Expense cards for employees: a guide for CFOs

Cash leakage is, unfortunately, one major pain point that every business will have to face. No matter how carefully your recruiting team vets new employees, the threat of corporate credit card misuse is very real, especially without the proper controls in place. 

At the same time, time-intensive expense oversight and approval processes take budget controllers away from their other essential duties. 

That’s when expense cards for employees come into play. The capabilities of the corporate expense cards currently on the market go much further than you might expect. 

Today, improved controls, automation, and even AI-powered functionality can help rapidly-scaling businesses address and prevent expense account misuse. And, importantly, these tools can play a pivotal role in your strategic initiatives concerning companywide accountability and transparency. 

Using expense cards as a tool for transparency and accountability

What are expense cards, and what makes them different? How can you use expense cards as a culture-building tool for your organization? 

Traditional company credit cards are straightforward to set up and use. You open them through your business banking provider or a popular credit card brand. In these cases, the CEO, CFO, office manager, and perhaps 1-2 other leadership staff hold company cards.  

What ends up happening: 2-3 company cards in the CEO’s/CFO’s names are passed around among multiple employees. Available credit is hard to suss out when big purchases are on the horizon. Expense reports become a wild goose chase. And the accountability process becomes murky. 

This system doesn’t scale. It doesn’t necessarily translate to better oversight. Plus, when teams or individuals don’t have direct access to funds when needed, they can’t do their jobs as effectively. 

At a certain point, founders and CFOs must let go of the traditional company credit card method. As your team begins to scale, it’s in the company’s best interest to embrace a solution that helps employees do what you hired them to — without compromising your peace of mind. 

Here’s what makes the expense card a CFO’s best friend: they afford greater oversight and control without compromising usability. 

Expense cards are a payment method that allows employees to spend company money and enables strict oversight for budget managers. This solves 2 key problems for business leaders: 

1. Easy to use for approved spending. Expense cards enable employees to access company funds for essential tasks. They replace the need for employees to put up their own money and request reimbursement, as well as the old-school method of passing around 2-3 company credit cards registered in the officers’ or team directors’ names. 
2. Holistic oversight and granular control. Unlike traditional corporate credit cards, budget managers leverage expense card software to set precise rules on spending behavior. These rules can apply companywide, but managers also gain precision control over department, team, or individual use limitations. 

As the business rapidly scales, expense cards alleviate the worry that comes with providing broader access to company funds. And innovations in the associated software reduce the overall time investment in processing expense report approvals, auditing usage, and reconciling budgets versus actual spending. 

For these reasons, expense cards are transformational for businesses, and agile teams are reaping the benefits. 

If you’re ready to onboard an expense management system for your oroganization, you should know there are 3 categories of expense cards for employees:

• Prepaid expense cards
• Debit cards
• Credit cards 

What type of business will be best served by these 3 expense card types, and what are the pros and cons of each? Let’s dive in. 

What are prepaid expense cards for employees?

Prepaid expense cards function exactly as their name describes. Finance directors and budget managers prepay a determined amount per expense card. Then, individual employees use their assigned card to make approved purchases. Backend software provides oversight, audit, and reconciliation support. 

Benefits of prepaid expense cards 

As companies expand and mature, accountability and transparency must become mission-critical priorities. Founders and CFOs should strive to create alignment for these values within the standard practices that keep the business moving forward. 

If you do, you can expect to increase your valuation, credibility, and overall fiscal discipline.

Prepaid expense cards can be used as a tool to ingrain accountability and transparency into the fabric of your operation. Finance directors and business vertical leaders collaborate to prepay the exact amount of funds every employee is authorized to spend. Often, you’re able to issue the funding amounts based on departments, teams, and titles. 

If you know exactly how much needs to be spent per team, the prepaid method introduces precision into the process — which is difficult to achieve with other types of expense cards. The outcomes include reduced fraud opportunities, complete transparency into available funds per user and department, and increased accountability to stay within budget limits. 

Drawbacks of prepaid expense cards 

While prepaid cards help reduce the possibility of fraud, they also make extraneous circumstances more difficult to overcome. This system is designed to present bottlenecks if employees need to charge amounts above the prepaid limit. Prepaid cards might not be your best bet if you expect this to happen frequently. 

Use cases for employee debit cards

Employee debit cards are most useful to teams operating in the field that require regular access to cash. But providing debit cards to employees feels risky. There needs to be a traceable system that doesn’t create administrative headaches for card users and budget approvers. 

If accountability is a value you prioritize, make sure it’s as easy as possible to fulfill those obligations. When selecting a debit card and expense management provider for field teams, make sure a mobile app is offered so they can keep track of spending as they go. 

Benefits of employee debit cards

When paired with expense management software, accountability for debit card purchases and cash withdrawals becomes possible. Assigning one debit card per field employee allows transactions to be traceable back to individuals. 

Finance directors can take additional proactive steps, such as setting limits on cash withdrawal amounts and frequency. And budget controllers can empower card users to do their jobs well, knowing their team trusts them to do what’s right.

Drawbacks of employee debit cards

Debit cards are not an ideal payment method for employees booking hotels and rental cars, which typically require a deposit payment hold that could be hundreds or thousands of dollars per transaction. Credit cards are better equipped for these use cases. 

Best practices for employee credit cards

Credit cards are the most common type of expense card for employees. 

There’s the traditional method of obtaining them: companies take out a line of credit with a credit issuer and distribute individual credit cards and credit limits to employees and teams. Then, there’s the modern approach: working with an expense management system that issues virtual and physical credit cards and unites purchases, receipts, reconciliation, and reports under one roof. 

Benefits of employee credit cards

Credit cards are arguably the most flexible, user-friendly expense card solution. They enable employees to make purchases and travel without worrying about fronting their personal money or credit. 

Some providers issue both virtual and physical credit cards, which suit a variety of use cases. 

Drawbacks of employee credit cards

Since credit limits and approved budget amounts usually aren’t synced, it’s harder to prevent employees from overspending. This isn’t necessarily a drawback if you have other controls in place that create transparency for finance directors and budget controllers. 

Virtual employee expense cards: Worth the hype?

Another common misconception about expense cards for employees is the need for physical cards. 

Today, the leading expense management providers issue virtual cards. They’re convenient, effective, and safe. Let’s unpack why virtual cards are the best solution for growing companies: 

1. Virtual cards are easier to keep safe. They mean no more lost cards, no more waiting for physical card replacements to arrive in the mail, and fewer administrative burdens for finance teams. 
2. Virtual cards are easy to turn on and off. Finance directors can click 1-2 buttons to revoke virtual card usage when card misuse, fraud, or employee termination occurs.
3. Virtual cards are agile. Users can save them to a mobile wallet for in-person purchases. This feature serves employees who travel and use a company-paid cell phone. 

Simply put, if you don’t implement a virtual expense card system for your business, you’ll quickly grow past the limitations of physical cards. 

How to select the best expense card solution for employees

Giving your employees freedom to operate versus maintaining hands-on control over spending — this is the classic tension facing founders and CFOs when selecting an expense management solution. 

Today, it’s possible to tackle both ends of this problem at once. But to achieve that outcome, the c-suite must be open to exploring alternatives to holding a limited number of company credit cards. 

Here’s what you should look for when evaluating your options. 

Accountability features 

If your objective is for your expense management solution to support your company’s accountability culture, examine how the platform’s features can help you get there:

• Does the platform enable users to access a unique expense card and an individual expense report?
• What access and insights do managers have into employee spending?
• What approvals are required to complete an expense report cycle? 

Budget integration 

Remember that transparency is a two-way street. While you may be interested in understanding spending behavior or even getting into granular transaction details, your card users also deserve similar insights. 

Some expense management platforms offer budget integration features that enable individuals and teams to gain visibility into the current budget cycle and real-time, available funds. With transparent budget data at their fingertips, they can make better-informed decisions and address issues proactively.

User-friendliness 

While keeping a tight rein on expense management is essential to the health of your business, you should also consider how your system impacts the day-to-day employee experience. 

For example, if your employee expense cards are so tightly regulated that they’re difficult to use, you’re making it harder for employees to do their jobs. This will create friction, particularly among your most loyal employees.  

Check out reviews from both administrators and expense cardholders to get a feel for the user-friendliness of expense management platforms. 

Cloud-based web and mobile apps

Whether your team is dispersed, remote, or in the field, a cloud-based expense management solution will be your best bet. It should offer both web-based and mobile-based access. 

Your best bet is to select a cloud-based provider that can provide the following top features:

• Automated receipt capture via mobile app
• Virtual and physical card issuance 
• Credit, prepaid, and debit solutions, if applicable 
• Easy on/off switch to individual or team expense cards
• Real-time syncing for up-to-date insights 

Best corporate expense card providers

There’s no shortage of SaaS providers delivering modern expense card solutions. The following 5 expense card providers are ranked 4.6/5 stars or higher by reviewers on G2 Crowd 

• Airbase (4.8/5 stars)
• Pleo (4.8/5 star)
• Spendesk (4.7/5 stars)
• Ramp (4.7/5 stars)
• Center (4.6/5 stars)

Take a look at the latest expense management provider rankings to locate the best partner for your business.

Keeping your eye on the horizon 

As your company grows, you’ll have to continue deciding how best to outsource key administrative tasks. Ultimately, if your business is to succeed long-term, you need to become well-practiced with delegation. 

Do you really need to know every time a new monitor needs to be ordered or where your field staff had lunch last week?

Onboarding an expense management solution is a liberating decision. You’ll empower your employees while maintaining the appropriate degree of oversight to keep costs under control. 

Your expense card system can also help your employees thrive. When you entrust your employees with the resources they need, such decisions contribute to a loyal, connected company culture. 

Adopt the right tools, and you can allow your staff to make purchases safely, efficiently, and compliantly. They’ll allow you to maintain your focus on what’s most important: growing the business, keeping your investors happy, and building a workplace that holds onto your best and brightest employees.