Many businesses today prefer to make transactions online using their card, due to it being more convenient and time-saving than transacting with physical cash. However, this benefit comes with an underlying risk. Exposing your credit or debit card details online can make you vulnerable to internet fraud and theft. Since there are so many hackers crawling the web, using your business credit cards online may do you more harm than good. Fortunately, all hope is not lost, thanks to virtual cards. If you want to reduce your risk of online fraud, learn how to use virtual cards to manage business expenses as explained in this guide.
Why is it important for businesses to use virtual cards?
As stated earlier, exposing your business’s credit card details online makes you vulnerable to fraud. However, an alternative to avoid this problem is using virtual cards. These virtual cards contain a temporary 16-digit number, a CVC, as well as an expiry date. Also, the cards are not traceable or connected to your business bank account, allowing you to set a maximum monthly spending limit. All these unique features of a virtual card can help mitigate the harm fraudsters can do to your business.
What are the benefits of using virtual cards?
Before we provide you with some ideas on how to use virtual cards to manage business expenses, let’s get insight into the unique benefits of virtual cards. Listed below are some of the benefits of virtual cards:
1. It gives you more control over spending
Businesses that use traditional reimbursement systems will only be able to tell which expenses they incur when employees submit an expense report. However, virtual credit cards can avert this issue with the spending limits feature. Also, setting a budget for each account on your virtual card is possible. These features will help you monitor the amount and objective of your business spending in real time.
2. Mitigate risk and minimize damage caused by fraud
A virtual card can help to safeguard your business from online fraudulent transactions as well as other security risks. With these cards, it is easy to activate or deactivate your account to protect your business’s information from outsiders.
3. Automation doing all the heavy lifting
The use of a traditional payment system will generally require an expense report at regular intervals. Unfortunately, the expense reporting process is generally hectic and too complicated, which can be very draining for employees. Also, the process is usually time-consuming and prone to errors. So why not opt for something better?
Virtual cards are typically manageable because they automatically allocate expenses to the applicable categories. This means that you can program these cards to do the heavy lifting for you. Also, virtual cards provide a spending history that anybody can access through your card provider account.
4. Makes purchasing easier for employees
Virtual cards generally make purchasing easier for your employees because of their flexible payment options. So whether they decide to use it to purchase online or go in person to make the purchase, they are still on the right track. Also, it allows them to spend up to a specific, pre-approved amount of money per month, thereby eliminating unnecessary expenses.
All of these features make it easier for you to manage your expenses in your business . This is because there will be no need for any time-consuming administrative expenses report work, such as preparing the budget request, getting it authorized, releasing the funds, and lots of others.
How to use virtual cards to manage business expenses
Below are some useful tips on using virtual cards to manage business expenses.
1. Set up spending limits
Setting up spending limit is key to managing your business expenses. You have to set up spending limits for each virtual card you make available to your employees so that they don’t overspend or use the card to make non-business-related expenses.
Fortunately, this is possible because most virtual card providers offer the spending limits feature on a card-by-card basis. This feature will allow you to adjust your virtual card’s spending limits as you deem fit.
2. Link your business’s virtual cards to an expense management software
When you link your business’s virtual cards to expense management software, it makes it possible to easily track your business spending and keep an eye on employee expenses in real time. Nowadays, there is a wide variety of expense management software that can help you organize expenses, create expense reports, and even manage budgets. Doing this is especially beneficial if you have a considerable number of employees and huge expenses to manage.
3. Use virtual cards for precise expenses
If you want to make the process of tracking your expenses easier for you, then you should use your virtual cards for specific expenses. For instance, you can try creating a virtual card specifically for internet or electricity expenses. By doing this, you will be able to identify these expenses easily when it’s time to review your business’s financial records.
4. Keep close tabs on your expenses regularly
It is important to monitor your expenses regularly if you want to manage them effectively. Doing this will help you identify any financial lapses, irregularities, or other suspicious activity. Also, regular monitoring can help you recognize areas where your business may be overspending.
5. Reviewing your company’s expenses regularly
Regularly reviewing all expenses can also help you keep records of your business’s spending and confirm that you are sticking with your predetermined budget. The review can involve checking virtual card transactions, categorizing all expenses, and even creating expense reports. When you review expenses regularly, you can also determine areas where your business may be overspending so that you can take corrective action.
6. Set strict policies for virtual card use
To make sure that your employees use the virtual cards in a reasonable manner, it’s very important to set usage guidelines. This can include setting policies on which expenditures can be charged to the business virtual card. Putting limits on the amount of money that can be charged works too. Also, you should provide employees with explicit instructions on how to use the virtual card, and the next step to take when the card gets lost or stolen.
The use of virtual cards won’t go out of style anytime soon so it is best to join the trend and take full advantage of all the benefits it has to offer. Virtual cards are generally far more secure than their traditional counterparts and can help you to analyze your company’s expenses and where exactly the money is spent. If you’re interested in learning how to use virtual cards to help manage your business expenses, the tips we’ve shared above will be of great help.
Bitmama virtual cards allow businesses to make online local and international payments with a single click. It is easy to set up, fund, and control your expenses with spending limits. Get started by downloading the Bitmama app.