How to manage employee expenses using corporate credit cards
Managing employee expenses by giving them cash in advance is doable when you’re a small business just starting out. But when you have a lot of employees making a lot of expenses, it becomes more difficult to manage.
Cash in advance doesn’t cut it anymore, and reimbursements are slow and tedious. A good alternative solution is to start using corporate credit cards to manage your employee expenses.
By equipping your employees with corporate credit cards, they have an easy way to make company expenses while you have an equally efficient way to track and control their spending.
What are corporate credit cards?
Corporate credit cards are used by companies for business payments. Using corporate credit cards allows employees to make expenses on behalf of the company without having to shell out their own money.
They can swipe their card or input their card number and access company funds that way when they need to make a purchase.
With corporate credit cards, all employee expenses will be logged and tracked in a card system. This way, the finance and accounting teams can get full visibility of all business transactions made.
How do corporate credit cards work?
Corporate credit cards function similarly to personal credit cards. Anywhere you can make a payment with a personal credit card, you’ll be able to do the same with a corporate credit card. You’ll then be charged your total credit usage at the end of your billing cycle.
Just as with any other credit card, you will get a credit limit on your corporate credit cards and must clear your payments for every billing cycle.
The biggest difference from personal credit cards is that no individual cardholders will be charged. Instead, your credit bill will be charged to the company’s bank account.
Want to explore your options? Check out our guide on the Best corporate credit cards in Australia in 2024.
Advantages of using corporate credit cards for employee expenses
Reducing administrative costs
Many corporate card providers offer great pricing for their card plans. By making the switch to corporate credit cards, you may get cheaper administrative fees than applying for multiple personal credit cards for your company directors.
Not only that, but you’ll also be switching away from a lot of manual administrative work within your team. As a result, you’ll be reducing time spent on it and saving money by automating your processes.
Simplifying expense management
Your entire expense management process will be streamlined by using corporate credit cards. For one, you’ll be bypassing complicated reimbursement processes when employees can make expenses with their cards.
You also get the added benefit of card expense management software, which helps everyone track expenses from one dashboard. There’s no desk-hopping or chasing papers around required.
Better control over employee expenses
Corporate credit cards give you the ability to set spending limits on all the cards you issue. Instead of worrying about how much your employee expenses will turn out to be, you can proactively set limits to ensure that it doesn’t happen.
You can also restrict some vendor categories according to your needs, reducing the risk of card misuse. With proper spend controls set up, employee expenses will stay within your policies.
Improving cash flow management
According to your invoice terms, sometimes you’ll have customers who pay at a much later date. In this case, even though you know that you’ll have cash inflow, you may not have a lot of cash on hand. Using corporate credit cards can help tide you over until your customers’ payments go through.
Cash flow management will be much smoother when you have access to credit, especially if you have time-sensitive payments that you don’t want to miss.
Less risk of fraud and fake payments
Compared to cash advances, you run into less risk of fraud with corporate credit cards. When your employee expenses are made through cards, it would be impossible to fake or doctor payment receipts. All transactions will be automatically updated on your card management system.
On the off chance that an employee loses a card, you can also immediately freeze and block cards to ensure that there is no card misuse.
Cards to all employees
When your employees have to rely on the company director’s personal credit card, a lot of payments can end up getting delayed. There’s a lot of passing around the card, meaning that the card will be hard to track, and getting your hands on it takes time. This becomes difficult to track and monitor the spends.
With corporate credit cards, you won’t run into this problem. You can issue cards to all your employees, allowing them to easily make expenses under each name.
Manage all your business expenses easily with Volopay cards
Who are eligible to get a corporate credit card?
As their name suggests, corporate credit cards are only for business use. This means that you can’t procure a corporate card as an individual looking for personal credit cards. Instead, you must be applying for a corporate credit card on behalf of a company.
Typically, basic requirements for a company to be eligible for corporate credit cards include having a registered and incorporated business, as well as having a business bank account.
Some corporate card providers also will have a minimum number of employees as a requirement that has to be met. Similarly, there may also be a minimum monthly transaction value that card providers look for from businesses applying for corporate cards.
If your business is registered, incorporated, and has been running for at least 6 months to a year, then you are likely eligible for corporate credit cards.
However, each credit card provider will have different requirements, so be sure that you know the exact requirements of the specific provider when applying.
Do you know, Corporate cards helps businesses to simplify and manage all sort of expenses? Check out our article on why every business should have corporate credit card and get your corporate cards now.
How to manage employee expenses using a corporate credit card?
Set expense policy
It’s necessary that you have an expense policy in place before you issue corporate credit cards to your employees.
On top of that, you should also set clear card policies and make sure that everyone is on the same page about card expenses, reporting, and other card workflows.
It will make the corporate card implementation process easier, but you’ll also get the most out of your cards. Use corporate cards parallel to and in compliance with your expense policies.
Set spending limits
Not all departments or employees will have the same expenses. Each cardholder will have different needs, which makes it wise to set spending limits according to the cardholders’ requirements.
With card-specific limits, you can ensure that all employee expenses are made within the budget. If any employee needs a limit increase, they can request it and go through an approval workflow before getting the increase.
You won’t run into out-of-policy expenses and as a result, your expenses will be easier to control.
Issue cards to employees
Corporate credit cards don’t have to be a rarity within your company. Instead of limiting card issuance to your upper management or only assigning one card per department, you should equip more employees with cards.
While you want to consider each cardholder properly, you also want to utilize cards to make employee expenses easier.
Having your employees have to share cards or go to their department head every time they want to make an expense defeats the purpose.
Monitor and control spending
You can link your corporate credit cards with a card management dashboard to view all the transactions that have been made on all your cards. This way, you have a complete view of your spending, making it easier to monitor.
Utilize your card management system to regularly check your spending and make sure that everything is within the budget. Take advantage of these features to make the most of your cards for employee expense management.
Set multi-level approval process
It’s not uncommon for companies to have a multi-level approval workflow in place.
You can use the same approach with corporate credit cards and set up a multi-level approval workflow, where there are multiple people who have to review card expenses and approve card limit updates.
If you’ve not implemented a multi-level approval process previously, doing so with your corporate credit cards is a good starting point, as it helps ensure that every concerned personnel is aware of all card spending.
Track expenses
All your employees’ card expenses will be reflected in real-time on your card management software. Individual cardholders will have access to the transaction data, as well as your finance team and other necessary personnel.
You won’t have to chase down different people to get this data, meaning that you can track expenses from anywhere at any time. It’s good practice for your finance team to regularly check these card transactions and track where money is going.
Reconcile expenses
Reconciling your expenses is an important part of the bookkeeping process, as it ensures that you have accurate data across the board.
You want to be sure that the data in your ledger matches the expenses that you and your employees have made on your cards. Many card providers offer integration with your accounting systems, meaning that the reconciliation process can be automated.
Automatic two-way sync ensures your card data has been reflected correctly on your accounting system and vice versa.
Regularly audit the usage
You may be monitoring and tracking your employees’ corporate card usage through the card expense management software and making note of what expenses are being made, but it shouldn’t stop there.
Take advantage of your corporate cards and expense management tools to ensure that your expenses are managed appropriately. It’s good practice to regularly audit your card usage and review your policies accordingly.
If you find some expenses are higher than you’d like, for example, you can adjust your limits and budget during this process.
Volopay cards - the best solution to manage employee expenses
Make managing your employee expenses easier and better with Volopay. Say goodbye to complicated reimbursement workflows and time-consuming expense reporting.
Instead of relying on tedious manual processes, you can gear your team up to be more efficient and free up their time to achieve higher productivity. At the same time, you’ll also get better visibility and control of your employee expenses.
Access detailed expense data on your card management software at any given time. With real-time updates, automated multi-level workflows, and built-in spend controls, you won’t have to worry about employees overspending or any untracked expenses.
You can guarantee that all employee expenses are made according to your budget and adhere to your company policies. It’s a win-win situation for everyone—employees get to make expenses easily while your finance team gets to track everything hassle-free.
Issue corporate credit cards for your employees, link them with Volopay’s card management software, and you won’t have to worry about employee expense management. Have a reliable way to make and manage employee expenses with Volopay.
Simplify your employee expenses and reimbursements with Volopay cards
FAQ's
Corporate cards are a way to manage your company expenses better. Instead of relying on lengthy reimbursement processes or giving your employees cash in advance, —which can be difficult to track—you can equip your employees with corporate cards to easily make trackable expenses. By linking your corporate cards to a card management system, you can view all employee expenses and ensure that they are controlled.
Like personal credit cards, corporate credit cards can be used to make both offline and online payments. You and your employees can use your corporate credit cards at any vendors that accept card payments. This includes offline payments at restaurants or retail stores as well as online payments like hotel bookings and digital marketing ad payments.
Corporate cards are more convenient for making business expenses. Unlike using a personal credit card, companies can track all expenses made on corporate credit cards. Not only that, but company expenses are also easily segregated from any personal expenses. Monitoring company spending is a much easier task with corporate cards.
To be eligible for a corporate credit card, you’ll have to be a registered business to apply. Once you have been onboarded with a corporate credit card provider, you can then issue cards for your employees. Corporate cards that are under your company name can only be issued to registered employees and used for company spending.
With corporate card providers like Volopay, you’ll be able to link your cards with a dashboard where you can monitor your employees’ card expenses. This card expense management system can be accessed by the cardholders, finance team, as well as any other authorized personnel depending on their level of access authorization. When card expenses are made, they’ll be immediately reflected on the system for easy tracking.