Among all of the responsibilities that come with working in an office every day, managing one’s expenses has to be the most laborious.
There is nothing more frustrating than getting home from a business function, rummaging through your wallet, and discovering that you’ve misplaced half of the receipts from the massive bill that you and your team ran up.
The problem of processing expenses also has to be addressed. Many companies are still dependent on cumbersome and outmoded systems that call for hours of administrative work and leave employees without pay for weeks at a time.
Enter the card that is virtual.
Virtual card companies such as Airwallex assert that they have a remedy for all of your financial concerns about expenses. To what extent, though, do they live up to the hype? Continue reading if you want to learn more.
What are virtual cards?
To begin, let’s get one thing clear: what on earth are virtual cards?
You may use them to pay for products both online and in person, just like you would with a real debit or credit card. They have a card number and an expiration date, and they link to a central account just like those cards do.
The key distinction is that these cards are only available in their digital iteration. They are not represented by anything in the physical world.
Because of this, it is simple to generate them — you won’t have to wait days for your new card to arrive at your workplace — and it is as simple to cancel them when they are no longer needed. Your personal information has a lower risk of being duplicated or stolen as a result of this, making the transactions safer overall.
That is the fundamental concept of a virtual card. However, some virtual card issuers provide organisations a wide variety of extra capabilities that might be of assistance in the process of streamlining their cost management systems. Here are a handful of them.
Spend controls
If you’re in control of a large staff, the concept of providing everyone access to your business finances might be scary.
It is common practise for companies to limit card distribution to just senior members of the staff. However, carrying only one or two business cards at a time might be a practical headache, especially for teams who work remotely.
It can also mean younger team members are left paying for business expenditures out of their own pocket and waiting weeks to be reimbursed. The encounter was less than ideal for the employee.
Virtual cards overcome this problem. You have the option of issuing cards to all of your employees and establishing spending limitations on a monthly, weekly, or daily basis for each card.
You may also set restrictions on which retailers your employees are allowed to spend money with, freeze cards with the touch of a button, and monitor real-time spending activity across several users from a single interface with some service providers.
Smoother reconciliation
There are two different ways that reconciling may benefit from using virtual business cards.
To begin, you have the option of creating new cards tailored to a certain type of expenditure. You may, for instance, make a card dedicated just to the expenditure of money on internet advertising, as well as for a particular event or marketing campaign. After then, you’ll be aware that any money spent on that card is associated with the specific spending, event, or campaign in question.
Second, most current suppliers of virtual cards provide their customers applications that enable them to rapidly submit receipts for review and to assign categories to each individual purchase.
Imagine one of your employees is at a customer meeting and is in charge of purchasing coffee. While they wait for the barista to complete creating their latte art, they pay with their virtual business card, upload the receipt for approval, and classify the charge as “client entertainment.”
Providers that are more sophisticated also sync with your accounting software, which allows spending categories to be pushed into your accounts in an automated fashion. Because of this, your finance staff will have an easier time of things, and you won’t have to spend as much time poring over your bank accounts to attempt to recall what each individual expenditure was for.
Protection from fraud
Cards stored in a computer are far more secure than physical cards.
To begin, counterfeiting a virtual card is quite difficult for criminals to accomplish. In addition to this, you have the ability to make cards that are valid for only a single use.
Imagine that you need to make a big payment to a vendor, but you’re concerned about the possibility of card fraud. You have the option of generating a card just for the purpose of making that payment and putting an expiration date on it as soon as the transaction has been completed successfully.
It makes no difference how many virtual cards you use because it is so simple to generate new ones and delete old ones. You can guarantee that your cash will always be safe if you configure your cards to expire at the time of your choosing.
Borderless spending
There are certain virtual card firms that do not provide this option, but it is something that should absolutely be investigated.
It’s likely that the majority of businesses in the UK will have to pay for part of their expenditures in a different currency. Whether it be for subscriptions to SaaS services, payments to overseas vendors, or the cost of day-to-day living expenditures when travelling abroad.
One example of a provider of virtual cards that enables you to spend money in several currencies without incurring significant additional costs is Airwallex.
You will be provided with a Global Business Account by Airwallex after you sign up for their services. With this account, you will be able to collect and store a variety of currencies. You won’t be charged any fees to make purchases when you use the virtual card that comes with your Airwallex account. If you don’t have the appropriate currency in your account, you may convert money at a rate that is only 0.5–1 percent, which is substantially less than the rates offered by high street banks.
Using this loophole, companies may save thousands of pounds in foreign exchange transaction fees.
Happy employees
The fact that using virtual cards might give employees a sense of agency is an intangible advantage that should not be discounted, though.
Your workers may use their personal cards to pay for modest business expenses, which eliminates the need for them to repeatedly go to the chief financial officer (CFO) for approval.
The use of virtual cards gives members of a team the impression that their company trusts them. They take precautions to guarantee that no one is out of money and that difficult conversations regarding compensation are avoided at all costs.
Not all virtual cards are created equal
Virtual cards are currently offered by the majority of banks. However, despite the fact that these cards come with fundamental benefits such as fraud protection and spending restrictions, they will not always come with all of the capabilities of cost management that certain FinTech companies provide.
Because banks often demand increased fees for each card that is issued, you will have less flexibility to establish new cards or cancel existing ones. When paying in a different currency, you should also anticipate the typical bank costs that come along with it.
Should you use virtual cards in your business?
Utilizing digital versions of business cards comes with a number of advantages and not too many drawbacks.
They provide a simple method to control expenses, eliminate bottlenecks, and cut down on administrative work. This benefit is available regardless of the size of your staff. In addition to this, they provide you enhanced supervision over the day-to-day expenditures of your firm and more accountability with regard to the specific costs incurred by employees.
