As a financial leader or business owner, you know how vital it is to have accurate, well-tracked employee expenses. Detailed records help you stay on top of your finances and are also essential for audit and tax purposes. Need more reasons to care? Here's a complete rundown of why you should always keep detailed records for corporate cards expenses.
Naturally, business credit cards help with corporate cash flow management, but they can also help with audits and tax issues.
Taking the time to itemize each purchase made on a business credit card is crucial, even if time-consuming. Typically, when done manually, the paperwork filling process for a business invoice takes 20 minutes.
The good news is that with the help of a corporate business credit card solution, you can cut this process down to just seconds.
Having all your expenses cataloged at the end of the year will make paying your taxes much easier. In addition, for UK companies, it makes VAT reclaims simpler and more accurate.
VAT is a big reason to keep meticulous records when using a business credit card. If you have correctly captured, stored, and bucketed expenses, VAT reclaims are a piece of cake.
As the Finance Manager at MDM Props explains:
"Before Payhawk, missing credit card receipts meant missing VAT reclaims. That's massive, with quarterly VAT bills of up to £240K. Now, with Payhawk, our cardholders upload receipts in seconds and save the business thousands.”
So, next time you think about skipping out on logging a purchase made on your business credit card, think again. Keeping detailed records may seem tedious, but it's worth it in the long run.
Keeping precise track of business spending not only cuts out any confusion but can also help prevent overspending by letting business leaders quickly check spend against budgets and identify expenses that should be reviewed or eliminated.
A good corporate credit card solution provides many ways for you to simplify this process:
These and many other business credit card management features help accountants accomplish three very important things:
Proper business credit cards and unified spend management bring many advantages and should become integral to any business strategy. While keeping detailed accounts of all company credit card expenses might be hard, corporate expense management software can help you light the way.
Of course, if not properly tracked and managed, business credit card expenses can be risky for your organization’s financial health.
Unfortunately, corporate credit cards are sometimes misused for personal purchases by employees. And without a proper credit card management system in place, it can be all too easy for things to go wrong.
To prevent the above scenario, you should put corporate expense management software in place to help you keep an audit trail of all company purchases.
That’s why opting out for a security-compliant corporate credit card solution can help you unify company finances to save time and money, avoiding manual tracking. The right enterprise spend management solution will also let you assign corporate cards to specific employees, monitor spending activities and data transactions, and encourage policy enforcement to ensure every corporate expense is managed and accounted for properly.
While expense management software provides organizations with greater transparency and control of employee spending, it’s vital for businesses to ensure the smooth adoption of corporate expense policies. Your organization can create a culture of financial responsibility by implementing an expense tracking system.
A unified expense management system within your organization makes this process extremely simple. All you need to do is:
This way, your team will better understand how to approach spending in a conscious, compliant, and cost-effective way.
In addition, expense management software can identify trends related to employee spending over time, such as areas where teams commonly go above budget or miss expense deadlines. Armed with this real-time data, you can devise effective budget plans and communicate spend forecasts to stakeholders effectively.
With this insight, your organization can adjust policies and communicate updates to employees to ensure compliance.
As previously mentioned, personal expenses may sometimes go astray and end up on an employee's corporate credit card. The key to avoiding this is by ensuring that proper employee reimbursement policies are in place.
Let’s say an employee needs to purchase office supplies for a project or incur business travel expenses for a work-related event. They should either pay on their corporate or personal card and expect to be reimbursed promptly, as the expense is 100% company-related.
On the contrary, if their phone does not work well and they want to buy a new one, such expense should be charged strictly on their personal card , since it's not business-related.
It might look obvious, but you might be surprised how many personal expenses go unnoticed on a traditional bank-issued corporate card. Using a more advanced solution with set expense rules can help you prevent that and make employee reimbursement policies clear within your organization.
Moreover, with a smart spend management solution like Payhawk, the card controls are built-in, meaning it’s almost impossible for the employee to overspend. From auto-blocking overspending cards to customizing daily limits, the cards make it difficult for employees to break the rules.
If you drafted a stellar draft of your internal expense management procedures but still have trouble enforcing these policies in your organization, consider seeking help from experienced expense management professionals.
Poor business spend forecasting can cause difficulties in documenting and reporting expenses for tax and audit purposes. Without accurate spend forecasts (especially across multiple legal entities and departments), what you’ve suggested you’ll make and think you need to pay could be miles apart and create major problems for your business.
Market-leading spend management solutions like ours come loaded with features needed to ensure tax compliance. With a little help from technology, you can dramatically improve your forecasting, keep track of all business receipts, encourage departmental spending within budgets, and never be worried about a potential tax audit again.
36% of all company-wide data breaches involved some sort of phishing.
From recognizing fraudulent activity to ensuring records are secure, businesses must understand accounting and finance security techniques.
Identifying fraud is a challenge as criminals are constantly finding new methods and strategies to bypass security protocols. Furthermore, fraud prevention relies heavily on implementing multiple levels of protection within accounting systems and training all employees on financial protocol.
Creating a secure environment, protected by multiple layers of security, can help you safeguard your financial activities. And doing this through an expense management solution with robust security features can help you sleep well at night.
While it may be difficult to track your credit card expenses, the benefits of clean, detailed records massively outweigh any burden.
With a cutting-edge expense management solution in your arsenal, you can get better transparency and accountability for employee spending with minimum extra effort.
Learn more about leveraging smart spend management in your organization to save time, money, and sleepless nights. Get started today, book a demo.
Whether you have tens, hundreds, or thousands of employees, we’re making your business spend work for you, giving you control over spending at scale with a single solution. Say goodbye to tedious finance tasks, and schedule a demo with us today.