Ways Your Corporate Credit Card Is Letting You Down

The traditional corporate credit card has been a staple in the business world for decades, but it’s no longer the most convenient, most secure, or most insightful way to pay for business expenses. In fact, your corporate credit card is probably letting you down in some of the most crucial expense categories.

Corporate cards don’t have real-time tracking, making every monthly statement a terrifying surprise. And because corporate cards are often shared between multiple employees or departments, the finance team has to do a lot of manual detective work to hunt down who spent what.

It’s impossible to successfully manage your company’s finances if you don’t have a detailed grasp on exactly where corporate funds are going. And upon closer examination, you might be surprised how much is being spent on certain expenses.

So, we’ve compiled a list of some of the areas where corporate funds aren’t tracked closely enough — resulting in unnecessary spending, loosened security, and a lack of useful insights into company spend. Here are three areas in which your corporate credit card is letting you down.

SaaS Spend

Recurring SaaS (software as a service) spend is crucial to keeping most businesses running, but also one of the easiest areas a company can overspend in. According to Deloitte, companies spend an average of $2,884 USD per employee on SaaS — so, depending on how many employees you have, it can get pricey pretty fast.

But, it’s also worth noting that only 46% of SaaS applications are frequently used by employees. So, there’s definitely room to trim the fat and cut down on SaaS spend.

The first step to getting control over your SaaS spend is to conduct an audit. Go through every service subscription you have, determine which ones you actually need, and how many accounts or licenses you need for them.

If you find “zombie accounts” — accounts from employees who no longer work for the company or never-activated accounts — be sure to remove them in order to save money and unauthorized access.

Also beware of “shadow IT” — subscriptions to services that the company is paying for, even though there are other services performing the same functions. If a subscription is deemed redundant (i.e. multiple photo editing softwares, different tiered accounts of the same app, etc.), then it should be canceled.

You may also be able to revise your subscription tier (basic, premium, etc.) if you discover that you’re paying for features that don’t get used, or renegotiate a deal with the vendor for a better price.

Here are just a few of the types of SaaS spend that often get overlooked:

Cloud Computing

Cloud computing solutions are essential to any company that runs online. They can provide functions like servers, storage, networking, remote computing, email, mobile development, and more, depending on your business needs.

Popular providers include AWS, Google Cloud, Microsoft Azure, Oracle Cloud and IBM Cloud.

Marketing

These expenses can include email marketing programs, advertising platforms, and paid social media posts.

Email marketing providers include Salesforce Pardot, HubSpot, Campaigner, Mailchimp and Campaign Monitor. 

Advertising platforms include Google Ads, Bing Ads, Facebook Ads and Amazon Ads, while paid social media posts can be made on platforms like Facebook, LinkedIn, Instagram, Twitter, TikTok and Pinterest.

HR and Payroll

Most companies have subscriptions to HR management solutions and payroll software, and these expenses should be included in your SaaS spend.

Prominent examples of HR and payroll software include Oracle, NetSuite, SAP, ADP, UKG, Workday HCM, Humi and BambooHR.

T&E

Travel and expense (a.k.a. T&E) is another area that makes up a lot of corporate spending — 10 percent, in fact — but it isn’t necessarily monitored and controlled as tightly as it should be. These costs pertain to any business travel-related expenses, and can include meals, transportation, accommodation, etc.

The IRS defines tax deductible T&E costs as “ordinary and necessary” expenses. So, as long as you can justify that a business trip is beneficial to your business, many of the associated expenses can be deducted. It’s worth noting that as of 2018, the IRS no longer considers entertainment expenses like sporting events, nightclubs, resort stays, or unnecessarily lavish meals for deductions.

As common as T&E costs are, tracking and managing them with traditional corporate credit cards can be a huge pain.

It is crucial to have a T&E policy in place to control travel expenses, but traditional corporate cards don’t integrate with your company’s specific rules. Plus, employees can use the card rather freely while traveling and unauthorized charges may not be noticed until the end-of-month card statement. This doesn’t allow the finance team to squash unapproved spending in the moment — or better yet, in advance.

Virtual or Plug & Play™ cards, however, are able to incorporate and enforce T&E policies. This ensures that employees don’t overspend on flights or accommodations during the booking process.

During travel, limits can be set on cards to ensure employees stick to per diem allowances. Additionally, admins will be notified of every transaction as they happen — so action can be taken immediately to deactivate cards that are breaking the rules or seem suspicious. Furthermore, receipts can be uploaded digitally and automatically matched on-the-go.

Unlimited virtual cards that can be linked to physical cards also eliminate the need for employees to pay for anything upfront and deal with the hassle of expense reports, receipt collection and reimbursements.

Miscellaneous Spend

Miscellaneous spend is the junk drawer of a company’s spend. It’s where all those purchases that don’t quite fit into established business expense categories go to be forgotten about.

Corporate cards are big contributors to miscellaneous spend but unfortunately, do nothing to help businesses track or control it. And over time, miscellaneous purchases can add up to significant amounts of cash — especially if employees are circumventing rules and committing fraud.

More innocuous miscellaneous expenses might be snacks and meals purchased for or ordered to the office for late-night sprints, formal meetings or special occasions. These can add up over time, as well.

For these types of purchases, corporate cards pay for the order, but then receipts need to be collected and matched, an expense report needs to be filled out and submitted, and the transaction needs to be added to the books. And once again, traditional cards give employees the opportunity to go rogue and make unapproved purchases that likely won’t be noticed until it’s too late.

Instead, opt for a spend management system that can categorize miscellaneous purchases, upload receipts from mobile and automatically sync with your company’s ERP or accounting software. You’ll be able to track every single transaction and notice any suspicious activity immediately, further reducing any opportunities for fraud.

In addition to the major spend categories that corporate cards have trouble tracking, there are a multitude of other downsides to using traditional credit cards. Read on for some of the other ways your corporate card is letting you down.

Misuse and abuse

Traditional corporate cards are notorious for employee misuse and abuse — from minor offenses like accidentally overspending on office supplies to egregious acts like racking up five-figure bills for personal purchases.

Virtual cards make it easy to set limits and enforce company spending policies so that employees are simply unable to break the rules.

Lack of oversight

Corporate cards are typically tracked with monthly statements — meaning a lot of spending can go unnoticed until the end of the month. Cards that share accounts or that are physically shared between multiple people also make it difficult to track exactly who is spending money and what they are spending it on.

Virtual cards make it easier for budget owners to assign cards, then approve transactions in real-time.

Potential liability

Because traditional corporate cards are issued to the company but used by individual employees, misuse can affect the credit standing of the company. Especially for smaller businesses, this can devastate owners financially and ruin reputations.

High fees

Many credit card companies charge monthly or annual fees. These can add up quickly when multiplied by the number of cardholders at a company. 

In addition to the standard fees, interest fees are typically quite high for credit cards.

Risk of fraud

Traditional corporate cards display embossed account numbers on them, which leave them vulnerable to fraud — be it skimming scams, cameras at payment terminals, or stolen cards. The identifying information on the card itself allows bad actors to use the cards fraudulently, at the expense of the company.

Difficulty tracking expenses

Tracking expenses is difficult with traditional corporate credit cards because they issue monthly statements. This means that there can be weeks of unchecked spending happening before the finance department is aware of any problems. 

Furthermore, statements and expense reports need to be collected for each card every month rather than expenses being consolidated in a single platform for the entire company.

Complicated reconciliation process

Due to the inefficiency of expense tracking, the reconciliation process also becomes difficult when using traditional corporate cards. Receipts need to be collected and matched to credit card charges manually, expense reports need to be filled out and approved, and transaction data needs to be manually transferred to the accounting system. 

Virtual cards can speed up a lot of the reconciliation process with automation — from automatically collecting and matching receipts to syncing all of the data with an ERP.

No control over spending limits

Corporate credit cards have a limit, but within that limit it’s difficult to figure out exactly how much is being spent on what and nearly impossible to stop employees from spending outside of the company’s expense policy.

With virtual cards, you can lock cards to specific vendors, set spending limits, and apply your company’s spend policies to the applicable cards.

Difficulty obtaining and maintaining good credit

With so many cards in circulation, it is difficult to obtain and maintain good credit with traditional corporate cards. One late payment or max-out from one employee can negatively impact the rest of the team and the company as a whole.

Not easy to cancel or close accounts

Canceling cards and accounts with traditional credit card issuers can be a complicated process — not to mention a huge liability when an employee is terminated and still has access to their card information.

Virtual cards can be canceled with a few simple clicks, ensuring immediate access is revoked from individuals who should no longer have access to company funds.

Hard to manage multiple cardholders

Corporate credit cards issue individual statements for each card, so it is difficult to manage the company’s expenses as a whole. The finance team needs to manually compile all the spending from each cardholder every month.

Virtual cards, meanwhile, provide an easy overview of all corporate spending. But they also allow you to zoom in and break down every transaction, automatically categorize expenses and maintain group budgets in real time.

Final Thoughts

Every company is going to have SaaS, travel and miscellaneous expenses, but they don’t need to set your business goals off-course. By making a few simple adjustments — like ditching the traditional corporate credit card — your finance team will be able to track and control corporate spending much more easily and efficiently.

Switching to a platform like Mesh Payments gives you access to unlimited virtual and Plug & Play™ cards that can be customized to your company’s policies, synced to your accounting software, and used completely securely.

To learn more about how Mesh can replace the tired old corporate credit card, schedule a demo with one of our reps.

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