Most businesses - even cutting-edge trailblazers - still rely on company credit cards to manage expenses. Try as we might, we still haven't managed to convince the business world just how sub-optimal these tools are.
You see, payments technology has come a long way. We have an almost endless range of options in our private lives, including Apple Pay, challenger banks, and more.
But company payments are still stuck in last century. And as you can probably tell from the tone of this introduction, they shouldn't be. There's a far better substitute that suits virtually every business out there.
This article explains the many virtues of prepaid employee expense cards. They work just like the credit cards we're all used to, but also eliminate all the headaches that come with them.
Let's start with a basic definition.
What are prepaid cards?
Prepaid cards vs debit cards
We need to add one further clarification here. For the corporate user, prepaid cards vs debit cards is really a distinction without a difference. They essentially do the same thing.
Both only let you (or your employees) spend the money available on the account. There's usually no credit or overdraft function.
But for merchants, this can mean the difference between accepting a payment and rejecting it. For largely technical reasons, many don't accept purely prepaid cards.
In this article, we're going to use the terms prepaid and debit cards somewhat interchangeably. The key thing for you to know is that they're not credit cards, and we think they're better for businesses because of that.
Just so you know
Spendesk issues employee debit cards. You can have as many as you need to give your team members the autonomy they need.
These are still "prepaid" in the sense that employees can't spend any more than is made available to them. But debit cards have a far higher acceptance rate - especially online.
Why should your company use prepaid cards?
- Almost nobody has a card. Perhaps just the founders or CFO can spend on behalf of the company.
- A few managers have cards. This is really just a slight evolution from scenario 1.
- A purchasing or procurement team has the cards. And every single transaction goes through them.
Prepaid cards to the rescue! Together with a smart expense management platform, they're perfect for giving your employees the freedom to spend when they need to, while also keeping an eye on your budget.
Instead of giving people access to the unlimited funds of a credit card, they can only access a predetermined amount, based on rules you set up beforehand.
How do prepaid cards work?
Then finally, you also have recurring cards designed for online subscriptions (like your SaaS tools). Simply create a virtual subscription card, and the right amount is loaded onto the card when the payment is due, so the subscription is automatically paid.
Next level: prepaid expense cards that reconcile payments for you
Really good prepaid cards take all of this to another level. Because they're built specifically for businesses, they tackle one of the biggest recurring challenges for finance teams: the monthly close process.
With a normal credit card, each user has to keep their receipts and submit them to finance periodically. Finance teams then have to match these receipts to the card payments to make sure that each payment was legitimate.
When you have a handful of cards, this can be tricky. And if those cards are shared around the whole company, it easily gets out of control.
Good prepaid cards also come with a mobile app to let your team members upload receipts as they spend. These are matched against every payment, and verified by the technology itself.
So at the end of the month, the finance team has a list of already-prepared payments that only need a quick stamp of approval, ready to export to your accounting automation tools.
Embrace the power of prepaid cards
If after all that you're convinced, there's only one thing to do: check out your best options to get prepaid expense cards for your employees.
When you do, here are a few keys to look for:
- Flexible limits that can be set and changed for each individual card
- Virtual cards (one-off and recurring) that have unique card details for every payment
- A mobile app that gives your finance team spend control no matter where they (or your employees) are
- Automated approval workflows, so managers don't have to send emails back and forth
- Integrations with your accounting software, so you can avoid manual data entry at every step
Spendesk offers all of that. So why not start your search by talking to us?