Managing corporate expenses effectively is crucial for the financial health and operational efficiency of any business or organisation. Keeping track of expenditures can be challenging, especially as companies grow and operations become more complex. In this article, we’ll explore how businesses can better take care of their corporate expenses using modern solutions like corporate cards.
What Are Corporate Expenses?
Corporate expenses refer to all costs incurred by a business during its operations.
For employees, these often refer to travel expenses, office supplies, client entertainment, and other operational costs.
Types of Corporate Expenses
Businesses encounter various types of expenses, which can broadly be categorised into:
- Operational Expenses: Day-to-day costs such as utilities, office supplies, and salaries.
- Capital Expenditures: Investments in long-term assets like equipment, technology, and infrastructure.
- Travel and Entertainment Expenses: Costs associated with business travel, client meetings, and employee entertainment. These are the expenses traditionally incurred by employees from their own accounts and then claimed back through the provision of receipts.
Naturally, the management of these expenses isn’t always easy. Traditionally, it relied on employees keeping receipts and filling in forms. For the employees, this meant a delay in being reimbursed as well as potential out-of-pocket expenses should receipts be lost or claim deadlines be missed. For businesses, it meant a delay in spending, which had potential repercussions for managing budgets and knowing the financial standings.
Corporate Cards for Managing Expenses
Corporate cards, or expense cards, are bank cards issued to employees for their business-related expenditures. Rather than employees needing to fill in forms and provide receipts, they can use a card that is linked to the company’s bank account to pay for authorised expenses like hotel stays and travel. This is a more streamlined way for businesses to manage and monitor spending.
Types of Corporate Cards
Like personal bankcards, corporate cards can be classified into different types based on their functionality:
- Credit Cards: Offer a line of credit for business expenses, with the company responsible for paying the balance monthly.
- Debit Cards: Directly linked to the company’s bank account, with funds deducted immediately upon each transaction.
- Prepaid Cards: Loaded with a specific amount of money, allowing for controlled spending.
Benefits of Using Corporate Cards for Expense Management
Corporate cards offer huge advantages to businesses, including:
1. Streamlined Expense Tracking
Corporate cards simplify the process of tracking and managing business expenses. Transactions made with these cards are automatically recorded and categorised, reducing the need for manual data entry. This provides real-time visibility into spending patterns and helps in making informed financial decisions. It means managers know where their budget stands at any given time.
2. Improved Budget Control
Corporate cards enable businesses to maintain better control over their budgets by setting predefined spending limits should they wish. This ensures that expenditures stay within allocated budgets and prevents overspending. Companies can issue different cards with specific limits tailored to departments or projects.
3. Enhanced Security and Fraud Prevention
Corporate cards come with advanced security features to protect against fraud and unauthorised transactions. These features include real-time transaction monitoring, two-factor authentication (2FA), and customisable spending controls. Wallester Business corporate cards, for example, offer robust security measures that ensure data protection and transaction security.
4. Simplified Expense Reporting
Traditional expense reporting can be a time-consuming process for both employees and employers. Corporate cards simplify this by providing detailed transaction reports that can be easily integrated with the company’s accounting software. This reduces the burden (financial and administrative) on employees and allows finance teams to focus on more strategic tasks.
5. Increased Employee Efficiency
With corporate cards, employees no longer need to use their personal funds for business expenses or wait for reimbursement. This reduces the financial strain on employees and increases efficiency as they can quickly and easily make necessary purchases. For employees, this improves their job satisfaction and productivity as they’re no longer financially responsible for purchasing goods or services and keeping hold of receipts to file on time.
Features of a Good Corporate Card Solution
Any good corporate card solution will offer a comprehensive expense management platform that is both robust and user-friendly platform. Key features typically include:
- Easy integration: A good corporate card platform seamlessly integrates with existing business systems, making it easy to implement and manage.
- Real-Time Expense Tracking: Businesses can monitor transactions in real time. This provides instant insights into spending patterns and helps to identify potential spending issues early.
- Customisable Spending Controls: A good corporate card solution allows businesses to set spending limits and controls for each card. This means that the expenses align with company policies and budgets.
Enhanced Security Features and User-Friendly Management Tools
Besides expense management features, a good solution will prioritize security too to protect against fraud and unauthorised spending. Advanced encryption, real-time fraud detection, and two-factor authentication (2FA) are all important features of a good corporate card expense management system.
Besides security, the system should be easy to manage by all. If businesses can oversee and control their corporate spending with ease, there are benefits for the company. Tools like transaction reports that integrate with existing accounting software can simplify the expense reporting process, saving time for those in charge of budgets and accounts. What’s more, a spend analytics feature can provide insights into spending trends and patterns. This can help financial managers to make data-driven decisions about business spending and finances.
Finally, a linked mobile app means that employees and managers can access and manage their corporate cards wherever they are. This means enhanced flexibility and convenience.
Conclusion
Any business needs to realise the importance of managing its expenses well if they want to succeed. Taking care of expenses can be facilitated by corporate expense cards. By using these, businesses can streamline their expense tracking, improve their budget control, and simplify their expense reporting. The benefits are plentiful for both the organisation and its employees.
