Feb 23, 2023
4 min read

Get better spend control with company cards, approvals, and watertight policies

Accountants reading our 2024 Guide To Company Cards With Custom Spend Controls
Quick summary

Implementing effective corporate card controls, approval workflows, and clear spend policies is key to managing business expenses. Corporate cards offer real-time monitoring and spend limits, while approval workflows ensure compliance with company policies. Learn how to leverage these tools to control your business's spending with the right tools.

Table of Contents

    But companies needn’t be wary of giving out corporate cards — as long as they select the right cards. Spend management solutions should offer both corporate cards with in-built corporate card controls and expense management to let companies stay agile without losing spend control.

    What are corporate card controls?

    Corporate card controls are the various security features and restrictions companies put in place to regulate corporate credit and debit card use. These controls can help your company monitor and manage employee spending, minimise the risk of fraud and abuse, and ensure compliance with company policies and procedures.

    Some examples of corporate card controls include:

    1. Spend limits: Companies may limit how much employees can spend using their corporate cards; this can help prevent overspending and keep expenses within budget.
    2. Vendor/ merchant category restrictions: Companies can limit the types of merchants or categories of purchases employees can make using corporate cards. For example, they might restrict spending at bars or nightclubs.
    3. Transaction approval: Companies may require pre-approval for certain purchases, such as travel or large expenses, to ensure they align with company policies and budgets.
    4. Real-time monitoring: Some corporate card programs offer real-time monitoring, which allows companies to track spending as it happens and quickly identify any unusual or suspicious activity.
    5. Card customisation: Some corporate card programs include custom card controls that you can update for individuals, teams, or in bulk. These controls could include custom limits, restrictions, and more.

    Overall, businesses should use corporate card management (including controls) to manage their expenses, reduce the risk of fraud, and ensure that employees use company funds appropriately.

    Take control of company spend

    Why do businesses need corporate card controls?

    Businesses may choose to avoid corporate cards because of the risks involved, but in doing so, they also miss out on the massive time-saving benefits. For example, saving two hours a day on manual finance admin and reconciliation at AiOps Group, thanks to Payhawk.

    But by choosing a spend management solution with corporate cards, in-built controls, and expense management software, businesses can get all the security they need (without all the admin!)

    Here are the biggest reasons that companies need card controls:

    1. Fraud prevention: Corporate card management helps prevent fraud and unauthorised spending. By setting spending limits, businesses can ensure that their employees do not exceed the authorised amount, which can help prevent the misuse of company funds.
    2. Expense management: Corporate card controls enable businesses to monitor and manage employee spending, helping to prevent overspending and ensuring that expenses are properly categorised and accounted for.
    3. Policy compliance: Company card controls can help businesses ensure that their employees follow company policies and procedures, such as spending limits and expense categories.
    4. Cost reduction: By controlling spending and enforcing policies, businesses can reduce unnecessary expenses, improving their bottom line.
    5. Audit trail: Company card controls also provide an audit trail of all transactions, making it easier for businesses to track expenses and reconcile accounts.

    Overall, corporate card controls are essential for businesses to manage expenses, reduce fraud, and ensure compliance with company policies and procedures.

    How do businesses get corporate card controls wrong?

    Corporate card controls make sense. With a spend management solution like Payhawk, businesses can use corporate cards to remove admin and error from receipt/data capture, get real-time spend visibility, reconcile quickly with accounting software, create in-built policies, update in bulk, and more. The benefits are enormous and easy for businesses to implement.

    However, businesses can run into trouble when creating and implementing card controls without a spend management solution (or with a less sophisticated vendor). Here are some of the main pitfalls:

    Lack of clear policies and procedures: A common mistake businesses make is with unclear policies and procedures for managing corporate card usage. Without clear guidelines, employees may not know how to use their cards properly or what is considered an acceptable use.

    Overly restrictive controls: While it's important to have some level of control over corporate card usage, overly restrictive controls can create unnecessary barriers for employees and slow down the purchasing process. Super rigid controls can lead to frustration and even deter employees from using their cards.

    Poor communication: Another mistake businesses make is failing to communicate with employees about their new corporate card management tool. And confusion about policies and procedures and even result in company card misuse.

    Failure to monitor usage: Even with clear policies and procedures in place, businesses can get corporate card controls wrong by failing to monitor card usage. Regular monitoring can help identify and prevent unauthorised use or fraudulent activity.

    Lack of training: Finally, businesses can get corporate card controls wrong by failing to provide adequate training to employees on properly using their cards. This can lead to unintentional misuse of the cards or errors in tracking expenses.

    With Payhawk, adoption is massive as the cards and app are so intuitive and easy-to-use. As Scott Johnson, Head of People at Essentia Analytics, says, “Payhawk is such an easy tool to navigate versus some of the clunky enterprise systems.”

    With strong adoption comes robust compliance, too, as with Payhawk, your card controls and spend/ fund approval workflows are built right into the tool.

    How have businesses traditionally controlled corporate cards via banks?

    Traditionally, businesses have controlled corporate cards through banks by setting up a corporate account with the bank and applying for a credit card in the company's name. Designated employees can use this credit card for authorised business expenses, such as travel, entertainment, and office supplies.

    The company can set spending limits on the card and monitor transactions online to control spending. And the bank might offer additional controls, such as the ability to restrict certain types of transactions, set merchant category codes, and limit spending per transaction or per day.

    The company is typically responsible for paying the credit card bill in full monthly, either by setting up automatic payments or manually submitting payments online or via cheque.

    Overall, the bank provides the infrastructure and tools to manage the company's credit cards, while the company is responsible for setting policies and guidelines for card use, monitoring transactions, and paying bills on time. But modern businesses need more. They need spend visibility and agility and can't afford to wait for banks to run through lengthy processes.

    As Uchenna, the Finance Manager at MDM Props, explains, "We used to use two different credit card systems, one from Barclays and one from AMEX. With the Barclays card, you would get a monthly statement, which you had to pay in seven days. But sometimes, when we logged into the system to retrieve the statement, it wasn't even available. So, we didn't know what we were paying, which was bad for cash flow. We had to download a pdf statement then physically get the receipts and attach them to the statement, and it would take days or even weeks to reconcile."

    These days, businesses use spend management solutions like Payhawk to leverage company cards, manage cash flow efficiently, and stay in control of spend.

    Payhawk mileage reimbursement feature illustratedPayhawk mileage reimbursement feature illustrated

    What are the different types of card controls?

    Card controls are features provided by card issuers to help businesses and their cardholders manage and monitor their company credit and debit cards. Here are some common types of corporate card controls:

    1. Transaction limits: You can limit how much employees can spend per transaction, day, or month.
    2. Geographic restrictions: You can restrict card usage to specific regions or countries to prevent fraudulent transactions.
    3. Vendor/ merchant category restrictions: You can block certain types of merchants from processing transactions on their cards, such as bars, casinos, or online retailers.
    4. Card lock/ unlock: You can temporarily disable or "lock" cards to prevent unauthorised use and then "unlock" them when required.
    5. Spending notifications: You can receive real-time notifications of all transactions made on your employees' cards, which helps you monitor accounts for suspicious activity.
    6. ATM withdrawals: You can block cash withdrawals from ATMs (and unblock them as needed).
    7. Online payments: You can choose to block online payments. For example, if your employees are just using cards for petrol and sundries.

    These are just a few examples of the available card control types. The specific controls available may vary depending on the card issuer and the card type.

    What are the main benefits of implementing corporate card controls?

    Businesses must implement card controls if they give out cards. And while this may be off-putting for some businesses who are hesitant to put company money in their colleague’s hands, ultimately, it will give the business better spend control, less risk, and improved cash flow (not to mention improved morale for employees who no longer have to wait weeks for reimbursement).

    Enhanced security is a major benefit of corporate card management with in-built controls. Businesses can set spending limits and restrict transactions to certain vendors or categories to help prevent fraud and unauthorised spending.

    Better expense tracking is a biggy too. Company card controls allow businesses to track spending in real time, which can help them stay on top of expenses and manage budgets more effectively.

    Improved compliance helps businesses ensure employees adhere to company policies and regulations, which can help avoid costly fines and legal issues. And with a solution like Payhawk, where the card controls are built into the card and app, it’s almost impossible to break the rules.

    Finally, simplified expense management is a significant benefit. Company card controls can consolidate expenses onto a single card or platform, simplifying expense management for employees and finance teams.

    Overall, implementing corporate card controls can help businesses improve their financial management, reduce risk, and increase efficiency.

    How can secure card controls impact your business externally?

    Secure card controls can have several external impacts on a business, including our top four:

    1. Increased investor trust: By controlling spend and cash flow and boosting real-time spend visibility, companies can demonstrate their control over money going out and into the business.
    2. Reduced fraud: Implementing secure card controls can help reduce the risk of fraudulent activity, resulting in lower chargeback rates and decreased financial losses, meaning your business can do more.
    3. Cost Savings: By reducing the risk of fraud and associated financial losses, implementing secure card controls can result in cost savings for a business, allowing it to allocate resources more efficiently to other areas of the organisation.
    4. Recruitment and retention: This suggestion sounds weird, but if a company builds a strong reputation for empowering its employees and encouraging agility, it can attract better talent. No one wants to work for a business that won’t let them make any decisions.

    Overall, implementing secure card controls can positively impact a business externally, helping to build employer branding and investor trust, reduce fraud, comply with regulations, gain a competitive advantage, and achieve cost savings.

    What are approval workflows?

    Card controls are not the only way to manage spending. And many businesses also opt for approval workflows when it comes to authorising requests for additional card funds, or card ‘top ups.’

    Approval workflows are steps to obtain approval or authorisation for a particular task, project, or process. They're typically used in business settings to consult all stakeholders and gain appropriate authorisation before proceeding with an action.

    Approval workflows can take various forms, depending on the task's complexity or the project's nature. They may involve multiple levels of approval or a single person responsible for the decision-making process. The workflow may include different types of reviews, such as legal or financial reviews.

    In many organisations software systems help automate approval workflows. For example, if an employee submits a request for a new piece of software, then the business can set up auto-approvals depending on the amount. The software system would keep track of the request's progress, and the employee would receive notifications as the request moves through the workflow.

    Approval workflows are essential to deliver the right oversight and authority at the right time to help minimise errors, increase efficiency, and reduce risk.

    Why do companies choose different levels of approval for fund requests?

    Companies may choose different levels of approval for fund requests based on a variety of factors, including the amount of the request, the level of risk associated with the expenditure, and the organisation's internal policies and procedures.
    Here are a few reasons why companies may choose different levels of approval for fund requests:

    1. Budgetary constraints: If a company has limited funds, they may implement stricter approval processes to ensure funds go to the most critical projects or expenses.
    2. Risk management: Companies may have a higher level of approval for expenses that are higher risk, such as investments or large-scale projects. This workflow setup ensures multiple stakeholders can review and assess the potential risks before committing funds.
    3. Accountability: Companies may require multiple levels of approval to ensure accountability for expenditures and help prevent fraud or misuse of company funds.
    4. Compliance: Many companies have policies and procedures to ensure compliance with regulatory requirements, such as legal, tax, or accounting rules. Approval processes can help ensure all expenses are properly documented and compliant with these requirements.
    5. Hierarchical structure: Some companies base approval processes on hierarchical structures, giving higher levels of management the authority to approve larger expenditures or more significant projects.

    In summary, companies may choose different levels of approval for fund requests based on factors such as budgetary constraints, risk management, accountability, compliance, and hierarchical structure. And the level of approval required for each expense will depend on the specific policies and procedures of the company.

    How do businesses define their workflows?

    Ideally, your business needs a spend management solution like Payhawk, which features both corporate cards and expense management software in one place. This level of robust spend control will let you leverage the benefits of card controls and approval workflows and build your spend policy right into the tool your cardholders use.

    Of course, your business can choose the number of approvers based on your own structure and needs. Two levels or more is the most popular option for our customers.

    37.84% of Payhawk customers include two approvers in their workflow. (Data taken from customers using Payhawk corporate Visa cards between 1st January and 30th September).

    Leon Steenbrink, CFO at Mercell Nederland, says, "I love that I can assign different responsibilities and approval levels to various persons. Before Payhawk, we had just one level, which wasn't enough for me to keep control of business spend."

    Depending on your business and your goals, you can choose one approver, two approvers, or more. And you can even set up auto-approvals for fund requests of a certain amount or less so that the approvers don't need to check every minor approval (especially if it's within your policy).

    How do you set up your corporate card approval workflows with Payhawk?

    It’s easy to define your custom approval workflows in Payhawk. First, choose which payment or request type the approval process is for; these include:

    • Credit and debit card payments
    • Fund requests
    • Bank transfers, including due or paid
    • Employee reimbursements, including business travel expenses
    • Company cash (paid with company funds)
    • Request a card

    You can then set the structure of your workflows and assign the necessary approvers, including team managers, project managers, accountants, administrators, and more.

    And you can also decide if your approval chain should contain one step or multiple steps (and include auto-approvals if desired).

    Learn more in our help centre article, How to define your custom approval workflows.

    Spend policies plus monthly limits in Payhawk's spend management suiteSpend policies plus monthly limits in Payhawk's spend management suite

    What is a spend policy?

    A spend policy is a set of guidelines and rules that an organisation follows to manage their spending. The policy outlines the approved methods and limits for spending money and the criteria for reimbursement or payment.
    A spend policy typically covers various expenses, including travel and entertainment, office supplies and equipment, professional development, and other business-related costs. The policy may also include guidelines for how and when employees should submit expenses for reimbursement, how much they can spend on specific activities, and the types of documentation required to support those expenses.

    For businesses, a spend policy can help ensure that employees use company funds responsibly and effectively while also helping to prevent fraud or misuse of funds. Additionally, a well-defined spend policy can help businesses control costs, improve budgeting, and ensure compliance with internal and external regulations.

    What is an expense policy?

    An expense policy is an organisation's guidelines and rules to manage and control expenses. The policy outlines the approved methods and limits for incurring expenses and the criteria for reimbursement or payment.

    Companies put expense policies in place to ensure that expenses are reasonable, necessary, and compliant with company goals. The policy may cover a wide range of expenses, including travel and entertainment, office supplies and equipment, professional development, and other business or personal-related costs.

    The policy may specify the types of expenses allowed, the maximum amounts employees can spend on each category, and the process for seeking approval for expenses that fall outside the policy. It may also outline the process for submitting expense reports and receipts and the timeline for reimbursement or payment.

    For businesses, a well-defined expense policy can help ensure that employees use company funds responsibly and effectively while also helping to prevent fraud or misuse of funds. Additionally, a clear expense policy can help businesses control costs, improve budgeting, and ensure compliance with internal and external regulations.

    See how ATU saved +€2m thanks to accurate reconciliation

    How can corporate card controls and workflows support your spend policies?

    Company card controls and workflows can play a critical role in supporting spend policies in several ways:

    • Setting spending limits: Corporate card controls allow companies to set spending limits for employees, ensuring that they do not overspend or make purchases that are outside of the company, project, or team budgets. Depending on the company's needs, businesses can set these limits per employee or team card
    • Enforcing purchase approvals: Businesses can put workflow controls in place to ensure that the appropriate person approves all purchases and/or fund requests before they are made/granted
    • Monitoring spending: Corporate card controls can provide real-time monitoring of employee spending, allowing managers to identify any unusual or suspicious purchases. This visibility can help prevent fraud and ensure employees stick to the company's spend policies
    • Tracking expenses: By using corporate card controls and workflows, companies can easily track employee expenses and identify areas to reduce spend. This real-time tracking can help companies to make more informed financial decisions and stay on track
    • Simplifying expense management: By streamlining the expense management process, corporate card controls and workflows can reduce the administrative burden on employees and managers, allowing them to focus on other important tasks

    In summary, corporate card controls and workflows can support spend policies by helping companies to set spending limits, enforce purchase approvals, monitor spending, track expenses, and simplify expense management. By implementing these controls, companies can ensure employees are spending money following company policy and staying within budget.

    See what our cards can do

    Why you need an expense policy

    You need an expense policy to keep business expenses within your financial plans. And you need it to be clear and easy to follow so that your employees know where they stand when it comes to making payments for work-related activities. According to The Economist, happy employees are more productive, and your expectations around out-of-pocket expenses and long reimbursement procedures or waiting times has a big impact on team morale.

    Here are the seven biggest "Cs" of expense policies and why you need them:

    Clarity: An expense policy clarifies what is allowed and isn't allowed when it comes to employee expenses. This clarity helps avoid confusion and misunderstandings about what costs the company covers.

    Consistency: An expense policy ensures that employees are all held to the same standards and guidelines, which can help to prevent inconsistencies in how teams handle expenses across the organisation.

    Control: An expense policy gives the company control over how people spend money, ensuring that funds are used for appropriate business purposes.

    Compliance: An expense policy can help ensure that the company complies with legal and regulatory requirements, such as tax laws and accounting standards.

    Cost savings: An expense policy can help to prevent unnecessary expenses and reduce costs. By setting clear guidelines for what expenses are allowed, companies can avoid overspending and prevent waste.

    Clear accountability: An expense policy can help promote transparency and accountability within the organisation, as employees must provide receipts and other documentation to support their expense claims.

    Company reputation: An expense policy can help protect the company's reputation by ensuring that employees spend company money responsibly and ethically.

    In summary, an expense policy is important because it provides clarity, consistency, control, compliance, cost savings, transparency, and reputation protection. By implementing an effective expense policy, companies can ensure that their employees are spending company money responsibly and ethically while also achieving their business objectives.

    What is a good expense policy

    A good expense policy is almost impossible to break.

    By using Payhawk, you can build their expense policies right into the tool and update them as they need with just a few clicks. You can also set restrictions and controls in bulk to save huge amounts of time and ensure consistency.

    • Here’s a quick list of what you can do:
    • Customise spend rules around single transactions, daily limits, hierarchies, and expense types
    • Design and implement secure approval flows
    • Create multi-step approvals (including by expense type)
    • Create cards limits for individuals, team, and in bulk
    • Issue risk-free, zero balance cards (and assign approval workflows for fund requests)
    • Block cards
    • Freeze cards
    • Delete cards
    • Limit offline spend
    • Turn off ATM withdrawals
    • And more

    All of the above features are built right into the cards and app that the cardholders use. These in-built rules make it almost impossible to be non-compliant which makes the finance team and business leaders very happy. What’s more, the cardholders are happy too. They no longer have to dig around to check what is and isn’t in policy as it’s all there in the palm of their hands.

    Really good expense policies should be simple and easy to comply with. As far as socialisation goes, Payhawk couldn't be easier. We share all updates with the selected admins and accountants within our customers finance teams so they can roll them out easily to cardholders. And our customer success team supports implementation from day one to make sure the admins know exactly how to get the most from our solution.

    Like what you see?

    Corporate cards offer a great solution to spend control. Book a demo to see how your business can save time, boost efficiency and take control of spend with Payhawk.

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

    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 →
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