Expense management is one of the most laborious tasks in any business, especially if you’re growing in number. From invoice management to receipt capture, using personal cards that are reimbursed is proving to be a hefty and time-consuming expense.
Out with the old, in with the new. Now, it’s all about company cards. Let’s take a closer look into two of the most common corporate payment options for businesses: prepaid debit cards and business credit cards.
Just like personal debit cards, prepaid debit cards are pre-loaded with a specific amount of money before being issued to employees. This allows cardholders to spend only within the allotted amount, making it a valuable asset for businesses without the risk of overdraft charges.
On the other hand, business credit cards allow employees to spend on the company’s behalf by using a revolving credit line with a set limit. Key employees may then use the bank’s money and make payments in the future with additional interest — just like how a personal credit card works.
While both cards can be used for similar recurring payments such as rent and utilities, transportation costs, payroll, and software subscriptions, they are both still relatively different in nature and function.
One of the biggest benefits of prepaid debit cards is that there’s no risk of overdrawing. If the card runs out of funds, cardholders will not be able to spend any more than that. Since it operates as a separate electronic wallet that isn’t linked to an account, companies can avoid the troublesome activation process and can top up their cards at any time. The risk of running into debt and damaging your company’s credit score is also much lower.
That said, this also results in limited funds for employees since cards only have value when they have been topped up by the primary cardholder. Activation and usage fees are also typically more costly than business credit cards.
On top of that, prepaid cards are still not widely accepted by service providers and merchants worldwide. If you travel for business or make foreign transactions often, you may want to take this into high consideration.
Most businesses still consider corporate credit cards as their first choice when diving into company cards for a variety of reasons. One of these is how most cards are globally recognised, making it easy to conduct both local and international transactions with competitive exchange rates.
What’s more, issuing business credit cards can help companies boost their credit score and gain access to card rewards and incentives such as airline miles, cash back, and rebates.
However, since funds aren’t as limited as prepaid debit cards, cardholders run the risk of overdrawing and potential misuse. To avoid this from happening, ensure that there is a well-constructed corporate credit card expense policy in place to clearly outline the spending limits of each employee.
Don’t have a policy set in stone yet? Here’s a resource that can help you get started.
With corporate cards, founders can finally skip the reimbursement process and simplify their expense management processes. By issuing cards to key team members, it gives them control of their spending with just the right amount of access.
Employers will also have clearer visibility on employee spending and have the last say when it comes to spending limits, freezing cards, and other related card activities. Employees can say goodbye to shelling out from their personal cards for good!
Managing your expenses efficiently is essential to the success of any startup, especially in its early stages. But if your bookkeeping and accounting processes are still done manually, this may hinder your chances of healthy financial management.
Most credit card companies offer expense management features and monthly reporting with real-time updates on your spending, giving companies a clearer picture of their financials in a single platform.
Especially for startups and small business owners, you may not always have cash in hand to afford bigger purchases that are essential to your business like equipment and supplies. With a consistent line of credit, founders can use their cards to afford these purchases and pay their dues at a later time.
With this, they no longer have to fork out immediate funds and can put it towards growing other aspects of their business in the meantime.
On top of that, business owners can also build their credit scores as they spend as well. Just remember to pay your dues on time and you’re good to go.
Take control of your finances and empower your employees all at once with the Aspire Corporate Card. With a variety of features from unlimited virtual cards, real-time visibility, to software integration, managing your company expenses has never been easier for both founders and team members.
Get started in just five minutes and we’ll take care of everything else.