Spending cards give organizations the power to democratize their spend processes. In short, team members can take advantage of existing credit card infrastructure and rapidly purchase the goods and services they need to work as efficiently as possible.
Used by many fast-growing organizations, spending cards are an excellent way of retaining control over organizational capital without slowing down team members.
Here’s everything you need to know.
What exactly is a spending card?
Spending cards fast-track the traditional expense and accounts payable process. They offer purchasing power directly to team members, who can use these cards to purchase what they need, when they need it.
Of course, the same checks and balances are required with spending cards as with a traditional procurement process. Line managers must first approve funds before a team member can make a purchase, for example, and accounts payable teams require the same paperwork to reconcile payments. In addition, spending cards often contain spend limits and a stringent approval workflow, meaning team members can’t just frivolously spend on whatever they see fit; money must first be loaded onto the cards.
As a result, spending cards offer more freedom and flexibility to team members, as well as greater visibility and control for administrators.
Spending cards can carry many names. You might know them as:
- Purchasing cards
- Procurement cards
- Corporate charge cards
- Employee debit cards
- Prepaid expense cards
- Business cards
There are some slight differences between a few of these names, but on the whole, most spending card programs you see out there are prepaid reloadable charge cards that leverage traditional credit card infrastructure.
Are spending cards different from company credit cards?
That’s a good question.
Yes, they are different. Company credit cards essentially work in the exact same way as a personal credit card. The account holder is extending their personal line of credit to multiple team members, and there’s little visibility into who spent what (read more about the differences between spending cards and company credit cards here).
Any good spending card program eliminates this risk. Procurify’s spending cards, for instance, allow you to:
- Build customer approval and spending limits, so your finance team can always control who’s spending what, and when.
- Unlock funds in real-time according to cardholder requests, holding everyone accountable to company spending.
- Customize the spending rules of each individual card.
- Create virtual spending cards that make it easy for team members to purchase safely online.
Most importantly, you can issue spending cards to as many team members as you like, letting you scale up or scale down departmental purchasing power as you see fit.
A few other perks of spending cards
For any rapidly-growing organization that needs to spend money in order to make it, spending cards are an excellent way to retain control over capital while creating a streamlined purchasing process .
To help you improve your process further, you can also:
- Use spending cards to make purchases from pre-approved merchants, reducing the risk of fraud and non-compliance.
- Give managers the chance to cap spend on specific purchases, and specific cards. (You might give managers higher spending limits, for example, so they have more purchasing power.)
- Capture and view receipts, account codes, spend details, and more, ensuring a successful month-end close and reconciliation.
Of course, not all spending card programs work in the same way, but on the whole, many programs (like ours) will help to facilitate a smooth, efficient, and democratized spending process that speeds up your procure-to-pay cycle times.
Cutting the cost of payments
Spending cards help organizations cut down on the costs associated with purchasing. First and foremost, organizations that use programs like this are able to reduce their chances of going over budget. Consequently, organizations can reduce costs associated with late payments, credit card fees, or penalties that may result from overspending.
In addition to these “boots on the ground” savings, fast-growing organizations can save money on excess staffing. Traditional procurement processes require multiple team members to intervene at various stages of the purchasing process.
Spending cards, however, cut out the middle person between requesting a purchase, and reconciling a payment. Instead of a procurement manager, for example, team members can purchase for themselves. They can then hand over the required information to AP teams to reconcile payments.
For those organizations who still rely on checks, spending card programs also reduce the expense of printing and mailing checks in order to pay team members or contractors.
Spending cards are a great way to improve your operational efficiency. They also help reduce your costs and create an accountable and conscious spend culture within your organization.
They give fast-growing organizations the chance to purchase quickly, make payments on time, and create autonomy among teams who may otherwise be slowed down by purchasing red tape.
Better yet, programs like this reduce the possibility of rogue spend, and make it easier for your accounts payable teams to reconcile payments during the month-end process. That means no more missing or lost invoices, no more back and forth asking for receipts, and no more overspending.
To find out more about Procurify spending cards, watch this video: