Different Ways Prepaid Cards Can Reduce Business Expenses
A great way to increase profits for your business is to reduce corporate expenses. While expenses are obviously necessary to operate a business, careful management and monitoring will help ensure that they do not exceed or break even with company revenues.
A proven payment option to cut business expenses is the use of prepaid cards. Prepaid cards are similar to credit cards in the sense that they can be used anywhere that VISA® or MasterCard® is accepted. However, they are also comparable to debit cards, since you can’t spend money that you don’t have; you can only spend the amount that has been loaded on the card.
Although many companies use credit cards as their main method of payment for business expenses, prepaid cards offer many advantages that credit cards lack. In addition to helping businesses reduce expenses, they are also customizable to your company’s needs, flexible to use, and easy to manage. See below the different ways prepaid cards can help your business cut down on expenses:
With a prepaid card, you can budget the exact amount you want to spend, monitor funds going on and off of the card, and place restrictions or alerts where necessary. Funds are loaded electronically and managed via an online portal.
Prepaid vs Credit:
Many companies use a business credit card to pay for company related expenses. The problem with using a credit card is that: 1) it’s difficult to track expenses; and 2) credit cards often have a high credit limit, which can be good in many ways, but can also become a license for overspending. A prepaid card, on the other hand, does not have a credit limit, giving you better management of how much money is being authorized, loaded and spent.
Prepaid cards offer substantial labour cost savings, while also cutting down on the print and distribution costs of traditional paper cheques. Studies show that cheques cost $0.82 vs. $0.13 for electronic payments. Prepaid cards are also beneficial for employees who are unbanked and for employees who freelance or work overseas. Read this article to learn more about the pros and cons of prepaid cards vs. paper cheques.
Manage Employee Spending:
Employee spending is often difficult to track, especially if numerous employees share the same corporate credit card. Employee spending can include travel expenses, fuel for business vehicles, client entertainment costs, or general company expenses. With prepaid cards, you can set budgets for your employees and monitor where money is being spent. You can also give each employee a prepaid card, which makes it easier to monitor individual employee spending as opposed to sharing one card among various employees. In addition, you can restrict the card usage to specific merchants and locations, if desired.
Prepaid card programs provide you with detailed and customized reports of business spending. The risk with credit cards is that you don’t get to see the statements until the end of the month. In contrast, a prepaid card program provides you with real-time reporting. Having full visibility of spending in real-time allows you to take action immediately if there are any discrepancies or spending irregularities.