14 Oct 2022
4 min read

Why UK business credit cards need smart expense management

A salesman paying for client lunch using Payhawk's Business Credit Card
Quick summary

Why do UK business credit cards need smart expense management? Imagine a world where every corporate card transaction is an opportunity for strategic financial decision-making. This article highlights business credit cards' critical role in the UK's business landscape, transforming everyday expenses into a canvas for financial ingenuity and agility.

Table of Contents

    The credit card itself is nothing new. And the security and acceptability offered by many leading card companies, like VISA and MasterCard, make them a popular choice for banks and financial organisations to support consumers and businesses.

    So, what’s new?

    Credit cards have long been a powerful tool for both facilitating and guaranteeing payments. Can you imagine many businesses operating today and not accepting credit cards? Credit and debit cards have even become common for payments in more traditionally pro-cash countries and cultures, especially since the COVID-19 pandemic. And experts believe the world's economy will be largely cashless in less than five years, led by Sweden, Canada, Hong Kong, Singapore, New Zealand, Japan, and Australia. Already in the UK nine in ten people own a debit card, while two-thirds own a credit card.

    The benefits of cards over cash are evident and massive for businesses, starting with security. Using commercial visa cards improves security as you can easily cancel them if lost or stolen and, especially in the case of credit cards, get reimbursed for unauthorised payments.

    Furthermore, using company credit cards and supporting expense management software via an expense management solution means your business can automate many tedious financial processes — eliminating grim admin scenarios for finance and accounts departments.

    How to enhance spend visibility and control with Payhawk

    Credit vs. debit cards

    For businesses, using company credit cards instead of debit cards helps in several ways; firstly, by improving business cash flow that can be used to invest in other projects and put towards growth. They also help reduce the need to borrow across working capital loans etc., and help businesses stay in better control of their money.

    One of the advantages of debit cards is that they're interest-free. Banks can also issue them more rapìdly than credit cards. Also, they tend to be free, compared to many credit cards. Take American Express, which carries card charges, has lower global acceptability, and penalises users with high-interest rates for late payments.

    Our credit cards outdo traditional bank credit cards thanks to our business credit card expense management technology. Credit card systems without supporting expense management technology are problematic. There are usually no spend controls, workflows, accounting automation, or real-time spend visibility.

    At Payhawk, our credit cards offer:

    • Real-time matching between the expense and the card payments
    • Superior data capture via OCR tech and VAT savings
    • Easier card management and issuance in bulk (i.e., admins can issue and amend spend rules and workflows in bulk)
    • Better, more time-saving ways to chase receipts (i.e., the software auto chases employees who have not submitted receipts and invoice PDFs)
    • Cost-saving opportunities as both our debit cards and credit cards are interest-free

    Why aren't most business credit cards smart?

    Traditional bank-issued credit cards, including American Express, rely entirely on manual expense payment processing by the accounting team. Or they have to be combined with other disconnected expense management products, like Expensify or Concur.

    However, a new generation of smart company credit cards can eliminate a huge chunk of the time and ensuing expense. Since 2018, our Visa debit card and its dedicated expense management system have automated 87% of the financial processes involved in company credit card accounting. Our solution saves finance departments loads of time each month. Our customer, AiOPSGROUP, for example, saves an average of two hours of work a day, thanks to its use of automation and clever technology. "Since switching to Payhawk, we save approximately two hours daily and up to two days in terms of resolution time. This allows me to focus on more important tasks," Magdalena Velikova, Finance Manager at AiOPSGROUP, explains.

    Our time-saving technology includes built-in workflows and spend limits, customisable spend categories, bulk card issuance, data-capturing OCR software, and more.

    Our company cards and expense management software lets CFOs and finance teams track and control expenses in real time and help provide visibility to optimise company spend. We offer both Visa credit and debit cards linked to our software, including our OCR tech. Users only need to snap a receipt photo or upload an invoice, and all the data is automatically pulled out for the finance team.

    We also integrate with the most common software used by finance teams, including Xero and NetSuite. So, for the first time, UK finance departments can really take charge of credit card expense management across all parts of an organisation. Now, via an easy-to-use dashboard, your CFO or finance team can get a complete overview and control their company's credit card management in real time.

    Do business credit cards mean extra work for finance departments?

    Well, no, as long as your solution has effective expense management software, like ours, to back it up.

    Unfortunately, not all company credit cards are created equally, and all too often, a business will be drawn in by offers and rewards alone. For these types of offer-driven, tech-light credit card providers, the explicit rewards and benefits can be easily understood by some card users but offer the business very little spend control or visibility.

    Although some corporate credit cards might appear to make life easier for employees out on business, they are all too often one of the biggest headaches for finance teams in terms of their management and accounting. At the user end, employees must keep all receipts and manually process them according to expenditure type. While the finance team has to spend their time trying to enforce policy, chasing receipts at month-end, updating missing vital spend data, and more.

    Intelligent business credit cards exist

    Shockingly, automated finance processes and streamlined, visible expense management are still not a priority for many businesses.

    Since their launch decades ago, the technology behind many bank-issued credit cards has been limited to the same basic functions, including payment authorisation, authentication, and clearing. And the ability to monitor and set a limit for, but not optimise, payments.

    Company credit card expenses with ERP treatment

    By switching to us, your CFO or finance team can set spending limits for any employee or team, alter them at any time, and approve fund requests in real time if part of the desired approval workflow.

    Our customers can customise their approval workflows to incorporate their specific expenditure policies, including approval requests from different or multiple team members. Every single transaction can be tracked and traced in real-time, while the expense data for invoices and regular company payments are automated.

    Mistakes can be frequent and costly for those finance teams using high-street or online banks or building society company credit cards without expense management capabilities. Your card, expense management software, and ERP are not connected. So, you can imagine how easy it is to make time-consuming or costly accounting mistakes and the time needed to detect and try to fix them.

    Close the month’s accounts extra early

    With our software, finance managers can get a global view of the company's live cash flow, cost centres, categories, and VAT, with the ability to filter results by category, supplier, or employee.

    The finance team can customise reports and filter for any aspect of company expenditure. Meanwhile, the AI within the software will make suggestions on things like subscriptions, meaning your finance team can track if there are multiple recurring payments to the same place or strange price fluctuations.

    Finance departments using our solution can close their month up to five days faster due to our task automation, like receipt chasing and reminders, OCR automation that supports effective bank reconciliations, reactive approval procedures, transaction syncs, and real-time expense matching.

    All of this, and our solution also integrates with many different accounting software products. This employment of automation guided by artificial intelligence means that finance teams can wipe their hands of mundane chores and focus on initiatives to help the business grow.
    Our agility-boosting automation, combined with a single global solution for cards, reimbursable business expenses, and Accounts Payable (AP), allows companies to scale their finance operations faster and is suitable for growing and larger companies.

    Intelligent spend management isn't just about tech

    The benefits of smart credit and debit card systems also go beyond tech capabilities when compared to their traditional peers. For example, we offer UK companies the flexibility of both Sterling and Euro debit and credit cards, the latter allowing spend limits of up to £250,000, dependent on assessment. This flexibility is ideal for fast-growing scaleups with international operations. However, most expense management solutions only offer debit cards in the UK.

    We also charge a low 1.99% rate for foreign exchange, offer up to 38 days of interest-free company credit card purchases, and provide the ability to use Apple or Google Pay. At Payhawk, we don't require a director's personal guarantee either. This personal guarantee is a major drawback of many credit card solutions, but we don't need one.

    Our company card and expense solution is already being used by UK tech scaleups and Enterprises, including Essentia Analytics, Delio, LloydsDirect, and Dronomics, among the first UK companies to benefit from intelligent expense management.

    Ready to find out how using company credit cards and expense management can help your company's growth? Book a demo today.

    Trish Toovey - Content Director at Payhawk - The financial system of tomorrow
    Trish Toovey
    Senior Content Manager

    Trish Toovey works across the UK and US markets to craft content at Payhawk. Covering anything from ad copy to video scripting, Trish leans on a super varied background in copy and content creation for the finance, fashion, and travel industries.

    See all articles by Trish →
    15 Jun 2024


    15 Jun 2024


    15 Jun 2024