At Payhawk we believe that corporate cards provide the best way for a business to have direct oversight on every business expense. We discussed in depth the differences between business credit cards, and other cards in our previous article. Here we’ll show you how corporate cards optimize expense management.
It's not just a card. It saves time and money
It's often best to have a centralized place where all the information about expenses is updated. Depending on internal processes, businesses have different ways to manage spend. We already discussed the risks between reimbursements and corporate cards. But how should corporate cards be used to help automate expense management within an organization.
The traditional banking approach would be to have a 3-5 of debit or credit cards that are used by many employees. In this way, individuals can spend much more conveniently without worrying about reimbursements. However, the advantages of this approach are exhausted with these small gains. Estimates show that it takes as much as 20 minutes to complete one expense report with just as much time to correct it if there is an error. Additionally, the extra day spent at chasing receipts costs businesses £3,000 per year.
Example: One of our clients used to manage 5 credit cards, issued from a traditional bank and used by his team members, and to share one with an external agency to make sure that expenses are separated. In order to check his spending, his finance team used to spend half a day to prepare reports, because it was virtually impossible to analyze spending and make optimizations on the spot.
You can read the whole story and learn more about how this person solved his problem here.
Efficient expense management means that there has to be added value in every single step of the process. A corporate card is not merely access to funds. It is a tool that allows every employee to do business. It gives enriched data about the spending, matches paperless receipts to transactions, speeds up reconciliation, and mitigates delays in building expense reports. Putting all of this together, it empowers employees and ultimately saves time and money to every organization.
Manage more people with less effort
For an organization to survive, it needs to grow. Business debit cards show their full potential when they are distributed among more and more employees. Effectively, they substitute the need for cash and expense claims. Businesses grant access to funds for employees who need it through physical or virtual cards.
The best part is that business credit cards help scale businesses without introducing additional complications along the way. Although there are many people who spend, managers can track expenditure and monitor company funds from one single portal. This is all possible because the cards themselves are linked with one central wallet. Employees can choose to go with a physical card or leverage the benefits of a virtual card. Additionally, every card belongs to an employee which makes it easier to track transactions.
Monitor and control spend effortlessly
By far, the one feature that makes business debit cards superior to all alternatives is transparency and control. Every company is selective when it comes to giving access to funds. Employees and departments have different needs and consequently their spending habits and limits vary. That's why corporate cards give managers the flexibility of custom approval chains that match the internal company spend policies. By restricting the spending right on the employee level, organizations can make sure that there aren't any unauthorized transactions.
Security comes first
Legislators and policymakers have been trying to reduce card fraud worldwide. In the EU one of the first steps was implementing the EMV standard. Further steps were taken by introducing 3D-Secure, and Strong Customer Authentication (SCA). All of these measures are regulated by the Payment Services Directive (PSD2) which is in effect as of 2019. Additionally, business debit cards provide extra security features that ensure companies’ funds are in a safe place.
- Corporate cards are not directly connected to the company’s bank account. Companies load funds to a central wallet, other than the bank account, which employees have access to through their cards. This brings another level of security on top that prevents incidents and fraud.
- A robust mechanism for requesting additional funds allows for cards to be used only whenever needed. Managers can approve expenses on the go and whenever needed without actually keeping any funds in the card beforehand. Only in the UK lost or stolen cards are estimated to have caused losses of over £90 million.
- Mobile apps provide real-time communication and card management capabilities. Every employee manages their card write from their pocket. Whenever a transaction happens, it automatically notifies the spender. Additionally, managers and employees can freeze and unfreeze corporate cards with a single click when they are not using them.
What types of companies can benefit from corporate cards?
Expense management is a vital part of the business for companies of all sizes. It is based on obsolete concepts that are not efficient and do not leverage contemporary technology. Merging payments and expenses, allowing companies to build spend policies on company cards will enable organizations to entirely revamp their expense management process.
Corporate cards will help prevent fraud and provide transparency and control. Additionally, when coupled with an automated expense management software, companies streamline operations and allow employees to focus their energy on bringing value rather than tackling bureaucracy.
If you want to find out more about how corporate cards can help you, book a demo with us.