Have you witnessed a tightrope walker in action? It’s a fascinating sight. They gracefully make their way to the end of the rope without tipping over. If you remember correctly, tightrope walkers use a pole throughout their walk to help them maintain balance.
Expense management is pretty similar. Businesses walk the tightrope every day in the form of controlling expenditure and maintaining compliance. On one hand, they churn out millions of dollars in revenue, and on the other hand, they spend proportionately big bucks on corporate travel. Controlling their T&E expenditure becomes increasingly complicated with the multiple offices and increase in the number of employees.
Here’s where they could use a pole for stability in the form of corporate credit cards.
For better understanding, let’s take the example of a fictional firm, Pastus Co. –
Their annual revenue hit $10 million last year. Joining the big league meant business trips were a frequent occurrence, and they kept shelling out thousands of dollars on business travel. Between trade shows and client meetings, Pastus had at least 10 employees travelling on business every other week. One major hindrance to spend control was travellers using their personal credit cards or cash to cover expenses and then requesting reimbursement later.
Naturally, they hit the roadblock when the travel expenses increased in volume and tracking them became arduous. Now, this led to an increase in overspending, fraudulent expenses, and employee dissatisfaction.
To put an end to all these issues, meetings were scheduled with the stakeholders. The travel and finance managers wanted a solution that would allow their employees to retain independence and simultaneously help in monitoring expenses. After thorough discussion, their CFO decided to implement corporate credit cards in their travel program and their CIO suggested integrating them with their expense management software.
What are corporate credit cards?
Corporate credit cards are issued to the employees of a firm to spend on authorised business expenses. This ensures employee satisfaction as the business travellers would not have to spend out of their own pockets.
These cards are issued directly between your firm and the credit card company, and they are issued in your firm’s name with the respective employee’s name on them. From spending limits to direct card feeds to rewards, corporate credit cards are equipped with great efficiency.
Here’s how Pastus Corp. benefited by switching to corporate credit cards to control travel expenses:
Increased spend control and visibility
Not having defined spend limits set and reviewing expense reports solely based on receipts were two main challenges faced by the finance team. Also, these factors offered limited visibility into the travellers’ spend. With corporate credit cards, the firm’s finance manager sets spend limits on how much the traveller can spend overall or per transaction before handing over the cards to them.
Now the finance manager can validate expenses without paper receipts, and has excellent visibility into employee spending. They get in-depth details about each transaction, so much so that if a receipt is lost, the finance team can easily pull up information on any transaction from the expense management system.
Streamlined expense management
When the Pastus team decided to implement corporate credit cards for their travel program, the CIO made sure the cards were seamlessly integrated with their travel and expense management system. By doing so, the card feeds were directly fetched into the expense management system for the employees and the finance manager to view.
Employees could easily convert the card transactions into expenses using the mobile expense management application. Automatic reconciliation matches the card transactions with the corresponding expenses based on factors like the date and the exact amount.
It does not stop with expense management, and extends to accounting as well. Pastus Corp. has their expense management system integrated with their accounting system. As soon as an expense report is approved, it’s pushed right into their accounting system with all the relevant details to facilitate accurate accounting.
Increases compliance and reduces expense fraud
Corporate credit cards put an end to receipt manipulation where employees provide fake receipts for expenses or exaggerate the actual amount spent. Since the finance team has access to the complete details of all transactions, it puts an end to all the possible loopholes.
Also, refunds are processed back to the same corporate card used for the purchase, and they appear in the transaction feed that’s available to the finance managers. So the employee can no longer hide their returns or claim reimbursement for them.
Corporate credit cards are equipped with multiple levels of security to protect against theft, accident, misuse, and loss. When the sales manager of Pastus Corp. lost her card on a business trip, she simply called up the travel manager, who reported the card to prevent fraudulent charges. The credit card provider issued a new card for the sales manager. It typically takes around 7 – 10 days to issue a new card, but in emergency situations, the card can be issued immediately.
Certain corporate credit card providers offer additional protections, such as emergency cash advances. They may also provide benefits like insurance coverage of car rentals (in case of theft or accident) if the employee has paid for the rental services using the card.
Credit card rewards
There’s work involved in maintaining corporate cards, but it comes with a pay-off. The finance team at Pastus Corp. has to monitor credit card balances and complete timely payments for each employee’s corporate card. But they also get to manage the credit card rewards in a way that works to the company’s benefit. Corporate credit cards offer the firm its money’s worth in the form of rewards, ranging from rebates to discounts on air travel, rentals, shopping at certain outlets, and cash back or gift cards that can be reinvested in travel management.
Here’s your takeaway!
Corporate credit cards are a great choice for large corporations that handle a high number of business travellers and need to control their T&E expenditure. With corporate credit cards, the finance team can set spend limits, easily track employee spending, and monitor compliance. They can also save themselves the tedious task of manually reconciling transactions. Employees get added convenience too, because they no longer have to spend out of their pockets and wait for reimbursement.