Business expense management can actually help or hurt how well your company works with money! Every single purchase can affect your cash flow tracking, how happy your employees are, and maybe how accurate your budget is – you might not see these effects until something goes wrong. In reality, corporate cards and asking your employees to pay first and get paid back later are two completely different ways to manage your costs.
The way that businesses manage their costs has changed quite a bit with the online tools that seem to give you more control and better oversight. Businesses like Tesla generally save thousands of hours of admin work each year with their streamlined corporate card systems, while other businesses still stick with traditional reimbursement processes to keep their spending in check. As a result, finance teams are looking for services that can make workflows more convenient but still hold people accountable without making their day-to-day work any harder.
The expense system that works best for you should probably match your company’s size and culture and how your team usually spends its money.
When you can track your costs instead of drowning in paperwork, corporate cards typically become very interesting – though they do come with their own set of challenges.
Let’s get started with the parts of this that are now changing how businesses manage their costs.
Corporate Card Pros and Cons
Corporate cards can actually make expense tracking much easier for businesses. You generally don’t have to dig through piles of receipts or fill out any long reimbursement forms. When you use them, transactions typically get recorded automatically in your account, which saves everyone time and cuts back on stress.
Plus your employees won’t need to use their own money when you give them company cards – that means that they rarely have to wait to get paid back for their business costs. It’s also helpful for team members who might not have enough money to cover the big work purchases first.
In most cases, you can set spending limits for different employees with most corporate cards. Just choose who can spend what amount and where they can use the card – this helps prevent any surprises on your monthly statement, and everyone follows your company rules.
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Want to know what’s being spent? With corporate cards, you can see nearly all purchases as they happen instead of waiting until the end of the month – it makes it much easier to find anything unusual or track your project budgets while the money is being spent.
The good news is many of the card programs give you cash back or travel points on your purchases. These rewards can save your company money over time. Some businesses use these rewards for team events or put them back into the company.
Corporate cards aren’t perfect, though. The cards can sometimes be used for personal costs if you don’t have strict rules. It’s best to create restrictions on what purchases are allowed.
Keep in mind that the yearly fees can add up – especially if you need cards for lots of your employees. Some business cards charge hundreds of dollars per year for each card. You might want to consider if these costs make sense compared to the benefits and time you’ll save.
Just so you know, getting approved could be tough if you run a smaller business. The card companies usually look at your business credit history and how much money you make before saying yes – it’ll probably be hard for newer businesses or those without much financial history.
Reimbursement Pros and Cons
Reimbursements have quite a bit going for them with handling your business costs. Your team gets to choose where they want to spend their money. They can go to the stores that they already know and trust – that means your employees feel more in control over their spending options.
People frequently spend more when it’s their own money on the line. When workers use their personal cards first, they might think twice about that expensive lunch. You might see more budget-friendly decisions across your entire company as a result.
Another plus is your staff can rack up some points on their personal cards. Their business costs can actually help them earn some free flights or cash back – it’ll be a pleasant reward that doesn’t cost your company anything extra.
But reimbursements aren’t all easy. Let’s face it, the paperwork can be a real pain for everyone involved. Your finance team generally has to process each claim one by one – it’ll eat up hours of work time every month.
Your employees naturally have to front the money while they wait to get paid back – this could be fine for some small purchases. But what about that $2,000 conference ticket or a week of hotel stays? Not everyone can float that kind of cash.
Just know that the waiting game for your money back can cause problems, too. Some workers might wait for weeks or even months for their cash – it’ll likely cause frustration and money stress that can affect their work.
And of course, missing receipts are another headache with reimbursements. We’ve all been there – that small paper slip goes missing somewhere between the store and the office. Without any proof, your team might not get their money back at all.
Some workers might skip necessary purchases to avoid the whole process. They might not want to manage all of the paperwork or wait for their money – this could mean some missed opportunities for your business to grow or advance.
Expense Tracking Efficiency
When you look at how some businesses manage their costs, tracking is actually a real headache for most finance teams. Corporate cards generally make this job much easier with updates that happen. You can see what your employees are spending as it happens, not weeks later when it’s too late to do anything about it.
Asking your employees to track their costs manually through reimbursements eats up time that you can’t get back. Your team members have to hang onto their receipts, fill out the expense forms, and then turn everything in to accounting – this whole process can take weeks and might create mistakes when people try to type in all of that information by hand.
In reality, corporate cards link directly to your expense systems without any extra steps needed. The transactions typically pop up automatically and get put into the right spending buckets – that means your finance team doesn’t need to bug the employees for missing facts or spend their afternoons fixing data entry mistakes.
You’ll find that handling receipts can become much easier with corporate cards, too. Most card programs now come with apps where your team can take quick photos of their receipts on the spot. The system then matches these pictures to the right transactions without anyone having to do all of the work.
Businesses that use corporate cards usually save about 20 minutes on each expense report – this might not seem like much at first glance. But think about the hundreds of reports coming through each month. Those minutes add up very fast and free your team to work on activities that grow your business.
Keep in mind that the reimbursement strategy also creates problems with timing and getting all of the numbers right. Employees sometimes forget to submit their costs until long after they’ve spent the money – it makes it very tough for you to know your spending until well after the fact.
As a bonus with corporate cards, you get the spending limits and controls built right in. You can set budgets for different teams or projects and receive alerts if the spending starts to climb too high – this helps you stay away from those end-of-month surprises when all of the bills finally come due.
Limits and Controls
Spending limits and controls do actually matter when you’re picking between corporate cards and reimbursements. Businesses have a hard time tracking all of their costs without some tools. Here’s how these might help you manage your team’s spending in different ways.
You’ll find that corporate cards come with some limits that you can change for each employee. You can set monthly budgets or even put caps on single purchases to help you stay away from overspending. Most card programs also let you block types of stores where you don’t want company money being spent. These limits generally work right at the register when somebody tries to buy something.
Reimbursements manage the spending controls in a different way. Your employees use their own money first and then ask you to pay them back – that means your team needs to check all receipts against your policies after the money is already gone. The laws are out there. But they can’t stop somebody from buying something that breaks those rules.
Just consider that another plus with corporate cards is seeing all of the transactions as they happen instead of waiting for expense reports at the month-end. Card systems will typically alert you when something unusual happens.
Corporate cards also do a much better job with security. You can create one-time virtual card numbers for online buying and keep your main account facts safe from hackers. If somebody loses their card, you can freeze it from your phone or computer.
With reimbursement systems, you mostly depend on people to catch the errors. Keep in mind that somebody has to look through each expense for policy violations or suspicious charges – this takes time and doesn’t catch everything.
Expense Software Integration
Expense management software helps you out when you’re picking between corporate cards and reimbursements. These systems actually work well with both options. But there’s a twist you might want to know about – they tend to work a bit better with corporate cards. When you connect your cards to the software, all of the transactions show up automatically without anyone having to enter them manually.
Most of the newer systems can pull in your card transactions in real-time – not days later. That means your finance team generally knows what’s being spent. They know this even before they get the monthly statement. The software can automatically tag all of the costs with the right categories and check to see if they follow your company’s rules.
For reimbursements, software still helps you but works a bit differently. Your team members can take pictures of receipts with their phones instead of keeping all of the paper ones. The app reads the receipt and fills in most of the details automatically, which saves you time and cuts down on mistakes.
You should know that approval workflows are another big plus when you use this kind of software. Managers usually get notified when they need to look at something and can approve it with just a tap. When everything moves much faster, you certainly won’t have as many back-and-forth emails about missing information.
Businesses usually find that they save time with automation, no matter which payment strategy they use. One medium-sized business cut their expense processing time in half after they started using integrated software. Their finance team could then focus on looking at the spending patterns instead of tracking down receipts.
You’ll get better security through the software integration too. The systems can find unusual spending patterns that could be fraud or just honest mistakes. With corporate cards, you can get these alerts almost right after a transaction happens.
As a bonus, reporting gets much easier with the integrated systems. Your finance team can break down all of the spending by department, project or vendor with just a few clicks – this information helps you with budgeting and better deals from vendors you use.
On the practical side, the software can also help you with tax compliance by showing which costs qualify for deductions – this feature alone can save you money during tax season and lower your risk of being audited.
Level Up Your Incentives and Rewards
When you choose between corporate cards and reimbursement systems, it doesn’t have to be an either-or choice for your business. Have you actually considered how each option might work in different parts of your organization? Most businesses find that the cards give them way more visibility into spending as it happens while also saving employees from using their own personal money for business costs. However, the reimbursements might still make sense in some situations, depending on what your team needs and how you like to manage your costs.
In the end, what matters to you the most is to find a system that generally makes everyone’s lives easier. Think about what frustrates your team about expense management. Is it the waiting period for their money back? Or maybe there are some problems with tracking where all of the company money is going? Your answer probably can give you some clues about which direction would improve your team the most. Remember that modern expense systems have come a long way in making methods more user-friendly than they were even just five years ago.
When the expense systems work well, your team typically spends less time dealing with their receipts and more time focusing on what they do best. So, have you talked with your team recently about their own expense experiences? Their feedback might surprise you and could maybe help you shape a system that works better for everyone. Let’s face it: the goal isn’t always perfection, but finding a strategy that balances control and convenience in a way that makes sense for your business needs.
On the topic of creating systems that work for your teams, expense management is one part of the bigger picture of supporting your employees. At Level 6, we specialize in elevating your business through a number of incentive programs. From improving your sales team’s performance to improving employee morale, our expertise covers it all. You’ll find that our services – like the branded debit cards, employee rewards programs, and customized sales incentive programs – are designed to meet your business needs.
We have custom-made programs that can drive real results. Reach out to us for a free demo to see how we can help high-performing businesses maximize their ROI and sales performance!
Claudine is the Chief Relationship Officer at Level 6. She holds a master’s degree in industrial/organizational psychology. Her experience includes working as a certified conflict mediator for the United States Postal Service, a human performance analyst for Accenture, an Academic Dean, and a College Director. She is currently an adjunct Professor of Psychology at Southern New Hampshire University. With over 20 years of experience, she joined Level 6 to guide clients seeking effective ways to change behavior and, ultimately, their bottom line.
