It’s safe to assume that any employee at your company without a corporate credit card is spending irresponsibly, even if not intentionally. When they need something for work, they buy it out of pocket and submit for reimbursement. They could very well be going over-budget or against your hard-earned vendor contracts, and you have no control until it’s too late.
Small business owners have long treated corporate cards as something employees earn when they cross the threshold to manager or senior executive. But this corporate card gatekeeping introduces a bevy of unplanned employee expenses. And surprise outflow is a luxury few SMBs can afford.
SMBs need to protect liquidity now more than ever, as tariffs and inflation threaten to shrink their already thin margins. Unexpected expenses can force SMBs to delay critical vendor payments and strain relationships.
It’s past time SMBs rethink their corporate card distribution strategy, especially since virtual card technology has evolved so significantly over the last few years. Virtual corporate cards allow SMBs to allocate specific, pre-approved funds for designated expenses, so purchase limits and spending policies are enforced automatically. They’re usually free to issue, easy to use, and can integrate with bank and ERP providers.
SMBs no longer have any excuses not to equip every employee with a corporate card—not when virtual cards are so accessible, and not when the pressure’s on to preserve as much cash as possible.
Modern expenses demand modern card controls
Even if corporate cardless employees are spending judiciously, channeling such a large percentage of operational expenses through the T&E process still creates chaos for the finance department.
Since the rise of self-service SaaS apps and remote work, more employees are buying essentials like software subscriptions, utilities, and equipment directly from vendors and filing for reimbursement. Finance teams have no leverage over vendor purchases made on an employee’s credit card. An employee could inadvertently buy a duplicate software license, tip your OpEx budget into the red, or pay a premium when the company could have negotiated better terms. There’s no pre-approval process. There’s no way to stop payment. The money is spent.
One could argue that having a card in hand doesn’t necessarily stop employees from spending irresponsibly or fraudulently. It’s true that traditional corporate cards lack the proactive, sophisticated controls to prevent out-of-policy purchases.
That’s exactly why virtual corporate cards are a better fit for the decentralized nature of employee expenses today: they control spend before it happens. Most of the virtual corporate cards on the market today allow SMBs to embed expense policies directly at the point of request or purchase. Admins can set spending rules to automatically approve compliant transactions, flag unusual ones for review, or block out-of-policy spending altogether. No more surprise expenses.
Virtual corporate card programs now work with your bank
Gone are the days of choosing between sleek, user-friendly software and the stodgy but reliable legacy provider. Competition in the corporate spend space has given SMBs more viable virtual card options than ever.
The late 2010s saw the launch of a few new corporate card issuers serving SMBs. These fintechs made huge inroads in virtual card usability, offering automated expense management functions and thoughtfully designed interfaces. Traditional banks felt the pressure to innovate or lose their customers. SMBs that endured terrible user experiences under their legacy corporate card provider started to shop around.
But SMBs lured by fintechs’ attractive interfaces soon hit a wall with functionality. Many modern spend management providers require customers to adopt their proprietary card exclusively, which clashes with their established banking relationships. Long pay-down times turned away others—taking up to five days to process one card payment at a time can severely disrupt operations for SMBs operating on tight margins. One spend management startup even stopped serving the SMB market altogether.
Recently, however, some fintechs have shifted their strategy to partner with traditional banks. If you can’t beat their reliability and infrastructure, join them. These providers give SMBs the ability to issue and manage traditional bank-issued virtual corporate cards from their spend management platform. SMBs get the best of both worlds: user-friendly modern software backing their trusted banking relationships.
Virtual corporate cards can do more, and cost less than you think
Small business owners need to start thinking bigger about the role virtual cards play in controlling employee spend. They tend to focus on maximizing plastic card spend as the primary goal of their card programs. But giving every employee a virtual corporate card could have an outsized impact on spend management in that SMBs could enforce purchase limits and spending policies at scale.
Their accessibility, both from a usability and price standpoint, further drives the standalone value of virtual corporate cards. They can be created or deleted in just a few keystrokes, giving employees instant access to funds. Most modern corporate card providers don’t charge card issuance fees or impose a limit on the number of cards you can create.
Of course, virtual corporate cards weren’t always this easy to use. A few years ago, virtual card transactions didn’t integrate as smoothly into ERP systems. Companies worried about creating an unmanaged pool of expenses that operated outside their regular approval processes and categorization workflows. Virtual corporate cards were mostly used for digital goods and services, with most organizations preferring the ease of plastic cards for in-person purchases.
Now, modern virtual corporate card platforms can integrate directly with ERP systems, automatically categorizing transactions and enriching expense data. They even offer real-time transaction authorization and receipt tracking for better visibility and budget control. Additionally, many virtual corporate card providers have enabled mobile wallet compatibility since tap-to-pay technology took off during the COVID-19 pandemic. Now that they’ve grown accustomed to ditching plastic, most employees don’t think twice about adding virtual cards to their mobile wallets and using them out in the world.
Make money by spending money (no, really)
Perhaps the biggest no-brainer for adopting virtual corporate cards is rebates: earning 1-2% cash back on every purchase. All virtual card spending is eligible to earn the same negotiated rebate, just like plastic cards. SMBs leave tons of rebate money on the table by only issuing plastic cards to the upper echelon, forcing the majority of employees to spend out of pocket. Funneling more expenses through virtual corporate cards could easily lead to five to six figures in rebates for an SMB.
One way or another, your employees will find ways to buy what they need to do their jobs. The explosion of employees buying from vendors directly and submitting those purchases as “T&E” has demonstrated that. Why not turn that spending into a revenue stream and get more visibility and control while you’re at it? In an uncertain economic climate, SMBs need to take every financial advantage they can get.
Kalie Phillips is the VP of Product Management at travel and expense management provider Emburse, overseeing its SMB and Card solutions.
Photo courtesy Fachrizal Maulana for Unsplash+
