10 key use cases of virtual cards for enterprises
Enterprises have to incur various expenses, small and large, regularly. The preferred method to make these expenses is generally credit cards. However, it is not always advisable to open up the company credit information to a wide number of vendors or sites. Plus, more credit utilization negatively affects the score of the business.
Hence, to reduce the risks of fraud and maintain stable financial management, businesses should start using virtual cards. Virtual cards are the digital, non-tangible version of the actual physical cards which we all are used to.
Why virtual cards? These are just a combination of the 16 digital card numbers, CVV, and expiry date. This comes along with management and payment features. So it's basically the same as normal cards but just a safer version of those.
One of the major reasons enterprises should adopt virtual cards over traditional physical ones is because of the high-tech security. The conventional ones are prone to be stolen, lost, misplaced, and can be hacked once the fraudster has it.
In comparison, virtual cards cannot be stolen or hacked. As these are intangible, two-factor authentication is connected to tracking software that records all the card activities in real-time.
Along with this, many virtual cards are not directly connected to your bank account. So, no direct connection to the source of funds.
There is only so much you can do with traditional cards. You can have the basic information related to the transactions made through the card at the end-of-the-month statement.
However, virtual cards go a long way when it comes to financial management aspects. These cards are either connected to a full-fledged expense management system or a basic mobile application.
It allows getting detailed expense information in real-time, setting spending amount limits, assigning users, and blocking anytime anything suspicious is suspected.
With physical cards or cash, everyone in the company is required to safely store their receipts and properly submit them for reimbursement and accounting purposes.
This is not only tedious but there are high chances that many receipts would go missing and expenses might not be added at all.
However, with virtual cards, everything is automated, including record keeping. Virtual card applications automatically maintain a record of all the transactions.
Virtual cards are not only popular and effective because of their functionality features, but it is also a better option when considering the cost.
Some providers charge a small amount; some providers give virtual cards on physical cards, and some providers give virtual cards for free.
So instead of spending money on acquiring and maintaining physical cards, virtual cards can be the perfect substitutes.
One of the major reasons why there is a trending shift from physical to virtual cards is security.
In comparison, virtual cards are safer and more tightly protected with tools like two-factor authentication, instant block or freeze option, real-time update, and tracking of all expenses.
Some virtual cards are not even connected to your main bank account; basically no direct link to the source of funds. Hence, this colossally reduces fraud.
Virtual cards are much easier to use compared to physical cards that have to be carried around. Virtual cards exist as digital wallets inside your phone.
Whenever making an online purchase, just enter the required information and click on pay. It is that easy. There is no rocket science or special knowledge required to use virtual cards.
This means that all your employees can effortlessly make payments through these cards.
Virtual cards can be used as effective measures to keep employee expenses under control. When employees are assigned virtual cards, they make purchases directly from the company funds, which means no reimbursement has to be done.
Along with this, features like real-time expense tracking and spending limits allow you to keep a tab on all the transactions made by the employees. Manual reporting and expense detail collection are both eliminated.
You can also improve visibility into business expenses and improve control over spending by automating your expense management process. Check out our article on expense management automation to know in detail.
Another beneficial way to use virtual cards is as procurement streamliners. You can dedicate virtual cards according to vendors, set repayment cycle dates, transfer money instantly to the vendor’s account, and always pay ahead of the due date.
Virtual cards help to manage your vendor relationship as you can set alerts and notifications to remind you of the due dates or set a date where the payment will automatically be transferred.
Dive into our comprehensive article on vendor procurement process to uncover how Volopay virtual cards help eliminate the challenges and complexities with traditional vendor procurement process.
Instead of carrying physical cards on business trips, carrying and paying through virtual cards is easier. Employees on business travel can simply be assigned virtual cards for booking and on-spot payments. They won’t have to worry about collecting and keeping all the receipts safe.
Plus, virtual cards also provide travel benefits like points and miles, discounts on bookings, and cash-back rewards.
Virtual card settings allow you to choose if the card would be used as a burner or recurring payment card. You can use the recurring payments option to make subscription payments and technology expenses.
For example, your company uses a certain Saas tool that costs $5000 per month. You can assign a virtual card for that tool and set a monthly cycle to deposit $5000 to the vendor.
One of the unknown uses of virtual cards is corporate gifting. To reward your remote working employees or to send some regards or gifts to your vendors/customers, you can use virtual cards as a gift.
Upload the card with the gift amount and share the details with the receiver. The receiver can use the given card information to avail of the gift amount.
Another amazing use of virtual cards is for payroll management. Normally, in the traditional payroll process, HR/finance had to transfer money into each employee account along with reimbursements, if any.
But with a virtual card, you can easily set aside a certain amount under the name of employee expenses and just send money to the employee's account directly. No need to enter the card information again and again.
Virtual cards are also advantageous for making marketing and advertising expenses. You assign a certain amount limit on a virtual card and keep it only for marketing expenses.
So, whenever any advertising or marketing-related expenses have to be made, employees will be required to enter the details of that marketing virtual card. You won’t have to worry about overspending as everything will be under the spending limit and approved.
Virtual cards can be used for employee training and development. This is not so known, but you can give virtual cards to your employees so that they can invest in upskilling and learning, through which, ultimately, your company will have a better-informed workforce.
You can upload a certain amount in the virtual card and give it to your employees as a reward or part of a training program.
Instead of using cash or physical cards to make payments for equipment and maintenance, virtual cards are much better. Storing receipts of such payments and processing them at the end of every month is tedious.
Every now and then, there are some or other maintenance or equipment upgrades or expenses a business must incur. A separate virtual card to deal with such expenses makes management effortless.
Petty cash expenses include postage and fuel payments, recharge payments, reimbursement of travel expenses, etc. So undertaking all these expenses with cash can be difficult.
Plus, a physical card won’t help much because, ultimately, it will be used to withdraw cash only. However, you can have a virtual card for all such expenses and practice shopping or paying for most of the necessities online. This will save you a lot of time and effort.
Plus, business expense management will become effortless as everything will be tracked in real-time, and all information will be stored in one single, easily accessible database.
The first step towards getting the right virtual card for your business is choosing the right virtual card provider. Determine the pain points and needs of your company. Then align it with the features and benefits provided by virtual cards. Choose the one that best fits all your requirements.
Our article on the best virtual cards in Singapore will help you understand the key factors to consider when selecting a virtual card provider and the best options available in Singapore.
Virtual cards' benefits enhance once the card is integrated with your accounting software. Hence, look for flexible virtual cards that can seamlessly integrate with your accounting software.
With this, all your expenses will be recorded in a database and entered into your accounting sheets. Say goodbye to manual data entry.
Along with choosing the right virtual card, it is also necessary to establish policies and rules for using those cards. Yes, these cards are meant to give easy supervised access to the employees; however, it is still necessary to have a procedure. Define the use cases and areas where the virtual cards can/should be used.
The next essential step is to set up access and controls on the virtual cards. You have to decide and assign cards to employees, set expense policies, spend amount limits, and other controls. This will help establish clear accountability and infuse a more streamlined expenses management workflow.
You cannot just give virtual cards to your employees or tell your stakeholders that the company will now start using virtual cards. You have to inform and educate all the members of the company on the workings of the virtual cards.
Train your employees on how these cards must be used and what are the benefits of it. This way, you are not forcing them to use something. They will understand the procedure and advantages and make the best of the virtual cards.
Even though the virtual cards do most of the tracking and recording work for you, being on top of everything is still necessary. The executives and department heads of the company must always monitor the spending made through the cards. Keep a regular tab on all the expense categories and all virtual cards used by the company.
Review and study the expense being made through the virtual cards. Find out the loss areas and make adjustments.
For example, there might be overspending in the marketing department. You can easily decrease their virtual card spending limit. Though these decisions need to be made strategically, it is easy to implement them when using virtual cards.
Now that you have decided to take your business financial management to the next level with virtual cards, why not do it with the best? Get Volopay.
Volopay virtual cards are the best ones available in the market, as you can get as many as you want without paying any extra charges.
And, of course, it comes with advanced expense tracking and recording features. It gets better when you know that Volopay virtual cards are directly integrated with accounting software like Xero, Netsuite, QuickBooks, etc., and also that you can make the cheapest international transactions in more than 60 currencies.