How Do Corporate Cards Simplify Accounting?

Reading Time: 5 Minutes

Have you ever wondered how some businesses seem to effortlessly navigate the maze of expense tracking and seamlessly manage their financial records? We’ll let you in on their secret: it’s all about the corporate cards.

Corporate cards, such as credit, travel, and virtual cards, provide not only a convenient payment method for employees but also allow the company to monitor and control their expenditures easily. They also ensure complete financial transparency regarding employee spending, helping protect companies against expense misuse of funds.

If you’re thinking about using corporate cards to make your payment processes easier and so you can finally eliminate paper trails, keep on reading. Below, we talk about the benefits of corporate cards to your business and explain how they can help streamline and simplify your accounting.

What Are Corporate Cards and How Do They Work?

A corporate card is a credit card specifically designed for business expenses issued by a company to its employees. It can be used for a plethora of business expenditures, including corporate travel, subscription payments, and even some entertainment expenses incurred while employees conduct business on behalf of their company.

You may be wondering exactly how this works; for instance, do the employees have the freedom to define “entertainment expenses” related to business, and if so, how can you trust them to be truthful?

You don’t; it would be ludicrous to give employees – no matter how hard-working and trustworthy they might be – unlimited freedom when spending corporate funds. After all, this is why expense policies exist. No, the beauty of corporate credit cards lies in their transparency and customizability.

Let us explain. When you issue a corporate card to an employee, you can set spending limits for individual employees and/or restrict card use to very specific categories. Basically, with a corporate card in their pocket, virtual or literal, an employee can make business-related purchases up to a predefined credit limit. Furthermore, every swipe or click is automatically recorded so you can check it out at your convenience.

For example, Moss, one of the more popular spend management tools and credit card platforms, allows you to set not only spending limits but also have a real-time view of all card spending so you can adjust, increase, or pause card allowances via their software.

What happens when it’s time to settle the bill? Simple – your company pays the credit card issuer. It’s a centralized process that simplifies the tangled web of receipts and reimbursements, and the result is a streamlined system that puts you in full control of your company’s funds.

Different Types of Corporate Cards

Corporate cards are not a one-size-fits-all solution. There are many different types of business and business expenses, and therefore, many different types of corporate cards, each catering to different aspects of your business needs.

Corporate Credit Cards

The most popular among corporate cards, these are the go-to for day-to-day business transactions. With a predefined credit limit, corporate credit cards offer flexibility for various expenses while keeping them under your control. They’re easy to integrate with accounting systems, ensuring your financial records stay in tip-top shape.

Purchase Cards (P-Cards)

P-Cards can be credit or debit corporate cards designed to purchase goods and services efficiently. They often come with customizable controls, allowing you to set spending limits and restrictions on specific vendors or categories.

Corporate Travel Cards

If your employees frequently jet-set for business, consider issuing them corporate travel cards. Tailored for traveling professionals, these cards often come with travel-centric perks like airline miles, hotel discounts, and travel insurance.

Corporate Virtual Cards

In the era of digital, well, everything, virtual cards have become ubiquitous. These digital versions of physical corporate credit cards are used for online transactions. Secure and convenient, they provide an extra layer of control by generating unique card numbers for each transaction. Perfect for a world where the office is just as likely to be your couch.

Fleet Cards

If your business involves wheels on the road, consider using fleet cards. These cards are tailored for fuel and maintenance expenses, providing a dedicated solution for managing your company’s vehicles. 

Lodge Cards

These cards are designed to simplify hotel expenses for enterprises heavily invested in lodging. Lodge cards streamline payments for accommodation, making it easier to manage travel expenses related to stays away from the office.

How Can Corporate Cards Simplify Accounting?

Now that we’ve covered the basics of corporate cards, let’s delve into their benefits and how they can help simplify your accounting processes while making your employees’ professional lives much easier.

Real-Time Tracking for Better Decision-Making

The conventional accounting process involves waiting for monthly statements and deciphering transactions like an ancient script. But with company cards, there’s no waiting or guessing: you get instant updates on transactions and easy-to-read reports on spending. Real-time tracking coupled with detailed reports on your company’s spending patterns means you can track all expenses with ease, plus identify cost-saving opportunities for future spending.

No More Paper Receipt Hassles

A desk cluttered with a mountain of crumpled receipts is not a pretty sight, but it’s one that every business professional is unfortunately familiar with. Thankfully, with a corporate card, you can bid farewell to this chaotic scene because every transaction is neatly documented in the digital realm. Each swipe is a digital bookmark, effortlessly organizing your expenses for painless reconciliation.

Simplified Expense Reconciliation

Speaking of painless reconciliation… Since company cards sync with your accounting software, they eliminate the need for arduous manual entries while ensuring that every transaction is accounted for. As a result, reconciliation becomes a swift and stress-free affair, allowing you to focus on strategic financial decisions rather than drowning in paperwork.

Automatic Categorization of Expenses

Business expenses can be categorized into various buckets, including office expenses, travel, advertisements, etc. Aside from being time-consuming (and boring), manually categorizing expenses is also prone to errors. Company cards can be of great help here as well as they automatically sort transactions into neat categories. With corporate cards, you can forget about manual entry errors – and your accounting software will thank you.

Enhanced Employee Spending Control

Corporate cards aren’t just about making your life easier; they can also allow you to manage employee spending more effectively. With these cards, you can set individual limits, restrict categories, and monitor real-time expenses.

Equally important, they can help empower your employees by providing them with autonomy within predefined boundaries. This creates a nice balance between freedom and responsibility.

Robust Fraud Detection

Business cards can also act as a shield against expense fraud and misuse of funds. Thanks to real-time monitoring and alerts for every card swipe or online transaction, suspicious activities are flagged immediately.

Most corporate cards also come with robust security features, including PIN protection and the ability to freeze or unfreeze a card instantly. Moreover, every transaction leaves a trail, making any suspicious activities nearly impossible to slip through undetected.

Conclusion

When used correctly, corporate cards can simplify and streamline accounting processes, transforming a cumbersome task into an easy and seamless experience. From bidding adieu to receipt hassles and embracing real-time tracking to effortlessly sorting expenses into autopilot categories, corporate cards are designed to make your and your employees’ lives easier.

Furthermore, with their customizable spending limits, detailed transaction reports, and robust fraud detection mechanisms, business cards also help protect your company against fund misuse and expense fraud. In short, they can make your entire expense management process more transparent and easier to track and control, ultimately improving your business finances.

I'm Allison Dunn,

Your Business Executive Coach

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