Why Your Business Needs to Switch to Virtual Card PaymentsBy Jack Ablon, published on Aug 6, 2020
The virtual corporate card is a recent fintech development that is revolutionizing how agile startups and small businesses spend and save. These futuristic debit and credit cards are an essential tool for mastering the art of end-to-end spend management.
They give companies greater spend control, while empowering spenders to do their thing without getting in the way of agility. They’re completely secure, and are typically powered by the same card issuers that your physical cards run on, such as Mastercard, Visa, or American Express.
This alternative to the traditional credit card is providing value to all types of businesses’ card programs, and while they don’t replace physical cards, they’re a necessary addition to your finance team’s arsenal.
If you’re learning about virtual corporate cards, there’s a lot you need to know. We’re giving you the scoop on why your business needs virtual cards, and how they can help the business grow. You’ll learn how virtual employee credit cards and debit cards can:
- Eliminate card abuse
- Reduce overspending on subscriptions
- Give you real-time visibility into your business spend
- Eliminate the need for expense reporting
- Increase corporate card policy compliance
1. Temporary virtual cards reduce misuse of funds
Virtual corporate cards allow employees to make specific purchases without getting full access to a corporate credit card. You can issue single-use corporate credit cards on an as-needed basis for specific purchases, like a software license, or certain periods of time, like during a conference.
These temporary virtual cards come with a unique credit card number that can only be used for that specific purchase or purchase period. This means that the card number that is associated with the main corporate bank account remains hidden. No longer will employees be able to abuse their card access.
2. Virtual cards can eliminate overspending on software
Did you know that a typical 200-person startup wastes half a million dollars each year on excess software subscriptions? With more than 120 tools in the average startup’s tech stack, it’s easy to lose track of software spending.
Virtual employee business cards can help reduce unnecessary spending on subscriptions and other b2b payments. The best corporate credit cards and debit cards let you link prepaid virtual card numbers to recurring charges, like software. When you can issue employee cards for very specific purchases, you gain greater spend control and ensure that every card transaction is deliberate.
3. Virtual payments give you real-time visibility into your business spend
One of the merits of virtual corporate cards is that they let you see what’s being purchased as it’s being purchased. Virtual cards, paired with spend management software, give you unparalleled, real-time visibility into spending that traditional corporate cards and the expense reporting process don’t offer.
With these tools, actual spend is no longer a mystery until the end of the month. You can better manage your budget when you know how funds are being used.
4. Virtual credit card payments eliminate the need for expense reports
The expense reporting process is a tedious one for both spenders who have to create the and finance team members who have to use them to give reimbursements and manage the budget.
Expense reports also obscure spending. Your finance team doesn’t know how much of the budget was actually spent until the end of the month, when expense reports have been submitted, and it’s too late to reverse any damage.
The expense reporting process is also problematic because it requires employees to pay out of pocket for expenses and then wait weeks to be reimbursed. This can take a toll on personal credit limits, credit scores, and savings goals.
When paired with spend management software, virtual corporate cards let you manage your business spend proactively by instantly capturing electronic payments and automating spending data as it happens.
5. Virtual payments increase corporate card policy compliance
This new class of corporate cards enables budget owners and account administrators to set limits on spending in new ways. Rather than creating a spending policy and hoping that employees adhere to it, finance teams can use virtual cards and spend management software to enforce the policy by enabling permissible expenses and blocking out-of-policy ones.
The best corporate credit cards and debit cards let you control spending by setting limits on things like vendors and amounts per card number, team, or team member. These restrictions reduce the misuse of funds and increase corporate card policy compliance.
The bottom line: Virtual card payments are crucial to spend management
Virtual corporate cards have revolutionized how agile startups and small businesses keep their spending on track. They are a crucial component of end-to-end spend management: a proactive way of controlling spending.
Virtual cards double as spending tools and spend control services, as this payment method can enforce spending policies as purchases are being made. With these cards, finance teams reduce time spent reversing damages because they’re able to proactively see and control spend. They’re then free to dedicate that time to initiatives that contribute to the bottom line.
Virtual credit cards combined with spend management software are a powerful combination that can save your company money and time.