Making the Switch: Why You Should Use Virtual Corporate Expense Cards
Managing corporate expenses effectively can be a daunting task, especially in a fast-paced world where businesses need to cope with rapid technological advancements. Accounting and finance teams have been relying on traditional credit cards to streamline the process of expense management, but it is time to move on to something better.
The advent of virtual corporate expense cards has made managing expenses easier than ever before.
While credit cards have been around for decades, virtual corporate expense cards are a newer and more advanced technology with many benefits for businesses. In this blog post, we will discuss how virtual corporate expense cards are better than traditional credit cards.
Current Issues with Managing Expenses
Corporate expense management becomes difficult when there is a clash between giving control employees access to business funds and maintaining financial security.
Without corporate card software in place, businesses face the following options to grant employees access to funds:
Asking Employees to Use Their Own Payment Methods
Asking an employee to use their personal credit card is essentially asking them to loan money to the enterprise. Besides this issue, there are no controls, and thus, troublesome confusion can occur.
Let’s say an employee thinks they were authorized to buy a $500 subscription to a business tool, puts it on their card, and submits an expense report. However, to the employee’s surprise, this purchase wasn’t actually authorized.
If it was authorized, a finance team member must chase down the employee's manager to ensure this expense was approved. Afterward, they reconcile with the business's expenses and issue reimbursement in the next payroll.
Giving Employees Access to Bank Credentials
While we would love to have developed such a level of trust with our employees, sharing bank credentials with anyone is simply too risky.
Giving Employees Access to a Corporate Credit Card
Giving certain employees access to a corporate credit card (Amex, Chase, etc) with a fixed line of credit also has drawbacks.
First off, we are usually limited to only one physical card per employee, and if they lose it or it gets stolen, they have to call the bank to cancel it.
Control is also handed off to the employee’s discretion as a limit setting is usually nonexistent with these cards. This model works for executives but may be less effective for team managers or contractors.
Corporate Card software enables businesses to get around these issues. They can provision cards per employee with custom limits and category controls. This way one can ensure that all spend is approved, authorized, and controlled before the spend even happens. Let’s look at all the other advantages corporate card software brings companies.
Advantages of Virtual Corporate Expense Cards
Corporate expense cards, which can be prepaid, debit, or sometimes credit cards, provide businesses with enhanced oversight of their expenditures.
Rather than being shared, these cards are individually assigned to each employee, connecting every transaction directly to the respective individual and relevant team budget.
The fundamental purpose of these cards is to equip team members with the necessary funds for their tasks, while still ensuring that finance departments and management maintain full authority and control.
More Control and Visibility
Virtual corporate expense cards give businesses more control and visibility over their employees' spending. With a traditional credit card, there is no way to set spending limits or restrict purchases.
With a virtual expense card, businesses can set specific limits for each employee, track spending in real-time, and block any unauthorized purchases. This oversight allows businesses to keep track of their expenses, prevent overspending, and catch any fraudulent activity.
Virtual = Better Fraud Protection
Virtual corporate expense cards provide better fraud protection than traditional credit cards. Since they are not tied to a physical card, they are less likely to be stolen or lost. In addition, virtual cards are single-use, meaning they can only be used for a single transaction before they expire. This prevents fraudsters from using the card for unauthorized purchases.
Customizable and Flexible
Virtual corporate expense cards are customizable and flexible. They can be configured to meet the unique needs of each department, location, or employee.
For example, businesses can set up a virtual card for a specific project and have it expire once the project is completed. In addition, virtual cards can be used for a variety of expenses, from travel expenses to office supplies.
No Personal Credit Checks Required
With traditional credit cards, employees may have to go through a credit check to be approved for the card. This can be problematic for those with poor credit ratings or no credit history.
Virtual corporate expense cards do not require employees to undergo a credit check, making it easier for everyone to have access to the card.
Easy Integration with Accounting Systems
Virtual corporate expense cards can easily integrate with accounting systems, streamlining the process of tracking expenses. Instead of manually entering expenses into their accounting systems, businesses can automatically import transaction data directly from the virtual card.
This saves time and minimizes errors that can occur from manual data entry.
Choosing the Right Corporate Expense Card
When selecting a corporate expense card, there are several factors to consider. Here's a simple guide to help you make an informed decision:
- Understand Your Business Needs: Every business is unique and so are its spending habits. Analyze your company's expenditure patterns, identify what you spend most on, and choose a card that offers rewards or cash back on those categories.
- Consider the Rewards: Many corporate expense cards offer rewards, such as cash back, travel points, or discounts at certain vendors. Consider these benefits and how they align with your business needs.
- Look for Flexibility: Choose a card that offers flexibility in terms of spending limits and categories. This ensures that the card can adapt to your changing business needs.
- Evaluate the Fees: Be sure to consider any fees associated with the card. These could include annual fees, late payment fees, or foreign transaction fees.
- Check the Reporting Features: Good expense management is crucial for any business. Look for a card that offers robust reporting features, making it easy to track and manage expenses.
- Security Features: In today's digital age, security is key. Choose a card with strong security features to protect your company's financial information.
Remember, the right corporate expense card can be a powerful tool for managing your business expenses more effectively. Take the time to do your research and choose wisely.
Power Up Your Team & Save Time
Virtual corporate expense cards offer numerous benefits over traditional credit cards. With more control and visibility, easy integration with accounting systems, no personal credit checks required, better fraud protection, and customizable and flexible options, it is clear why businesses should consider making the switch to a virtual corporate expense card.
This technology is also designed to empower employees to manage their own relevant payments. Whether it's purchasing a new mouse or monitor, or arranging a client lunch, your involvement isn't necessary.
This way, employees are equipped with the necessary tools to make secure, safe payments, with each transaction instantly recorded upon completion.
The result is a reduced workload for managers, with no need to micromanage every single office activity. This equilibrium paves the way for office managers, team leaders, and CFOs to foster efficient workspaces filled with empowered employees.