As your business expands, you need to stay attuned to the future. Within the realm of business finances, this translates to reassessing the way you make and manage payments and the tools you use to do so. If you still rely on traditional physical credit cards, checks, or ACH payments — there’s a better way. 

With the rise of online transactions and the increasing need for secure payment methods, the business virtual credit card has become indispensable for companies of all sizes. More than just a payment method, virtual cards are a strategic asset for businesses seeking to streamline expense management and establish an overarching spend management strategy. 

But what is a virtual credit card, and how does it differ from a traditional physical card?

Whether you're a startup exploring new payment methods or a well-established corporation looking to streamline processes, understanding the power of virtual credit cards is essential for the future of your business. 

In this guide, I’ll delve into the mechanics, benefits, and best practices of using virtual credit cards for business. 

Let's get started. 

What is a virtual credit card?

A business virtual credit card is a digital version of a traditional corporate credit card. Each virtual card consists of a unique 16-digit number, security code, and expiration date, and although they’re typically associated with your main credit card account, they stand alone in their functionality. 

Virtual cards were initially created to enhance security around payments since they safeguard real account information and protect against data breaches and fraud. However, the benefits of virtual credit cards have since expanded beyond just security. Today, virtual cards offer businesses a comprehensive suite of helpful features, from real-time expense tracking to on-demand payments.

You can use virtual cards for one-time or recurring payments and easily deactivate or modify them to fit your company's needs. This adaptability makes them a preferred choice for businesses looking to modernize their payment processes without overhauling their existing financial infrastructure.

How do virtual credit cards work? 

Diving deeper into the mechanics of virtual credit cards, it's essential to understand their operational framework. How do these digital tools function in the vast ecosystem of business finances? Well, much like their traditional counterparts. 

You can use virtual cards for various transactions, whether you make them online, in-app, on file, and, depending on your issuer, in person via mobile wallets. Through a virtual card app, which you can use via your desktop or mobile device, you can create and distribute as many virtual cards as you need in a matter of minutes. 

This means you can instantly equip your team with a payment method when they need one and gain even more control while doing so — thanks to spend limits and custom expiration dates. 

For instance, let’s say your team needs to charge various expenses for an upcoming project. Simply create a virtual card with a precise spending limit and a set duration, and distribute it in seconds. Once the project wraps up, you can easily deactivate the card, ensuring no unexpected charges crop up. 

Every transaction you or your team makes with a virtual credit card is logged in real-time, giving you an immediate snapshot of your expenses. This instant tracking keeps you updated and helps you spot any irregularities or potential fraud. Notice something off? You can take immediate action, showcasing the proactive nature of virtual cards. 

Why should you use virtual credit cards for business? 

Embracing virtual credit cards in your business is not only about transitioning to a more effective payment method; it's a strategic move to future-proof your financial operations. As industries become more interconnected, the demands for swift, transparent, and secure transactions will grow, and agility and adaptability will be even more critical. With virtual credit cards, you can instantly gain the security, flexibility, control, and real-time insights to navigate the complexities of payments.

6 Benefits of using business virtual credit cards 

Beyond serving as a modern payment method, virtual cards for business offer many advantages that allow you to get more out of your business credit card, enhance security, and provide unparalleled control over transactions. 

Enhanced security 

One of the primary reasons businesses gravitate toward virtual cards is the enhanced security they bring to the table. Each virtual card has its own unique card number, and you can use it for specific transactions, contractors, or employees. So if a virtual card number is compromised, you don’t need to worry about jeopardizing your entire credit line. Simply deactivate the virtual card and create a new one, rather than having to close down your entire credit card account and start from scratch. 

Simplified vendor management

Navigating vendor payments can be a hassle for any business, and let’s not talk about the pain of having to update cards on file with Every. Single. Vendor. That’s the drawback of traditional payment methods; they may work, but they’re also cumbersome and time-consuming. With virtual cards, vendor management becomes notably simpler. You can tailor each virtual card for a specific vendor, ensuring precise payment amounts and schedules. This reduces the risk of overpayments or missed transactions and provides a clear audit trail for every vendor interaction. By using virtual cards, you can instantly centralize and streamline payments while gaining a more efficient and transparent approach to vendor management.

Increased control over expenses 

With the ability to set custom expiration dates and specific spending limits on each card, you can ensure employees adhere to budgets and spending policies. With real-time tracking, you can also gain immediate oversight of all transactions, making it easier to spot and address any discrepancies and keep a tight grip on expenses. Not to mention, with a clear view of where and how company funds are spent 24/7, you can proactively manage and optimize tedious yet necessary finance processes, like expense management and reconciliation. 

Improved flexibility and convenience

Gone are the days of waiting for plastic cards to arrive in the mail or the logistical challenges of distributing physical cards to team members. With virtual cards, everything is instantaneous. Need a card for a new vendor or employee? Generate it in seconds. Concerned about a specific transaction? Deactivate the card immediately and create a new one. The digital nature of virtual cards ensures that your business can respond to financial needs promptly, making the entire payment process more streamlined and efficient.

Cost savings

Ditching your plastic and using virtual cards will also translate to tangible savings for your business. 

Virtual cards help you do this in a couple of ways. First, with spending limits, which ensure your business stays within budget and eliminates unexpected overspending. Second, with real-time tracking, since you can easily spot suspicious transactions or fraud and instantly deactivate a card, safeguarding your funds from further unauthorized charges. Third, with streamlined vendor management, which puts you in a better position to negotiate favorable terms and discounts, ensuring you only pay what's necessary. And lastly, think about the hours you'd save on manual reconciliation thanks to the clear transaction trails. That's not just time saved; it's money saved from reduced labor and minimized errors.

Faster processing

Let’s face it, waiting days for transactions to clear can be a hindrance, especially when paying vendors or freelancers. Unlike traditional payment methods that can be bogged down by longer processing times, virtual cards offer near-instant transaction approvals. Whether you're settling an invoice or making a purchase, the speed of virtual cards ensures you don't miss a beat. This swiftness not only enhances your business's agility but also strengthens vendor relationships, as payments are received promptly. By reducing the waiting period associated with payments, you're ultimately boosting your business' productivity and financial fluidity. 

Best practices to manage business virtual credit cards

Learning how to use virtual credit cards is only the beginning. Follow these best practices to maximize their benefits and seamlessly integrate them into your business operations. 

Develop a clear policy 

First, define who can create, request, and approve virtual cards. Whether it's only executive management, specific departments, or every team member within a budget, clarity is vital. Next, set spending limits based on roles or project needs to ensure your business stays within budget. It's also essential to outline the approval process for exceptions to these limits. Incorporate guidelines on when and how to use virtual cards for recurring payments, one-time transactions, or vendor-specific purchases. By doing so, you not only enhance security but also ensure that all team members are on the same page, reducing the risk of unauthorized or fraudulent transactions. Remember, a well-defined policy is the foundation of effective virtual card management, ensuring you reap all the benefits.

Use a centralized platform 

Consider your current and future business needs when choosing a virtual card provider. A good virtual card provider will offer a centralized dashboard that integrates with your existing financial infrastructure, including ERPs, CRMs, and accounting systems. This interoperability ensures you can work seamlessly between platforms without compromising visibility into your expenses. Moreover, it minimizes manual data entry errors and enhances security by enabling quick card modifications. With all virtual card activities consolidated on a single platform, you not only streamline your operations but also foster a more transparent and efficient financial environment. This holistic approach ensures that your business remains agile, making informed financial decisions with ease and precision.

Train employees 

A good virtual card provider will equip you with educational resources and dedicated customer support to help employees grasp the ins and outs of the platform, from generating virtual cards to setting spending limits and monitoring transactions. But if you want to take it a step further, consider organizing in-house training sessions to delve deeper into the nuances of your company's specific virtual card usage and policies. This can also be a good time to review virtual cards' security advantages, such as their role in safeguarding against data breaches and fraud. When employees understand virtual cards' inherent value and safety, they’ll be more inclined to use them responsibly and effectively. Make sure to encourage open communication throughout this learning phase and establish a feedback mechanism where team members can voice their experiences, challenges, or suggestions. This not only aids in promptly addressing concerns but also in refining your company's approach to virtual card management. After all, well-informed employees act as a robust line of defense against potential financial discrepancies and unauthorized transactions.

Implement spending controls

Begin by analyzing your company's past spending patterns, identifying areas where overspending is common, and setting limits that align with your budgetary goals. Then, leverage spending limits when issuing virtual cards. However, if you need to administer funds within various projects, departments, or campaigns, create a pre-determined budget where your team can create, distribute, and use multiple virtual cards accordingly. This not only keeps expenses within your company's budget but also provides a clear audit trail, simplifying reconciliation. When assigning virtual cards to employees, consider their roles and responsibilities. For instance, a team member procuring office supplies might have a different spending limit than someone handling multiple marketing campaigns.

Regularly monitor expenses 

With the advanced features of virtual cards, you're equipped with real-time insights, but it's essential to actively leverage these tools to stay on top of payments. Make sure to consistently pull and review reports to get a clear view of monthly spending, identify trends, spot anomalies, and make data-driven decisions to optimize your budget. Regular oversight helps prevent unauthorized or fraudulent transactions and ensures that your spend management strategy aligns with your business goals. Remember, the power of virtual cards isn't just in their use but in the strategic insights they provide, enabling you to drive financial efficiency and growth.

How to get virtual credit cards with Extend 

Staying attuned to the future of finance means embracing tools that redefine how you make business payments. If you're ready to move beyond traditional payment methods and harness the power of virtual credit cards for business, there's no better time than now. 

Learn more about the virtual card features you can instantly start benefiting from, or if you’re ready to get started, we’re here to help!