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The new best small business solution: Software-enabled employee credit cards

The new best small business solution: Software-enabled employee credit cards

Every business owner reaches the employee credit card crossroad at some point. The communal company card passed around the office to pay for business expenses has been misplaced once again. Or perhaps your employees are fed up with forking out from their personal credit cards to pay for business travel, leaving them nerve-wrackingly close to maxing out their credit limits. All the while, you’re up late processing expense reports to reimburse them each month. This is the turning point when you realize that every employee in your organization should have their own employee credit card. Having numerous cardholders might sound like an administrative nightmare, but it’s made simple with software-enabled employee corporate cards.

Modern software-enabled employee credit cards allow you to roll out cards to everyone with just a few clicks. A universal employee card program, linked with spend management software, is the solution to many of the most frustrating aspects of the expense management process. By providing a card to every employee, you’ll have better visibility and control over spending, while eliminating expense reports and the archaic reimbursement processes. Let’s take a closer look.

The traditional way employee cards are deployed

The first solution you might consider is setting up a limited small business credit card program. This involves distributing business cards only to key senior leadership or to each team to share amongst themselves. There are many valid reasons for a limited employee card roll-out:

  1. Minimize the risk of overspending: By capping the number of employee cards issued and credit limit on each card, businesses can impose limits on total employee spending. This minimizes the risk of going over budget since employees cannot spend beyond their credit limits and the total line of credit is controlled. 
  2. Reduce the risk of fraud and lost or stolen cards: Fewer cards issued means less opportunity for a company card to be lost, stolen, or fall into the wrong hands and be used for fraudulent transactions. These scenarios result in an administrative headache, from canceling and reissuing cards to disputing the transactions with the credit card issuer. Even if your disputes are successful, the process could take months, putting unnecessary pressure on your cash flow.
  3. Employees enjoy their rewards programs: Although business cards alleviate the financial burden on employees having to front the funds for business expenses, some staff with rewards cards may still prefer to use their own cards. Opportunistic employees who are rewards-based cardholders can take advantage of perks such as earning points or cash-back rewards on business purchases such as office supplies, flights, car rental, and cell phone bills, which are subsequently reimbursed by the company. Spending on an employee card would benefit the business’ rewards program instead.

The new way to deploy employee cards: The Universal program

A limited-roll out makes logical sense. However, there are clear benefits of providing every employee with a software-enabled business card that could make a significant difference in your business.

Real-time visibility into spend

Traditional limited solution: With the conventional expense process, you have no visibility over employee spending until reports are generated at the end of the month—assuming they are completed on time and without errors. The manual nature of expense management leaves your business susceptible to fraud when receipts inevitably go missing, or numbers are keyed incorrectly.

Not only is there plenty of room for human error throughout the reimbursement process, but it is also lengthy and tedious. It’s no wonder you constantly need to chase up missing receipts and approval signatures from staff, resulting in expense reports that are delayed and often tagged incorrectly. A survey by GBTA Foundation and HRS found that it costs on average $58 to process one expense report. Around one in five expense reports contain errors or missing information, almost doubling the cost to $110 after correction. Inaccurate reporting makes effective spend analysis an impossible task, and you won’t know if a particular category of spend has gone over budget until the expense report is complete.

The next hurdle with a limited roll-out is correctly combining and reconciling card spend with reimbursed spend in your accounting software, to ensure an accurate representation of total spend. 

New universal solution: If cards are issued to every employee, all business spend will be captured in one place, and the reimbursement process will be eliminated. Think of the hours of valuable time spent on repetitive reconciliation that you could save!

With appropriate expense management software in place, data from all transactions will instantly and accurately flow through to the software. Not only will this eradicate manual spreadsheet uploads, but expenses will also be automatically categorized, streamlining the accounting process and allowing you to track spending by category or employee—in real-time. Software solutions are easily accessible on-the-go, from your laptop or smartphone, giving you the instantaneous ability to check how expenses are tracking.

Control over spend

Traditional limited solution: Month-end (and often delayed) reporting means you won’t know if your employees are adhering to your corporate credit card policy until it’s too late and the money is long gone. 

New universal solution: With real-time visibility, you can reduce unnecessary spend by catching out-of-policy employee spending as soon as it occurs. An out-of-policy transaction such as a cash advance or personal purchase, can automatically trigger an instant notification, enabling you to have a prompt conversation with your employee before they rack up a whole month’s worth of spending. There is a record of every single employee purchase, so you can monitor an employee’s spend real-time or dispute individual transactions if necessary.  

With appropriate expense management software, you can set customized parameters of your business’ spend policy to control total expenditure. Spend controls include setting budgets per category, per employee, depending on job description or seniority, and per transaction. Some cards also allow controls over the types of merchants the card can be used for, to minimize the risk of employees making personal purchases. Once spending limits are reached, software-enabled cards can be remotely shut-off.

Employee happiness

Traditional limited solution: Employees not bestowed a business credit card must use their personal cards to pay for business expenses. A business trip or any other sizeable transaction can put significant pressure on their finances, particularly if they need to pay interest on the amount owed or pay off the credit card from their savings to protect their credit score, while waiting for their reimbursement. This can be a constant friction point, causing employee dissatisfaction, particularly if the claim is subsequently rejected—not to mention the sheer frustration from having to complete expense reports each month. 

New universal solution:

  • No more unnecessary admin. There is nothing more de-motivating than wasting time on an unproductive task—this goes for both business owners and employees. A State of the Global Workplace report by Gallup found that 85% of employees are disengaged at work, particularly in roles with highly manual or routinized processes. Wouldn’t you rather spend your time growing your annual revenue, and have your top sales rep focus on closing a deal rather than squandering their time stapling receipts onto an expense report? Universal software-enabled company credit cards eliminate manual expense reports, meaningless menial paperwork, and create more time for your employees to focus on their work.
  • >No more passing financial burdens onto your employees. By rolling out universal employee cards across the business, you’ll no longer need to unfairly ask your staff to pay for business expenses on their personal credit card then wait for the reimbursement to hit their bank account.

Adopting a universal employee credit card program will improve the agility of all your employees and empower them to get the job done. They’ll be able to make necessary business purchases when needed, rather than always hunting down the shared card or seeking approval from authorized users, and free their time from tedious expense reporting. By managing expenses with a spend management software solution, you’ll have real-time visibility and gain powerful insights into your company’s spending to make nimble decisions to control your bottom line. 


About the Author: Jemima Law
Jemima is a finance writer with a professional background in Corporate Finance. She is also a small business owner who hates reconciling business spending with a passion.