Cash flow management, alongside funding, is one of the biggest challenges facing businesses since time immemorial.
Investopedia points out that as a company’s books become more complex and cash flow increases, handling business accounting could become more difficult. For many businesses, this could result in more difficulty managing growth.
There is a nagging question to be addressed here: How do you keep track of and duly attend to hundreds of monthly expenses across various clients, vendors, and partners?
Some business owners and managers attempt to streamline this task by handling these expenses through cash disbursements, bank transfers, and corporate credit cards.
But, these methods often complicate things further by potentially adding more layers of human error to the expense management process while creating a trail of debts and hidden costs.
For forward-thinking businesses, the answer is quite simple: Corporate prepaid cards.
So, how do corporate prepaid cards help?
Businesses with custom prepaid cards fund the cards with a specific amount of money to pay for expenses—whether recurring or one-time expenses. This means being able to actively sort and keep track of expenses, and that could serve as enough reason to embrace prepaid cards.
Before we dive further into the use of custom prepaid cards for business expense management, let’s take a quick look at the common challenges of traditional expense management.
Challenges of Traditional Expense Management
Businesses need to put measures in place to manage expenses. However, when those measures do not serve the intended purpose efficiently and effectively, more problems may arise.
Here are some of the common challenges of traditional expense management that custom credit cards aim to solve:
- Lack of transparency and control: Removing cash from your sales to manage expenses doesn’t sound bad, especially if you document the expense and cash spent. But how about the days you don’t? How about employees who don’t note down the correct amount spent, if at all? What happens when a team member uses a credit card for nondescript services? These and similar concerns make monitoring where and how money is spent a chore.
- Slow approval and reporting process: Manual reporting, approvals, and reimbursement processes could take an unnecessarily long time. This can hinder efficiency when fast action or response is very crucial to progress.
- High transaction fees: These fees often emerge as hidden costs attached to bank transfers and credit card usage. Credit card processing, for instance, costs businesses about 1.15% to 3.25% of the total of each transaction. While these costs are usually attributed to payment processing, businesses also find themselves at the short end of the stick when they constantly engage these methods for their expense management. Businesses paid about $172 billion on these fees alone in 2023, according to the Nilson Report.
- Fraud and financial mismanagement risks: From limited transparency to slow response times, malicious actors can fraudulently exploit numerous loopholes in traditional expense management measures. More so, when employees’ spending goes unchecked, opportunities for overspending emerge.
Thanks to the growing rise of custom visa gift cards, which are prepaid, businesses now have better control of their expenses while gradually eradicating these challenges.
What Are Custom Prepaid Cards?
Fundamentally, custom prepaid cards are a type of prepaid card, usually offered by Visa, that businesses can design to reflect their brand’s identity.
But there’s more to custom prepaid cards than design.
Businesses are also able to implement well-defined spending controls and rules on their cards, such as spending limits and types of merchants that can process their cards.
The flexibility of custom prepaid cards enables businesses to actively control spending by setting limits for employees or designating a card for a given expense—and nothing else.
Custom prepaid cards from payment processors like Visa have automated and well-detailed tracking capabilities. Generally, this translates to higher visibility into the anatomy of a business’s expense processes, significantly streamlining expense reconciliations.
Moreover, setting a spending limit or preloading a card with the exact amount needed for an expense helps to minimize financial risks and their effects, including mismanagement and fraud.
So, how exactly do custom prepaid cards enhance business expense management?
How Custom Prepaid Cards Simplify Business Expense Management
Corporate prepaid cards can help businesses streamline their payments, manage expenses, reconcile accounting, control employee spending, and optimize budgets for each business process. And all of these are possible due to the following features:
- Enhanced transparency and control: All transactions on prepaid cards are electronically recorded in real time, providing clear transaction details that can easily be extracted into common accounting software for effective expense reporting.
- Flexible usage: Prepaid cards are highly adaptable and flexible. Apart from enabling strict spending limits depending on the project or task, businesses can also top up a prepaid card within a few seconds in response to an emergency. Thus, giving them more control of their money while equally empowering them with the agility to adapt to changing business needs in real time.
- Reduced bureaucracy and administrative burden: There is no need to pass forms around to confirm employee expenses and determine appropriate reimbursements. Prepaid cards make things as simple as they could be: this is what you need to pay for, and here is just enough cash for it. Employees are not subjected to the stress of crafting emails and submitting receipts, and the accounting department doesn’t have to divert time that could be spent on business-critical processes to scrutinize or query the emails, forms, and receipts.
- Enhanced security and fraud prevention: Prepaid cards are equipped with various security and fraud prevention measures, such as one-time passwords, 3D Secure (3DS) verification, and EMV chips, to protect personal information and form a barrier between the business and malicious actors.
These features have led to the widespread adoption of prepaid cards for various business purposes by small-, medium-, and large-scale business entities.
Prepaid cards also have the advantage of being free of credit checks, which enables small businesses and startups with limited credit history to get one without hassles.
Real-world Use Cases
You can get a custom card for any activity, project, or task that deserves a place in your corporate budget.
One of the key points here is accountability: setting money aside for a given business activity and being able to control and track all the spending in that direction.
Some common use cases include the following:
- Corporate travel expenses: Manage employees’ travel costs by loading a specific or appropriate amount in an employee’s prepaid card to cover all the identifiable expenses they make on a business trip.
- Retail and supply chain purchases: Top card providers like Visa allow merchant category restrictions on all their prepaid cards, including corporate Visa gift cards. Essentially, you get to set the vendors or suppliers where your business’s custom prepaid cards can be used to make a payment successfully. This could help improve business relationships with your retail partners.
- Marketing and promotions: Having difficulties measuring ROI on your marketing campaigns? You can simply use prepaid cards to allocate funds to different marketing teams and track how much they spend on each campaign.
There are numerous scenarios where having a custom prepaid card could come in handy. You could use it to map out funds to cover all the purchases for a business event, cover the expenses for temporary workers, and manage utility bills, among other things.
The possibilities are endless.
Conclusion
Cash flow management, including business expense management, may be considered one of the top challenges U.S. businesses face, but it’s also a business process that could be easily handled.
Custom prepaid cards have made it very easy for businesses to allocate funds for specified tasks while ensuring maximum control, protection, and tracking of those funds.
Getting custom prepaid cards for your business is a great way to eliminate all the common challenges of manual expense management while simultaneously enabling cash flow management efficiency and effectiveness to secure your bottom line.