Why Virtual Corporate Cards are Crucial to Expense Management
Over the last few years, contactless payments have become the preferred payment method for both consumer and business finances, especially as we adapt to a new post-pandemic world. As such, virtual corporate cards are becoming a crucial part of expense management when it comes to modern business.
The potential for growth in the virtual credit card arena is momentous, with a 2021 report by Juniper Research predicting that virtual card spending will top $6.8 trillion by 2026. Additionally, the prepaid card market in Australia is forecast to record a compound annual growth rate (CAGR) of 10.3% over the period between 2022 to 2026, up from 9.9% in the period from 2017 to 2021.
In this article, we’ll discuss why virtual corporate cards are the way forward for businesses and how you can benefit from using them.
Why choose a virtual card?
Virtual corporate cards, or virtual debit cards as they are also known, work in the same way that traditional plastic bank cards do. The difference is that they are accessed via an employee’s phone, rather than having a physical card that needs to be kept safe in their physical wallet.
There are several benefits to virtual cards for both the employee and employer. For example, employees can benefit from the ability to pay in-store or online with their phone, while employers can instantly issue, pause or cancel virtual cards at the touch of a button when needed.
Here are some more of the key benefits of virtual cards for expense management.
1. Virtual cards are safer and more secure
While many people might think of digital finance and ‘the cloud’ as a potential risk for financial hacking, virtual cards are actually safer and more secure than traditional company credit cards. There are a few reasons for this.
Virtual cards are ‘preloaded’ by the employer each month, ensuring spending limits can be put in place and excess spending minimised, thus supporting security further.
Another reason why virtual corporate cards are more secure than traditional cards is that you will no longer have physical cards being passed around to team members as they need them, potentially exposing corporate card details and bank account information to dangerous sources if lost or stolen. With a virtual card provider such as DiviPay, you can also block merchants that are not in line with the company spending policy, enabling you to better manage corporate expenses.
2. Say goodbye to cancelling or replacing company cards
One of the main inconveniences with traditional physical cards is the paperwork involved when company cards need to be cancelled or replaced. When a physical card is lost or stolen, your accounts payable team will often need to visit the bank in person or fill out extensive paperwork to ensure the card is cancelled and can no longer be used. They will then need to go through a lengthy process of determining which expenses or subscriptions were legitimate before they can replace the card.
With virtual corporate cards, cancelling and replacing cards is usually instant. With a virtual card, you can simply pause, cancel or issue a virtual card to an employee in just a few clicks with no bank visits, paperwork or a wild goose chase to find out where expenses have come from.
3. Keep better track of subscriptions
With virtual cards, it is much easier to digitise and automate expense management, meaning your finance teams have better visibility over recurring payments such as subscriptions used by your employees. This ensures they can determine which subscriptions are needed by whom so receipts can be tracked down and appropriately allocated in financial reports.
Virtual cards help you to manage recurring payments with unique cards locked to each subscription. This enables your finance teams to create, pause and cancel business subscriptions from one central location, while also having access to easy-to-read metrics and charts that help to surface any inefficient spending.
Many virtual cards also offer the opportunity for better budget tracking, again ensuring that subscriptions can be kept on top of as part of an employee’s allocated monthly budget.
4. Save time and reduce the cost of admin
Saving time and money is always a key goal for many organisations, especially when it comes to reducing the time spent on lengthy admin tasks that can take up a large proportion of your finance team’s time.
With virtual payment cards and the digital systems used alongside them, your accountants can speed up the reimbursement process and even automate expense reports to save time and money, while also eliminating the risk of human error.
With good expense management software, you should be able to set up predetermined requirements and rules for approving and paying employee business expenses, enabling your finance professionals to automatically approve and record them.
For your employees, it’s most effective if expenses and receipts can be submitted instantly whenever they pay for something using their virtual corporate card. Upon payment, employees should be notified with a reminder to submit their expenses to the accounts payable team by providing a receipt.
5. Control spending & refine strategy
Just as virtual cards enable you to streamline your expense management processes, they can also help to control company spending and refine your cash flow strategy. Good virtual card providers can offer benefits from a data-rich transaction feed that allows you to see expenses and transactions in real-time without needing to wait for bank clearance.
With instant budget tracking, custom rule creation to control spending and the ability to approve spending as it happens, the reporting and analytics tools that accompany virtual cards truly enable your business to exercise spend control and put appropriate payment solutions in place.
Your finance teams can use the dedicated search tool to find specific expenses, use filters to view data from different employees, dates or categories, and export customised reports that can be used for reconciliations and audits.
Improve your expense management with a virtual corporate card
Expense management doesn’t have to mean reams of paperwork, filing and visits to the bank. Virtual corporate cards are a great way to take advantage of automation and give some valuable time back to your finance teams so they can focus on the bigger things. Better still, DiviPay’s virtual cards are ideal for integrating with other accounting software and finance providers which means switching to a virtual card solution can be pretty straightforward.
Book a demo today and find out how we can help your finance teams become more efficient and transform your business into one fit for the future of payment processing and expense management.