When it comes to budgeting, credit cards may not be the first tools that come to mind. In fact, many people view credit cards as a hindrance to effective budgeting since they can lead to overspending and high-interest debt. 

However, when used responsibly, credit cards can be a valuable asset to budget in your business. They can help you track your expenses, maximize cash-back rewards, and increase your cash flow, saving you money in the long run. 

But, traditional credit cards can only take a business so far.

Whether it's from a lack of security, visibility, or control, physical credit cards can quickly pose challenges, especially if you continually share them across various departments and individuals within your organization. 

That’s why it's better to extend your credit card’s capabilities with virtual cards. 

Business virtual cards work exactly like traditional credit cards but grant you greater control and visibility over your spending. They make it easier to stick to your budget, reduce overspending, and gain valuable insights into your business's financial health and performance. 

Let’s explore how virtual card features can help you budget more effectively. 

Customizable spending limits and expiration dates 

Establishing spending guidelines for your employees is a great start, but enforcing them and controlling spend with traditional credit cards can be difficult. This is because it’s nearly impossible to limit spending by an amount or by the date on a business credit card. Therefore, to ensure adherence to budgetary constraints and minimize unexpected charges, you need to adopt a tool that can enforce your business requirements. 

You can easily do this by using virtual cards and gaining flexibility over payments with dynamic controls and spend limit functionality. You can empower your employees to create virtual cards, set specific spend limits, adjust expiration dates per card, and even determine auto-refill rules for recurring payments, such as monthly software subscriptions.

Expense categories and real-time reporting 

There’s a whole world beyond the confines of a spreadsheet, and it’s far more organized and effective than relying solely on manual data entry. By taking advantage of virtual card features like expense categories for real-time tracking, you can easily step outside the spreadsheet, reduce human error, and gain a clear view of the business’s finances. 

The great thing about expense categories is that they allow you to begin the reconciliation process as you transact. For instance, with a platform like Extend, you can easily sync your general ledger accounting codes and tag transactions in real-time. This lends itself to a seamless reporting process between Extend and your accounting platform of choice. 

So, why limit yourself to the spreadsheet when there’s a better way to manage expenses?

As Visa points out in a recent report, virtual cards aren’t only growing in popularity because they help with fraud and convenience but because they’re a great tool to increase organizational efficiency by automating payments.

Take this approach, and you’ll gain complete transparency over expenses and benefit from significant time and cost savings during your monthly reconciliation process rather than dealing with over-budget surprises at the end of the month. 

Predetermined budgets for specific projects, departments, and clients

Actively managing a comprehensive budget can be a hassle in and of itself. But what happens when you have to juggle multiple budgets across various business initiatives and departments? 

If you do it traditionally, that hassle suddenly becomes a budgeting nightmare.  

Fortunately, with a virtual card platform like Extend, you can create budgets for various projects, business locations, departments, and even client accounts. You can set a budget for a specific period of time and replenish it at a set frequency that suits your business needs, whether that’s daily, weekly, monthly, or quarterly. 

From regular department and location-specific budgets to one-off budgets for unique initiatives — you can manage them all in one place, track spend in real time, and gain visibility into what has been spent and how much is left.

Here are some ways Extend customers leverage budgets for better spend management:

• To control company card spending with virtual cards and allocated budgets for specific projects, departments, or other expense categories;

• To find information faster and keep company finances organized, rather than browsing through complicated spreadsheets; and

• To delegate responsibility and empower employees to manage their own virtual cards for various business expenses while eliminating the risk of overspending and tedious approval processes.

When to use the budget feature in your business

You’ll want to use the budget feature in your business in numerous instances. For example, for:

• Departmental expenses: travel, software subscriptions, conferences, location-specific purchases 

• Project-based expenses: corporate events, internal office parties, per diem meals

• Individual client expenses: project fees, contractor supplies, dinners

• Media buying expenses: digital advertising campaigns for your company or clients

Boost your bottom line by budgeting with virtual cards

Virtual cards are a valuable tool to ensure a seamless payment experience without disruptions to your budget. If you’re ready to incorporate them into your corporate budget process, get started here.

Have you ever wondered if it’s truly possible to maintain full control over company credit card spend while empowering your employees with the payment capabilities they need?

It’s undeniable that expediting payments keeps operations running smoothly, and long and tedious approval processes only hold businesses back. But managing employee credit cards is a balancing act. How do you strike that perfect balance between accessibility and absolute control?

By implementing systems and proper payment tools. 

This way, you can arm employees with a better way to pay, make it easier to manage employee credit cards, and guarantee the visibility and control your finance team needs to keep company spending in check. 

Let’s delve into the realm of effective employee credit card management and discuss how virtual cards can help you tackle this, at times, complicated business process.  

Why is employee credit card management important for my business? 

As a business owner, you know that keeping a firm grip on expenses is non-negotiable for success. While issuing credit cards to employees can facilitate transactions and reduce expense reports, it can also present challenges when it comes to monitoring and controlling expenditures. Unchecked credit card usage can lead to overspending, compliance issues, and employee misuse. By embracing modern solutions like virtual credit cards to address these challenges, your finance team can equip employees and unlock new levels of operational efficiency without ever putting security and control at risk. 

What are virtual credit cards, and how do they work? 

Virtual cards are digital versions or “extensions” of your physical corporate credit card, although they have their own unique card number. They’re strictly digital, more secure, and way more versatile than traditional credit cards. You can use virtual cards anywhere you would use your regular credit card, online, over the phone, and depending on your card issuer, in person via contactless payments. Companies that use them to manage employee credit cards completely eliminate the need for additional plastic credit cards and significantly reduce the amount of manual work and expense reporting that can occur when running a business. Not to mention lost cards or fraud on a physical card creates operational burdens, which can be avoided by leveraging virtual cards. 

Rather than sharing multiple physical credit cards across your organization, you can create as many single-use or recurring virtual card numbers as you need, each with a designated spend limit and expiration date. These helpful features ensure that even if the card information is compromised, it can’t be used for unauthorized transactions. When an employee needs to make a purchase, simply create a virtual card, add an expiration date and spending limit, and send it in seconds.

Furthermore, with virtual cards, you can collect more data that you can transfer into your accounting software via integrations, helping you reduce manual processes and simplify reconciliation. With seamless connections to your financial systems, you can track and categorize expenses accurately and in real time.

How to use virtual credit cards to manage employee expenses 

With virtual credit cards at your disposal, you'll gain unprecedented control, transparency, and efficiency to properly manage employee credit cards. 

Follow these steps to get started.

Choose a virtual credit card provider 

Selecting the right virtual card provider for your business is paramount. Not all providers are created equal; some operate away from traditional financial institutions, while others, like Extend, work with your preferred bank — meaning there’s no need to leave your bank or open new lines of credit with a neo-bank. Therefore, consider your business needs, and look for a convenient company that offers security measures, user-friendly interfaces, and integration with your business and accounting platforms. The right provider will minimize any disruptions in your financial processes.

Establish a comprehensive expense policy 

Before sending virtual cards to your employees, lay the groundwork for efficient expense management and create a comprehensive expense policy if you haven't already. Clearly outline permissible expenses, spending limits for different roles, rules for managing employee credit card receipts, and the approval process for higher expenses. Communicate this policy to all employees to ensure they understand the guidelines, and make the policy readily available so they can adhere to it.

A well-communicated expense policy ensures employees are aware of what expenses are allowed and sets clear expectations for the responsible use of company funds. Don’t forget to regularly review and update the policy to accommodate changes in business needs or industry regulations.

Train employees to use virtual credit cards 

Although virtual cards are easy to use, training your employees is still important — especially if they’ve never used virtual cards before and don’t know the ins and outs of the platform you implement.  

A good virtual card provider will equip you with learning resources and knowledgeable customer support to ensure your employees understand everything from requesting and creating virtual cards to attaching receipts and generating reports. 

Don’t skip this step, even if your chosen platform seems pretty self-explanatory. Doing so will only cause confusion, delay adoption, and encourage misuse instead of responsible spending practices and a culture of financial prudence.

Set spending limits 

One of the most significant advantages of virtual credit cards is the flexibility to set customized spending limits per card. When managing employee credit cards, your finance team can easily tailor limits based on your expense policy, responsibilities, purchase types, and even individual roles, ensuring employees have the necessary funds while maintaining fiscal responsibility.

For instance, employees with more purchasing authority may have higher spending limits, while those in administrative roles may have more restrictions. Taking advantage of spending limits prevents excessive spending and mitigates the risk of unauthorized or inappropriate expenses while granting you and your finance team complete, real-time visibility over expenditures. 

Monitor expenses in real-time 

In contrast to traditional credit cards, virtual cards make real-time monitoring a reality. You can access transaction data as payments occur rather than at month’s end. This immediate visibility streamlines reconciliation and helps you quickly identify unauthorized transactions or potential issues, enabling you to take corrective actions promptly.

Real-time monitoring also allows you to spot spending patterns and identify opportunities for cost optimization. Analyzing expense data in real time can provide valuable insights into the effectiveness of various cost-saving measures and aid in making data-driven decisions for your business.

Advantages of virtual credit cards over traditional credit cards 

Virtual credit cards offer many benefits that set them apart from conventional corporate credit cards. 

Enhanced spending control 

As a business owner or finance professional, you know how important it is to maintain control over company expenses to ensure financial stability. With virtual credit cards, you gain the upper hand in managing expenses effectively while still enabling accessibility. 

Setting customized spending limits for each virtual card in your business ensures that your employees always stay within the allocated budget. This feature is particularly valuable for employees who frequently travel or have varying expense requirements. Additionally, virtual cards can be configured for single-use or limited-use, reducing the risk of unauthorized transactions or misuse. This will cause a virtual card to become invalid when a transaction is completed, preventing future charges. When it comes to recurring virtual cards, the spending limits and deactivation ability still apply. This level of control ensures that company funds are used solely for approved business purposes.

Increased security 

Security is a paramount concern in today's digital landscape, and virtual credit cards provide an armor of protection against fraudulent activities. Each virtual card is associated with its unique card number, card verification code (CVC), and expiration date, significantly reducing the risk of fraud and misuse on your physical corporate credit card. Not to mention, you no longer need to spend precious time and energy closing and opening credit card accounts, which is cumbersome and only interrupts operations. 

With virtual cards, you can assign unique virtual card numbers to specific vendors and suppliers, ensuring that transactions are limited to approved merchants. In case any suspicious activities occur, easily deactivate virtual cards to mitigate potential losses.

Simplified expense tracking and reporting 

Accurate and timely expense tracking is essential for financial planning and budgeting. Virtual credit cards simplify this process by providing real-time data on expenses. Each transaction you make with a virtual card is instantly recorded, along with details such as the date, amount, and merchant. Employees can also attach receipts for each transaction, making managing employee credit card receipts a breeze. This streamlined data makes expense tracking and reporting effortless, reducing the administrative burden on your finance team.

With a platform like Extend, you get a comprehensive view of all transactions to speed up reconciliation. As a result, your finance team gains valuable insights into spending patterns and can make more informed decisions about budget allocations and resource management while you gain the transparency and visibility you need to run your business.    

Lower costs 

Traditional corporate credit cards often come with various fees, such as annual charges and foreign transaction fees. Instead of incurring even more costs by relying on a stack of physical credit cards, each with their own fees, use virtual cards. Since virtual cards are an extension of your existing card, you can eliminate any additional fees while still accruing credit card rewards. 

Furthermore, virtual cards will inevitably streamline expense management and reduce the time and effort you and your team spend on manual reconciliations and paper-based workflows. This efficiency translates into cost savings by optimizing resource allocation and enhancing overall business productivity.

Flexibility

Virtual cards will easily accommodate the diverse needs of your business and employees. Since virtual cards can be generated instantly, they’re ideal for urgent or one-time expenses. You no longer have to wait for plastic cards to arrive in the mail, and your employees don’t have to wait through long approval processes that only delay payments and, in turn, operations.  

Virtual credit cards are also versatile when it comes to travel expenses. Rather than making employees front the bill and submit expense reports for cash reimbursements, employees who travel for business can use virtual cards for hotel bookings, flight reservations, and other travel-related expenses. They can travel with ease and without incurring unnecessary debt while you ensure travel expenses stay within your budgetary constraints.

Manage your employee credit cards with Extend 

The journey to optimal expense management begins with virtual cards. Learn more about how to better manage employee credit cards and how virtual cards can help your business here.

At Extend, we believe in enhancing, not reinventing, how businesses pay. 

We know businesses don’t want to start from the ground up; they simply want to do more with what they already have. But to achieve this, companies need access to the right tools to streamline payments.

That’s why we partner with the banks businesses already know and trust to instantly help customers access a smarter, more efficient method of managing company spend. 

Central to this strategy are virtual cards, which are digital counterparts of traditional physical cards, extending the capabilities of a company's existing credit card while providing better spend management. Virtual cards have typically been viewed as a single-use product for specific purchases and online security –- often used only by the largest of companies. 

But at Extend, we’ve leveled the playing field and now bring virtual cards to businesses of all sizes. 

We’ve turned virtual cards into a dynamic payment platform, functioning as digital versions of a supplementary card but with a vast array of controls and features. 

Today, thousands of small to medium-sized businesses trust Extend to turn their existing corporate card into a spend management platform through the power of virtual cards. 

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As one of our customers, the controller at Donovan Agency, put it,

“With Extend, we’re getting flexibility over how we can use our company credit card. Creating virtual cards is really simple, and we can use them for everything from office supplies and production costs to managing our clients’ campaign spend by platform.”

Whether it be to manage media budgets or streamline employee expenses, there are many ways our customers use virtual cards in their business. 

1. Pass-through and bill-backs 

Businesses using Extend bring a new level of efficiency to pass-through and bill-back expenses, streamlining expense tracking and reconciliation. 

Instead of handling payments with a couple of physical cards, which often leads to a time-consuming reconciliation process, assigning individual virtual cards to each project and client account ensures every dollar spent is accounted for and attributed to the appropriate source.

With this clear separation and categorization of expenses, it’s easier to see who spent what in real-time rather than combing through credit card statements at month’s end to determine which charge belongs to which project or account. 

Moreover, businesses not only streamline a manual and error-prone reconciliation process but also enhance transparency and accountability. Since every transaction is recorded in real-time and can be tagged with expense codes, finance teams gain an up-to-date financial picture to ensure clients are billed back correctly and quickly, fostering trust and reliability in business relationships.

2. Multi-location businesses and franchisees 

Maintaining oversight and control over purchasing across various locations and franchises while ensuring compliance can be daunting. For that reason, more multi-location businesses are using virtual cards to budget and delegate purchasing power while maintaining total oversight and control. 

Companies using Extend can easily do this by creating and allocating budgets to location managers, who can then create and issue virtual cards for each location's purchasing needs within that budget. This approach eliminates card-sharing and allows location managers to manage day-to-day expenses while ensuring spending remains aligned with the company's policies.

The strength of virtual cards lies in the unparalleled control and visibility they provide to the business. Every transaction made with a virtual card is tracked and recorded, offering a transparent and detailed view of expenditures across all locations. This level of detail is invaluable for effective financial planning and budgeting. It enables owners to dissect spending patterns, uncover potential areas for cost-saving, and allocate resources more strategically.

3. Contractors and temporary employees 

Virtual cards offer a more efficient solution for covering contractors' and temporary employees' work-related expenses compared to traditional methods like checks or ACH. While these conventional methods work, they often lead to delayed reimbursements, creating inefficiencies and potentially straining working relationships.

Instead of having contractors submit their out-of-pocket expenses via an invoice, businesses can issue virtual cards to them directly. This approach ensures that contractors and temporary employees can immediately cover necessary work-related costs, from supplies to tools, without fronting their own money.

Virtual cards also bring significant operational advantages thanks to their immediacy and flexibility. Businesses can reduce cash reimbursements, streamline financial operations, and enhance the spend-tracking process. Not to mention, businesses accrue even more rewards from these transactions, a benefit they would otherwise miss by paying with traditional methods. 

4. Vendor payments 

Businesses are increasingly turning to virtual cards for vendor payments due to their enhanced safety and efficiency. Unlike traditional payment methods, virtual cards offer stringent security controls, like spending limits and custom expiration dates, which reduce risks like wrongful billing and fraud.

Moreover, they eliminate the need to share a single physical card with multiple vendors, which is risky business. Especially since fraud and data breaches are more common than ever, with global losses predicted to grow to almost $50 billion by 2030.

Creating a unique virtual card for each vendor is a much more convenient and secure approach to protecting real account information and credit lines. If vendor-related fraud ever occurs, businesses can simply deactivate that one virtual card and create a new one, rather than having to close down their entire credit card and update card numbers with every single vendor — a tedious and disruptive process for business operations. 

5. Employee expenses 

Virtual cards offer a flexible and accountable way for businesses to manage employee expenses more effectively. This use case is particularly important since not every employee has access to a company card, leaving many fronting the bill and submitting expense reports for reimbursement. 

Worse yet, if employees aren't using personal credit cards, they're likely sharing company card numbers, which can lead to unauthorized charges and a lack of accountability. Such practices not only affect employee morale but burden finance teams with a retroactive process that depletes time and energy that could instead be devoted to more strategic tasks. 

With Extend, business leaders can use virtual cards to empower their teams and efficiently distribute funds across the organization without sacrificing control or visibility over expenses. Employees can also request virtual cards, reducing unapproved spending and enhancing accountability. 

This approach simplifies expense management, receipt management, and out-of-pocket expenses, if any, and allows finance teams to create pre-determined budgets to delegate spending power while retaining comprehensive oversight.

6. Subscription costs 

Managing subscription payments often involves sharing one or a few corporate cards across various departments. A process that ultimately exposes credit card numbers and forces teams to leave cards on file with multiple providers. 

While common, this method can lead to several challenges, from security breaches to difficulty in tracking which charges belong to which department, diminishing internal accountability and control. Instead, finance teams can create a recurring virtual card for each provider to drastically reduce the risk of credit line exposure and gain a clear view of expenses. 

This method ensures every subscription expense is linked to a distinct virtual card that automatically renews every month, simplifying the process of paying, identifying, and managing these costs across the organization. 

If an employee leaves without canceling a subscription, deactivating their specific virtual card is a simple task. 

7. Suppliers and wholesalers 

Dealing with wholesalers and suppliers means businesses face the same risks associated with using the same credit card for multiple transactions. This practice risks a business's entire credit line, and if fraud occurs, canceling and reissuing cards and updating all relevant vendor details will take valuable time and stall business operations.

Assigning individual virtual cards with set limits to each vendor is a better approach to eliminating risks and limiting potential fraudulent activity to a single virtual card rather than the entire credit line. In case of fraud, businesses can quickly cancel the affected virtual card in just a few minutes compared to the lengthy ordeal with traditional credit cards.

Leveraging virtual cards empowers businesses to maintain business continuity, ensure smoother interactions with suppliers and wholesalers, and benefit from a safer, more controlled, and more efficient way to handle these crucial business relationships.

8. Travel expenses 

Everyone benefits when virtual cards are used for business travel: the company, its finance team, employees, interns, and even interviewees. 

The reality is many employees can’t afford to front business costs on behalf of a company and wait for reimbursement. Given that travel expenses can be substantial and accrue interest, this places a significant financial burden on staff, interns, and interviewees. 

Meanwhile, finance teams are left with a cumbersome reimbursement process and a lack of real-time spending visibility. Finance teams that implement virtual cards for better spend management can easily manage and monitor travel spending as it occurs, while employees get an instant and reliable way to cover travel-related costs like flight bookings, accommodations, and meals.

The same applies to interviewees, who can also use a virtual card to take care of travel costs and an allotted per diem when interviewing for a position, giving them a stellar interview experience and leaving a positive impression of the company. Moreover, with spending limits and restrictions on virtual cards, teams can rest assured travel expenses will adhere to company policies, reducing the risk of overspending and simplifying compliance. 

9. Tail spend 

Virtual cards provide a practical way to track miscellaneous spending and cash flow in real-time. Each purchase is automatically recorded, providing up-to-date financial data and enabling businesses to adjust their spending as needed throughout the month, rather than waiting for month-end reviews. 

This level of detail is crucial for identifying areas where cost savings can be made and ensuring that even minor expenses align with the company’s broader financial strategies.

Businesses using virtual cards for tail spend not only benefit from a streamlined expense tracking process but also from significant savings. According to recent data, firms that use digital tools to manage tail spend can cut their annual expenditures by 5% to 10%, on average.

Get started with Extend 

Experience Extend's spend management platform for yourself and see the impact it can have on a business’s efficiency and financial control.