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Though credit card issuers generally deal with one borrower responsible for a consumer or small-business card account, corporate-lending relationships tend to be more complicated. For starters, corporations have more-sophisticated financial statements and debt loads than do consumers or small businesses. So issuers often have "blind spots" in their views of the combined risks of a corporation's commercial and card loans, according to Patricia Hewitt, author of a new report by Mercator Advisory Group. Moreover, "the credit limits are higher and can get higher very quickly," says Hewitt, a senior Mercator analyst, tells CardLine. "There isn't always someone validating employee corporate credit card use, but the company is always required to repay that card debt." Issuers do not yet have well-developed tools for monitoring multiple types of a corporation's debt at once, and collecting on corporate card debts can be difficult if a corporation declares bankruptcy or goes out of business, Hewitt notes. However, credit-rating agencies and companies that create account-origination software for commercial loans and consumer and small-business credit cards are only beginning to develop scoring models and analytic tools that more comprehensively address the risks of issuing and managing corporate credit cards, she says.
