What is a virtual company card?
The traditional company card has received a digital makeover. The days of time-consuming rigid plastic are over.
Electronic funds transfers, automatic deposits and electronic payments are now the most convenient way for consumers and businesses to deal with money.
A growing number of corporates and fintech start-ups are now adopting virtual company cards as a secure and paperwork-free alternative to handling employee expenses. The streamlined and flexible prepaid card is being embraced by business owners and finance teams as a better alternative to a business credit card for many types of business expenses.
So, what is a virtual company card?
A virtual card consists of a randomly generated16-digit card number which is linked to an existing credit account. It is a prepaid card which can be used for all the online purchases for which you would use a conventional credit card, but it cannot be traced back to the original account by hackers.
Benefits of virtual cards
Virtual company cards are the latest and most secure form of electronic payment. They are convenient, reduce processing costs, improve internal controls, minimise human error and facilitate the automation of account reconciliation processes. Virtual cards are a key component of finance management technology, saving your company time and money and reducing the possibility of employee misspending or third-party hacking.
Virtual cards, such as those offered by Soldo, provide an improved user experience and simplify the process of managing company and employee spending while providing valuable oversight of employee spending, in real-time, enabling the monitoring of transactions as they take place, rather than after the payment is completed.
Virtual cards are more secure than conventional plastic cards. They can be set up as single use cards, which expire once the transaction is concluded, or as recurring use cards. Individualised budgets can be set and monitored and there is no physical card which can be lost or stolen. A virtual card can be easily cancelled without the need to cancel the whole account.
Virtual cards support the automation of account reconciliation and expense reports and by using Soldo’s control and reporting features, you can eliminate end-of-month surprise expenses for your finance team.
Using the Soldo web console, you can view transactions in real-time and generate instantly virtual Soldo cards for use in online spending, as required by your team.
Virtual cards can work seamlessly alongside other financial software to help manage company expenses. For example, the Soldo web console works in unison with major expense management software, such as Xero and can easily export data to accounting software such as Sage and Concur.
With the Soldo mobile app, lost or unreadable employee receipts are a thing of the past. Employees snap photographs of receipts using a smartphone and submit them directly to your finance team. A system which is time-saving and convenient for all concerned.
Addressing the drawbacks of credit cards
The move away from traditional plastic cards has been driven by a recognition of their limitations and vulnerability. An old-fashioned expense report typically comes with dozens of vague receipts that must be found, sorted and categorised, wasting hours of finance team time – time that could be spent productively elsewhere.
With virtual cards, account details do not need to be shared between supplier and buyer, reducing the likelihood of fraud and theft. All that is required is the number of the virtual card.
Transparency in transactions is one of the significant advantages of using virtual cards or prepaid business cards. Rather than employees reconciling transactions, the Soldo software handles these tasks, providing data of all transactions in real-time. With traditional business credit cards, the business must wait until the month-end to see transactions and expense reports.
In some instances, virtual cards can even be shared. For example, by assigning one virtual card to a specific cost centre. All employees will know what budget is remaining in real-time, and no employee can go over that.
Employees may still need physical cards for transactions such as hotel stays. Hotels often insist on keeping a copy of plastic cards on file for security. Some restaurants and coffee shops may similarly require physical cards, but virtual cards are gradually becoming more accepted and incorporated into virtual mobile wallets such as Apple Pay.
By using virtual cards or prepaid company cards, firms have real-time access to expense information, with analytics providing valuable insight into trends and patterns in company spending. Solutions such as Soldo can transform financial decision making and the budgeting processes of expense management, improving predictability and driving profit.
Company credit card best practices
- Create clear guidelines which define card use. This should include permissible uses and an emphasis that the card is not for personal use or use by other people.
- Differentiated spending limits. Spending limits should be set according to seniority but can also be used to define specific spending limits, such as meals or accommodation, as well as total spending limits.
- The use of integrated analytics tools to track how and where employees are spending company money.
- A procedure in place which requires that large expenses require senior approval.
Company Card FAQs
How does a company card work?
A company credit card enables employees to meet expenses incurred as a result of their work for the company, without having to spend their own money. Cards are issued bearing an individual’s name and often the name of the company as well.
What can a company credit card be used for?
The type of expenses for which a card can be used will depend on the nature of the company and the seniority of the card holder. Typical expenses include travel, accommodation and entertaining clients, but they can also include minor expenses such as a cup of coffee when travelling.
Can a virtual company card affect credit scores?
Virtual credit cards are prepaid cards for businesses which cannot be traced to your credit card account and consequently a company can generate as many as required without affecting the credit score of any individuals or that of the company.
What are the main benefits of using a company card?
Company cards give your employees autonomy, cutting out time consuming expenses claims and building a sense of trust and responsibility. Your employees no longer need to spend their own money and feel resentful about the amount of time it takes to claim it back. Expenses can be more easily tracked, monitored and predicted.
Can employees keep any air miles generated through a company card?
When travelling, whether you use a forex business card or company credit card, the air miles accrued have been generated using company money and therefore the company is fully entitled to claim ownership. However, the company may choose to give the air miles to an employee as a token of goodwill and in recognition of their good service.
Can employees keep the money from cashback offers?
Cashback from a company credit card is the result of the expenditure of company money, not that of the named card holder, therefore the cashback is company money. A company may choose to allow individuals to claim cashback as an act of goodwill or in recognition of their good service.
If you’re still confused as to which type of card is right for you, check out our guide on choosing a company card here.