Managing Company Expenses with the Help of Business Cards
Throughout the UK, more than 5.7 million businesses exist, spanning several different industries and serving millions of consumers each day. Over the last decade, business ownership has grown in the region given the opportunities that are inherent in operating a company. However, the prospects that come with owning a business are, at times, diminished by the countless responsibilities business owners have. One of the most important facets of being a successful business owner is managing the company’s finances for both the short- and long-term, and this is no small feat.
Many businesses in the UK struggle with cash flow management, particularly those that experience seasonal shifts in revenue. Fortunately, managing expenses can be handled in an efficient and cost-effective way with the help of various business cards. It is essential, however, for business owners to understand the types of cards available to help with expense management over time, as well as which card may make the most sense for ongoing efficiency.
Types of Cards for Businesses
According to the UK Card Association, several different categories of business cards are available to companies, regardless of size or industry. Each card type offers different features and use cases, but there is likely a solution to help with the management of expenses for each business in operation today. The most common business card types include:
• Credit or charge cards – these business cards extend a credit line to businesses, allowing them to make purchases and pay for ongoing expenses without tapping into cash reserves immediately. These cards, however, carry interest in most cases, which can make for an expense management system if expenses are not paid in a timely fashion.
• Debit cards – these business cards are linked to a business checking account. Any purchases or expenses are immediately debited from the linked account, and no interest is charged since spending is paid for out of available funds.
• Purchasing cards – these business cards are generally reserved for large corporations, as they are used to cover purchase orders from suppliers.
• Prepaid cards – these business cards can either be pre-loaded or re-loadable with available funds. They can be used link debit or credit cards, but only up to the amount of cash added to the card.
Any combination of business cards can be used to help manage expenses over time. This is because purchases and other spending is easily tracked when utilising a card, and businesses have the option to provide cards to employees for company-related expenses. Although companies can use any of the cards mentioned above to help manage their finances over time, there may be a specific case for prepaid cards when expense management is a glaring issue.
The Case for Prepaid Cards
A finance specialist from Money Pug, a site used to compare prepaid cards, suggests there are certain advantages to using prepaid business cards specifically for expense management. Prepaid cards eliminate the need for employees to use personal cards or accounts to cover company spending, and businesses can often acquire multiple employee cards through a prepaid card provider at a minimal cost. Additionally, prepaid cards only allow for spending up to the loaded cash limited, making it far easier for businesses to restrict spending either for certain employees or for the business overall. Prepaid cards also offer the security of carrying a card rather than cash to cover spending needs.
Companies benefit greatly from using prepaid cards because they often have lower transaction fees than comparable credit cards. They also do not accumulate interest, given that the available spending limit is linked to the amount of cash added to the card. Most prepaid card providers allow businesses to add funds online, at cash machines, or over the phone when necessary.
Considerations When Selecting Cards
The use of cards to help manage expenses from a business perspective can be incredibly helpful, but there are considerations to think through before selecting a category of the card to use. Companies should seriously consider the fees associated with the card of choice. For instance, prepaid cards may have reloading fees or additional charges associated with creating employee cards. Credit cards for businesses accumulate interest on unpaid balances, and some providers charge annual fees for simply having the card in the first place. It is necessary to evaluate these costs to ensure a card selection makes the most economic sense for a company, both now and in the future.