For businesses small and large, as well as public sector organisations, prepaid business cards can streamline the expenses function, reduce risk and significantly improve management control over spending.
Prepaid cards can be a win/win for both employer and employee when it comes to company spending.
Many employees currently face having to spend their own money for work-related expenditure. After waiting for an expenses form to wend its way through the finance system, they often have to wait even longer for a payment run from the accounts system to get the cash back.
This isn't really fair on them when they may be struggling to make ends meet.
The cards are also useful in a business with young employees, including those who are under 18 who are trusted to make smaller purchases. Whereas you have to be 18 to have a credit card, you can be issued with a pre-loaded card at any age.
Indeed some parents use prepaid cards to give money to their children to take to school.
So these cards can be a useful way for the employer to stratify expense handling among staff. New or junior employees can be given a card with a low limit until they prove that they handle the spending responsibly.
The employer can load the employee's prepaid card with enough cash for their expenses. The employee can, depending upon any rules that may have been set, buy items online, book travel, pay for taxis and also use the card for minimal amounts - a cup of coffee or a sandwich.
Alternatively, they can use it to draw cash from an ATM as you would with a debit card. However, unlike a debit card, prepaid cards are not linked to a bank account.
Once the amount on the card is spent, it can only be reloaded by the business. Cards are issued by the MasterCard or Visa networks.
Instead of a blizzard of receipts, the card can simply transmit the data detailing the spending amounts to a dashboard-driven system which provides real-time management information for the finance team.
Connect this with your accounts system, and you have eliminated expense claims, manual receipt processing and payment of claims. You've also relieved your staff of the burden of spending their own money and waiting for reimbursement.
There are some risk mitigation advantages too. As there's no credit facility on the cards, they can't be used to accumulate debt. So a rogue employee can't go wild with a company card.
Moreover, if the employee loses the card, unlike a credit card, it won't be much use without the PIN. The company can immediately block the card.
The benefits of these cards are becoming ever more widely accepted, and their use is growing both in business and among consumers. A generation that has grown up with online and plastic everything is now beginning to use them as a basic account alternative.
Some employers are even paying wages on employee cards. For business expense accounting, however, this isn't recommended because the inevitable confusion between personal and business expenditure is something that most companies are keen to get away from.
The cards can't be used for a purchase that requires pre-authorisation, such as some hotel bookings.
So for senior employees, a credit card may still be needed. However, by supplementing the credit card with a prepaid card, small items such as drinks and snacks can still be processed through an ultra-efficient expense management system. Also, these cards are even available in different currencies, for foreign trips.
Inevitably, this functionality is becoming available on mobile phones. The employee can use a mobile app both to pay and to send the business expense receipt off to the expense management interface which is ideal for employees travelling abroad.
The technology is being widely adopted by governments and councils, for paying benefits and other uses. This is good news for businesses because it means the cards have become widely accepted and used, and are no longer a "niche" method of payment.
In fact, all of the developments in credit and debit cards, such as contactless technology, are also being offered in prepaid cards.
To see how a modern expense management system uses prepaid cards and mobiles to deliver efficiencies at every stage of the expense cycle, simply contact Soldo or visit us here - we are market leaders in this technology.