Keeping track of expenses in the business world is not a simple task — especially for contract employees. However, expense management and tracking are simplified with the help of expense cards for contract employees.
Managing business-related costs doesn’t have to be complicated, and these specialised cards are proof of that.
What is a business expense card for employees?
In its most basic form, a business expense card for contract employees is a company-issued payment tool to help manage business expenses.
These cards streamline expense reporting, allowing for more accurate expense tracking and efficient management. They come in several varieties, including physical and virtual cards, prepaid cards, and corporate credit cards, each with features and advantages.
Physical cards are plastic cards you can swipe or insert at a point-of-sale terminal. On the other hand, virtual cards exist only as a set of digital numbers and are primarily used for online transactions.
Both types make it easier to manage expenses and offer flexibility in their use.
Prepaid Cards
Unlike corporate credit cards that draw from a credit line, prepaid expense cards must be loaded with a specific amount of funds beforehand. These are ideal for setting spending limits and managing expenses proactively.
Corporate Credit Cards
Corporate credit cards are issued in the company’s name and typically have higher spending limits. They’re commonly used for considerable expenses and often offer rewards programs that benefit the company.
The main difference between employee expense cards and traditional company credit cards lies in the control and accountability they offer.
An expense card for contract employees can often set spending limits individually, and they integrate more seamlessly with expense management software. This results in a more transparent and efficient expense tracking system.
Also, unlike corporate credit cards, most expense card providers don’t require personal credit checks for issuing employee expense cards.
This makes employee expense cards an accessible option for contract employees, helping them separate business expenses from personal expenses without affecting their credit scores.
Understanding how an expense card works
Grasping the mechanics of expense cards can shed light on their effectiveness in managing expenses.
Let’s explore how these cards operate, from their issuance by leading expense card providers to establishing spending limits and the process of expense tracking.
1. Issuing the card
The first step is obtaining an expense card from a reputable expense card provider. The application process is straightforward and can often be completed with just a few clicks online.
Once approved, the company receives physical or virtual cards, sometimes both, depending on their requirements.
2. Setting spending limits
One of the main features of expense cards for contract employees is the ability to set spending limits.
These can be placed individually or by expense categories, offering businesses unprecedented control over employee spending. Setting use limits can help companies manage expenses more proactively, benefiting cash flow.
3. Using an expense management platform
Many expense cards come with integrated software. This platform allows companies to set individual spending limits and monitor real-time transactions.
The platform also allows for easier reconciliation of business-related expenses, ensuring that everything aligns with the company’s financial policies.
4. Expense tracking and reporting
Effective expense tracking is facilitated by automated expense reports generated through the expense management platform. Employees can easily submit expense reports, which are then reviewed for compliance with company policy.
In some systems, features like mobile receipt capture simplify the reporting process further, making it easy to match transactions with their corresponding receipts.
5. Defining types of transactions
Expense cards can be used for online purchases or to buy office supplies. They are also efficient for handling online transactions, including multiple currencies, which can be particularly useful for companies operating across borders.
How to choose the right expense card provider?
Making an informed choice about which expense card provider to opt for is critical. This decision impacts not just cost but also the efficiency of expense management processes.
Here are some essential factors to consider when selecting and looking at some of the top expense card providers in the financial services industry.
Cost
Expense cards can range in price, often determined by their features. Some come with monthly fees, while others may charge per transaction. Understanding the cost of owning an expense card is essential for accurate expense tracking and cost-effectiveness.
User interface
An intuitive interface on the platform is essential for effective management. The easier it is for employees to navigate, the more likely they will submit expense reports and adhere to company policy correctly.
Features
The range of features varies from setting individual use limits to automated expense reports and mobile receipt capture. Some cards even offer rewards programs. Choose a provider whose features align with your company’s specific needs.
Benefits of using expense cards
Expense cards offer many benefits that streamline expense management and offer convenience, cost savings, and flexibility. Explore these advantages to understand why they’re quickly becoming the first option for businesses and contract employees.
- Ease of use
- Convenience
- Efficient expense management
- Financial perks and savings
- Flexibility in multiple currencies
- Rewards programs
When to choose a corporate credit card?
While expense cards are increasingly becoming the go-to option for many businesses, traditional corporate credit cards still have their place.
It’s essential to understand their advantages and disadvantages, especially when comparing them to expense cards for contract employees, to make an informed decision.
One of the primary advantages of corporate credit cards is the credit line they offer. This can be particularly beneficial for businesses that require a significant amount of upfront capital for things like travel or large equipment purchases.
They’re also a good choice if you want to take advantage of complex rewards programs to save money in the long run.
Businesses with long-standing relationships with credit card companies may also find this option more suitable. However, corporate credit cards often require personal credit checks, which might not be ideal for every employee.
In contrast, if your primary concern is to manage business-related expenses with greater control and less administrative hassle, especially for contract employees, then expense cards are likely the better choice.
Management software often complements these cards, making monitoring transactions and managing expenses easier.
Automated expense reports and mobile receipt capture
One of the immediate advantages of using expense management software is the automation of expense reports.
Say goodbye to the tedious task of manually collecting receipts and inputting data. The software can often sync directly with your expense cards, pulling in real-time transactions.
Features like mobile receipt capture also streamline the reporting process. An employee can simply snap a photo of a receipt, and the software will automatically match it with the corresponding transaction, thereby facilitating more accurate expense tracking.
This software usually comes loaded with features that enable businesses to control spending effectively. You can set individual limits, categorise expenses, and even flag transactions that don’t comply with company policies.
This high granularity enhances employee expense cards’ utility and ensures a more disciplined approach to spending. Integrating the software with your expense cards is a wise financial decision if you want to manage business-related expenses precisely.
Seamless integration with accounting software
Most top-tier expense management software will offer integration capabilities with popular accounting software.
This feature saves hours of manual data entry and minimises the risk of errors. It enables the accounting department to have a real-time view of expenses and cash flow, improving the overall efficiency of financial operations within the company.
Best practices in managing employee spending
Untangling the intricacies of employee expenses can pose a challenge for businesses. Yet, the right suite of practices can considerably simplify employee spending management.
These can span from establishing thoughtful spending caps to diligently monitoring transactions and astute categorisation.
1. Setting spending limits effectively
One of the first steps in managing expenses is setting appropriate limits. While the software often has features to set these limits, balancing frugality with practicality is the key.
Adjusting these limits according to contract employees’ roles, responsibilities, and past spending behaviours is crucial for maintaining a healthy expense sheet.
2. Monitoring transactions for authorised business expenses
Staying vigilant about how employee expense cards are used is vital. Most expense card providers allow real-time monitoring of transactions, enabling companies to identify unauthorised or suspicious expenses quickly.
To ensure that all transactions are legitimate, it is essential to routinely check the card’s activity against the list of authorised business expenses.
3. Using expense categories for smarter financial decisions
When utilised effectively, expense categories can be invaluable for better financial oversight. Categorising each transaction helps better understand where the money is going.
This, in turn, can help the employee and employer make intelligent financial decisions that contribute to the company’s bottom line.
4. Submitting expense reports for reimbursement
The expense management cycle comes full circle with submitting expense reports for refund. Most platforms facilitate easy report submission with just a few clicks.
Employees should adhere to the company’s reimbursement policies, ensuring that they submit their expense reports promptly for timely reimbursement.
The convenience of virtual expense cards
Virtual expense cards are essentially digital versions of traditional plastic cards. Top expense card providers generally issue and integrate them into your management software.
The virtual cards are often easier to issue, with most prepaid card providers enabling setup within just a few clicks.
These cards are handy for contract employees who may not have easy access to the company’s physical location but still need to make authorised business expenses.
Situations where virtual cards are preferable
The most apparent benefit of virtual cards comes to the fore when dealing with online transactions.
Virtual cards are handy for purchases that don’t require a physical card, such as online purchases of software, office supplies, or even booking flights and accommodation for business trips.
Their utility in facilitating online transactions efficiently helps streamline the processes.
How do virtual cards and physical cards complement each other?
While virtual cards offer specific advantages, they are not intended to replace physical cards entirely. Instead, they serve to complement them.
For instance, a physical card may be more suited for in-store purchases or situations that require a tangible card. Virtual cards, on the other hand, are preferable for online purchases and can be generated on the fly for immediate use.
Many companies offer physical and virtual cards, ensuring employees can choose the most appropriate payment method depending on the expense’s nature.
Conclusion
Managing business expenses involves multiple stakeholders, from contract employees to financial managers. Introducing an expense card for contract employees can be a pivotal tool in streamlining this often complicated process.
Choosing the right card for contract employees is not a decision to be taken lightly. Various factors must be considered, including the user interface, cost, and additional features.
The same level of scrutiny should be applied when selecting expense card providers and management software. Remember, the ultimate goal is facilitating more effective processes, contributing to positive cash flow, and enabling smarter financial decisions.
In the business world, staying ahead of your expenses is not just good practice — it’s a necessity. Therefore, investing in the right tools, including expense cards and software, is akin to investing in your enterprise’s long-term sustainability and success.
By adopting these technologies and best practices in expense management, you can focus less on the minutiae of financial tracking and more on the bigger picture — growing your business.
FAQ
How does an expense card work?
Top expense card providers issue an expense card that can be easily managed via a platform. The card has set limits that can be customised for individual contract employees.
Expense tracking and reporting are simplified, thanks to real-time updates and seamless integration with management software. Employees can use these cards for various transactions, including online purchases and office supplies.
What are the benefits of expense cards?
Expense cards offer numerous advantages, including ease of use, convenient expense management, and financial perks like savings on foreign exchange fees.
They also provide the flexibility of managing expenses in multiple currencies. Many cards come with rewards programs that benefit employees and employers, making them a win-win for everyone involved.