There’s something about plastic that makes us forget it’s real money, and spend without giving a hoot for the consequences — hence the age-old caution against putting it all on the credit card.
Many business owners will sympathise. There will always be an employee whose sense of responsibility seems to go out the window the moment they are given a corporate credit card. Even more headache-inducing is the commonplace of missing receipts, lost cards, late expense reports and mystery charges.
And that’s to say nothing of the disruption caused by having to replace a card and update every single payment portal, merchant and recurring payment, just to do it all over again when another unrecognised charge inevitably hits your card. Or the employees who are simply careless and lose their card, or the manager who shares card details via sticky notes, photos or any other inherently insecure method.
Even so, it’s impossible to imagine life without corporate cards. There’s no more efficient way of enabling employees to make the purchases they need to get the job done, and they are flexible in ways that cash just isn’t — including one-time invoice payments, for example.
The answer therefore isn’t to dump corporate cards, but to join the growing number of businesses of all sizes that are swapping plastic for virtual.
Ride the trillion-dollar revolution
Virtual cards might sound like something your mother emails you on your birthday, but in actual fact they are simply unique credit card numbers that enable employees to buy items online or over the phone. If that sounds no different from an ordinary credit card, that’s part of the point: they are meant to be as quick and convenient as plastic.
Where they are drastically different is what you can do with them. Because they are digital proxies for real payment cards, they enable managers to control and have visibility over every single payment.
What’s more, with some virtual cards, purchase requests can be pre-coded with a business justification and accounting code where needed, information that stays with the purchase all the way through the accounting process. That means employees no longer have to fill out POs or retain receipts, and the accounting department doesn’t have to reconcile anything when the bill comes in.
Not only are they far less hassle to manage than physical credit cards – budget holders can issue a new one with a few taps of the keyboard – they are also far more secure. Encrypted by default and only capable of being used for pre-approved budgets, they enable organisations to eliminate risk, all the while gaining control over spend and streamlining expenses.
Virtual cards are already a trillion-dollar business, with annual spending touching $2 trillion and predicted to reach almost $7 trillion by 2026, according to Juniper Research. And when you look at the benefits, it’s easy to see why businesses from multinational enterprises to SMEs are joining the virtual revolution.
The business case for virtual cards
First, they make rogue spending a thing of the past, ensuring that employees follow procurement policies and prevent them from circumventing the rules because it suits them, all while simultaneously streamlining the reconciliation process.
Second, virtual cards eliminate the tangle of paperwork and permissions that make procurement and accounting such a task, especially so in the case of SMEs without a dedicated accounts payable team.
Third, they’re secure by design, both in terms of encryption and because they are impossible to lose or mislay – and because they can be cancelled with the click of a button.
And finally, they couldn’t be easier for employees and merchants alike.
None of this is to say that traditional plastic doesn’t have its place. There will always be a need for physical credit cards, for travel and emergencies, say.
But for most online or over-the-phone spending, whether it’s for pens or plane tickets, a virtual card ensures the right person always spends the right amount — and no one else. Meanwhile, every purchase sails right through accounting without the manic monthly hunt to match settlements with invoices.
Every business should give virtual cards a go. Those that do will never go back to plastic.
Written by Mason Burr, director at Tradeshift Go (pictured above)