Spend Management Can Help Maximize Your Corporate Cards

Businesses have tried to lessen expense reporting headaches by having employees use a mix of personal and corporate cards when making purchases. Even when cards are used, though, expense management can still be a time consuming process with just as many headaches.

A new approach to organizing and reporting expenses, called spend management, can transform traditional expense management from a manual, cumbersome process into a valuable source of real-time information.

Here's a look at several ways that personal and corporate cards can be rolled out in a company and the challenges posed by each scenario.

Scenario #1: Employees Using Personal Cards

Some companies ask employees to front their own money to make business purchases. In this scenario, the employee must keep track of receipts and spend time filling out expense reports. Either a manager or the accounting department then reviews and approves the expense for reimbursement.

Potential Problems

• No visibility into what is being purchased by the employee until the accounting department sees the expense report
• Employees may not have the credit available to make purchases, leading to some highly awkward conversations
• Employees may need to wait up to several weeks before getting reimbursed

What You Can Do

• Expense reimbursements can be eliminated by issuing one corporate card per employee. Employees will no longer need to wait multiple weeks to get reimbursed, while management and your accounting department no longer need to process expense report-related paperwork since all documents are now digital.

Scenario #2: Employees Using Company Cards for Frequent Travel

Frequent travelers are usually provided with a company card to pay for business-related expenses. The employee makes a purchase, keeps the receipt, then fills out an expense report following the trip.

Potential Problems

• It's easy to lose receipts while traveling. This could potentially lead to post-spending approval friction between the employee and the manager
• The credit card may not categorize the charge, adding manual work
• Management can't immediately address spending problems because expense reports are usually for transactions that are 30 to 60 days old

What You Can Do

• Creating budgets for all employees who have access to a card can enhance your company's culture by eliminating friction from the post-spending approval process.
• Eliminate expense reports by snapping a picture of a receipt in the Divvy app, when needed, then throwing it away. The employee assigns the transaction to a budget and a category within the pre-approved budget.

Scenario #3: A Standard Business Card Being Shared by a Department

Designed specifically for companies and offering unique benefits, business cards normally feature higher credit limits, and the opportunity to earn more rewards points. For these reasons, each department within a larger company is provided with its own card to share among employees.

Potential Problems

• There could be a pre-approved budget for a department, but no enforcement of that budget
• Setting individual employee budgets would involve more manual work if there’s only one card to be shared within a department
• Vendors have the ability to automatically charge a payment with no controls on how much can be charged

What You Can Do

• Help enforce internal controls as part of a revised expense management policy.
• Implement virtual cards that can be used for security and compliance purposes. Each vendor could have their own card, for example, which can be pre-funded so an authorized employee can make a payment. Virtual cards can be frozen when not in use.
• The coding of a transaction can be automated; your accounting department no longer has to spend time tracking down an employee to explain how an expense should be classified in the chart of accounts.

With a proper rollout of corporate cards, your business can transform a time-consuming expense tracking policy into a value-added spend management policy.

One option for properly rolling out corporate cards in your business is to partner with Divvy, a free, all-in-one expense management solution that gives small and midsize businesses the credit they need while helping save time and money by automating expense reports, budgets, and reimbursement processing.