and the finance team.
• Real-Time Visibility: Spending is visible in your financial dashboard the moment a trip is booked, not weeks later when an expense report is filed. This allows for accurate, real-time budget tracking.
• Enhanced Security: By using virtual card numbers that can be generated for a specific transaction with a specific limit, you drastically reduce the risk of fraud. There are no physical cards to be lost or stolen.
• Improved Traveler Satisfaction: Employees love it. They no longer have to pay for major travel expenses out-of-pocket and wait for reimbursement.

Cons of Centralized Billing

• Doesn't Cover On-Trip Expenses: The centralized account is for pre-booked travel. It doesn't cover on-the-ground expenses like meals, taxis, or client entertainment. For these, you still need a solution, which could be a limited corporate card, a per-diem cash advance, or employee reimbursement. However, by handling the major expenses centrally, you have already solved 80% of the problem.

The Verdict: A Hybrid Approach is Often Best

For most companies, a purely centralized system is the most efficient and secure way to manage travel bookings. It offers unparalleled control and visibility.

However, the ideal solution is often a hybrid one:

1. Use a centralized travel account within your booking platform for all flights, hotels, and car rentals.
2. For on-trip expenses, issue a controlled corporate card (with a set spending limit) or use a modern expense management platform for easy reimbursement of out-of-pocket costs.

This approach gives you tight, automated control over your major travel spend while providing employees with a simple way to manage their smaller, on-the-go expenses. It's the best of both worlds, creating a travel program that is both financially responsible and traveler-friendly.

Ready to centralize your travel payments?