Utilizing employee credit cards as an expense management tool is helpful on a number of levels. For example, credit cards eliminate the need for time wasting expense reports and costly reimbursement checks. Conscientious use of credit cards can allow a business to build its credit rating and improve its credit score. Employee credit cards also have many features that allow the company and its administrators to control how the cards are used. In this article, we’ll go over twelve benefits of issuing an employee credit card with controlled budget.
1. Control Expenditures
By issuing credit cards with an employer set budget, administrators are able to keep track of and stay in control of the company’s expenditures. Without budget controlled credit cards, it’s possible for employees to overspend which could result in financial disaster. A credit card with budgetary controls ensures that once an employee reaches their pre-established card limit, further purchases will be denied. This allows the company’s administrators to review the charges made in real time and prevent costs from spiraling out of control.
2. Predict Costs
Annual budgetary forecasts are an important part of planning for business growth, budget creation and setting the groundwork for loans or other financing opportunities. Assessing the costs associated with employee expenses is much easier with an employee credit card with controlled budget than it is with open ended expense accounts. By knowing the maximum amount each employee is able to spend, spending forecasts can be based on actual numbers rather than guesswork.
3. Limit Fraud
Although it’s something that no one really likes to think about, employee theft and fraud is unfortunately an all too common occurrence. By creating spending limits, setting approved purchase categories and having the ability to immediately cancel an account, fraudulent credit card activity can be curtailed. Although unapproved charges still have the possibility of occurring, by implementing budgetary controls, the damage they can cause can be kept to a minimum.
4. Meet Financial Goals
By administering budgets on employee credit cards, it becomes easier for your company to meet its financial goals. Enforced budgets limit expenditures and, more importantly, makes them more predictable. This predictability means your expenses will more likely align with the financial priorities you’ve set. It’s possible to use budget controlled credit cards as an extra tool to help achieve the company’s financial goals.
5. Increase Profit Potential
By having an understanding about how your employee credit cards are used and the costs associated with them, your company is more likely to achieve its projected profit margins. By limiting the amount of money allocated for expenses through the use of credit card budget controls, profit levels are certain to rise.
6. Create Better Employee Understanding
When limits are placed on employee credit card expenditures, the employees themselves get a better understanding of how their spending affects the company’s overall health. Without budgetary controls, employees may think their spending has no effect on the wellbeing of their employer. However, when budgets are enforced, an employee will likely watch their spending more carefully to ensure they don’t overstep their limits. This extra attention helps employees better understand the consequences of their spending.
7. Promote Employer/Employee Trust
When budget limits are enacted, an employer doesn’t have to worry about watching every cent their employees are spending. The employer can rest assured that once a specific limit is reached, the financial taps are turned off. Similarly, knowing that certain purchase categories or cash advance abilities are unavailable, employers are able to be more at ease regarding employee expenditures. From an employee’s perspective, being freed from constant scrutiny related to spending engenders a feeling of privilege and flexibility which can contribute to the overall morale of the company.
8. Reduce Administrative Tasks
By enacting budget controls at the source of spending, the company’s administrative team will need to allocate less time towards going over credit card statements, analyzing expenditures and tracking down unauthorized purchases. With the ability to preemptively rule out entire classes of disbursements, administrators can prevent unauthorized spending from occurring in the first place.
9. Mitigate Cash Flow Problems
With budgetary controls in effect on employee credit cards, employers and administrators are better able to predict cash flow and mitigate any problems that pose a threat to it. As the expenditures begin to reach their limits, administrators have the opportunity to refine the budgetary controls to ensure they don’t run into financial problems. By adjusting the limits and allowable uses of the employee credit cards, a company may be able to avoid a catastrophic cash flow problem that might not be controllable without such administrative abilities.
10. Reduce Personal Liability
By implementing budget controls on employee credit cards, the chances of misuse and abuse are greatly decreased. Corresponding to this reduction in misuse is the lowered possibility of employees being held personally liable for mistakes made with their expense accounts. By not allowing unauthorized expenses to occur in the first place, employers can avoid uncomfortable and possibly embarrassing circumstances for both them and their employees.
11. Reduce Out Of Pocket Expenses
When supplied with a credit card that is paid off by the company, an employee no longer has to use their own money to pay for company costs while waiting for expense reports to be cleared and reimbursement checks to be issued. An employee credit card with a controlled budget allows employers to maintain a cap on their expenditures without causing financial hardship for their workers.
12. Improve Accountability
When individual employees are issued budget controlled credit cards, their spending patterns become immediately apparent to themselves and their supervisors. With real time tracking of expenditures, the accounting department can be absolutely sure of who is spending how much and on what. Budget controlled employee credit cards make expenses accountable which can reduce overspending, misuse and outright fraud.
Emburse Credit Cards
Emburse now offers employee credit cards through a partnership with Comdata, a leading commercial card issuer. Emburse’s employee credit cards offer a wide range of budget controls that can be tailored to your business and the way your workers pay for their expenses. For more information, contact Emburse today.