Run out of printer toner? Need to place a recruitment ad for sales? Taking a client out for lunch? Businesses across Australia have historically embraced the corporate credit card to ensure that staff can pay for supplies that keep operations humming. However as we’ve shifted towards remote working, the days of popping over to finance to borrow the corporate card are long behind us.
The pandemic has forced many businesses to review and adapt their purchasing and expense management processes for a distributed workforce. Further, many larger businesses also want stricter controls to prevent wayward spending rather than trying to claw back incorrect expenditure.
It would seem that the days of the plastic corporate card are numbered, but is that reflected in employee sentiment towards it?In a recent report commissioned by DiviPay, it was found that the majority of Australian employees with access to a corporate credit card find it convenient for work related expenses (70%).
Among those who don’t have access to a corporate card, 37% wish they did at their current company. Overall, 59% of Australian employees would prefer to work for a company that provides access to a corporate card.
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From a business perspective, corporate credit cards give businesses the flexibility in spending to ensure business moves at maximum speed.
Unfortunately, corporate credit cards also make it a little too easy to spend. About a quarter (26%) of Australian employees with access to a corporate card admit to having used it for non-work purposes. That number increases substantially in mid-size companies (37%, 100-1,000 employees) compared to very large companies (12% at companies with 1,000+ employees).
This highlights the main drawback of corporate credit cards: they are a blunt instrument when it comes to allocating spend. An employee can use a credit card with any supplier for a purchase of any value up to the maximum spend limit on the card. Within that limit, there’s no way to set budgets for various types of expenses such as accommodation, meals, transportation, and so on.
If you’re handing out corporate credit cards then you should have guidelines for expenditure, backed by limits on maximum spend. The finance team should periodically review expenses to ensure that they fall within guidelines, and if not ask for an explanation.
However, not every business has the resources to provide sufficient oversight. It can take the finance team hours to check that expenses are in line with historical trends, incurred with preferred suppliers, and accounted for at expected times and locations. (A taxi fare could be a legitimate work expense but if it occurred at 3am Sunday morning it probably wasn’t.)
For this reason, businesses can be reluctant to trust employees with corporate credit cards. Once the money has been spent it takes time and effort to determine whether the expenses were correct. It takes even longer — and more effort in the form of difficult conversations — to reclaim those funds if they weren’t spent correctly.
While the corporate card may not yet be kaput, the pandemic together with changing attitudes around spend risk have amplified the issues with traditional plastic corporate cards.
So, what’s the solution?
Just as we have reimagined so many aspects of our working world through implementing smarter and more flexible processes, expense management should be no exception.
Virtual credit cards provide much higher levels of control to businesses of all sizes, while giving employees the flexibility they need to keep a business moving at pace. The high interest among employees in virtual credit cards indicates that they will be welcomed as a sensible upgrade to the corporate credit card.
The pandemic has forced many businesses to implement smarter and more flexible systems to match their employees’ work arrangements. Expense management is no exception. Virtual credit cards provide much higher levels of control to businesses of all sizes, while giving employees the flexibility they need to keep a business moving at pace.
DiviPay is an all-in-one virtual business card and expense management platform that enables finance teams to better manage, control and streamline spending across their organisation. DiviPay’s easy-to-use web and mobile app comes with instant virtual expense cards, bill pay, card controls and budgeting, a real-time transaction feed, powerful accounting integrations and subscription spending. Businesses have used the DiviPay platform to process over $110 million in business payments.