According to a study by GBTA, business travel spending was expected to grow by 7.1% in 2018, and top $1.7 trillion USD by 2022 globally. This indicates that a major part of your firm’s funds will be invested in travel expenses, which makes it important to keep up with controlling your T&E expenditure. Two common obstacles to managing your T&E expenditure are minimal control over employee expenses and not being able to identify fraudulent expenses. The best way to get a handle on the situation is to equip your firm with streamlined expense management strategies. One such strategy is to implement prepaid cards in your travel program.
Prepaid cards are payment cards that can be preloaded with a set amount of funds and then used by your employees to make purchases. These cards are reloadable and they can be used for online payments, point-of-sale payments, and ATM withdrawals. You can control overspending at the source and prevent non-compliant transactions by setting spend limits and restricting the outlets where the cards can be used. In this article, we’ll explain how prepaid cards are a better alternative to cash, and how they can help you save money and increase compliance.
Prepaid cards increase control over your employees’ expenses
Firms that do not use prepaid cards either provide their employees with company credit cards or expect the employees to use their personal credit cards to cover their travel expenses.
Company credit cards come with high credit limits and they are often misused by employees unless they are integrated with an expense management system. So without integration, credit cards don’t give you enough control over the spend. If you make your employees use their personal credit cards to cover their expenses and claim reimbursement later by submitting receipts, you are adding to their burden. Some of your employees may not even have credit cards, and even if they do, the credit limits may not be high enough to cover their expenses on an international trip.
Here’s why prepaid cards are better. They help significantly in saving costs, since they don’t allow overdrafts and you can set fund limits on them. These limits can be set on a daily, weekly, monthly or yearly basis and different limits can be set for different employees. Now your employees have a budget to stick to, so they are likely to think twice before making a purchase. Also, prepaid cards mean that your employees don’t need to spend from their own pockets, relieving them of a massive burden. Your finance team can easily track expenses in real time while the employees are still on their business trips. This gives you good control over both your employees’ spending and your expense approval process.
Prepaid cards increase policy compliance
If you’re having a problem with non-compliant expense reports, then prepaid cards are the ideal solution. The ultimate result of non-compliant expenses is overspending your T&E budget. Prepaid cards reduce this overspending to a great extent—partly because your employees cannot overcharge them, and partly because the spending rules and fund limits are laid down before the expenses are incurred and not after the employees submit their expense reports. Also, you can restrict the stores or outlets where your employees can use these cards, to ensure that your T&E funds are being spent in the right way. Going one step ahead, your travel managers can restrict the channels (online payment/PoS/ATM withdrawal) through which the funds are spent and limit the amount being spent through each channel. Now your travel and finance teams have complete control over the spending even before it occurs, and they don’t have to review reports to pick out non-compliant expenses.
Prepaid cards reduce your firm’s dependency on cash
Travel programs that involve cash and cheques tend to be inefficient and slow. For an employee, carrying wads of cash is one headache, and managing to return to the hotel room without losing them is another. Losing that cash would mean losing funds for the entire trip, and replacing them might be difficult or impossible.
Prepaid cards are the best alternative to cash, cheques, and receipts. They are flexible and safe, and they reduce dependency on cash without the need for extra bank accounts. They also save your employees from worrying about losing receipts. While it is always advisable to have receipts, if an employee loses a receipt for a prepaid card transaction, you can still gather the details by simply checking the feeds in your expense management system.
Prepaid cards are secure
Prepaid cards offer a good degree of protection against loss. If an employee loses their card, they can easily get it restored or issued a new card. By implementing prepaid cards in your travel system, you can provide funds to your employees instantly. For example, if an employee has an accident or is stuck in a situation where they need funds immediately, you can immediately load their card with the funds they need. Any unused funds can be swiftly transferred to your firm’s corporate account instead of needing to be retrieved from the employee.
Prepaid cards are secured with PIN protection and they offer limited scope for damage caused by loss or fraud since they are not linked to a bank account. Depending on the particular prepaid card you choose, your firm may be insured against employee misuse of the cards. There are different types of insurance, which cover a variety of situations including employee misuse, lost cards, forgery, accidents, and theft or assault.
Prepaid cards offer real-time visibility into T&E expenses
The purchases made by your employees using prepaid cards can be automatically collected to generate expense reports, which your travel and finance teams can access through your expense management system. By viewing the transactions across the entire firm as they happen, you get great visibility into your employee spending. This visibility also allows your travel manager to keep an eye on the types of transactions that are happening and spring into action when they notice something amiss.
Prepaid cards are an increasingly popular option for business owners due to their contribution to controlling T&E expenditure, their ease of use, and the security they offer. They save businesses a considerable amount of time and money, increase spend control with pre-set spending limits, improve compliance, and reduce expense fraud. With prepaid cards, employees no longer have to safeguard large amounts of cash, and finance teams are spared tedious hours of reviewing expense reports manually.