Corporate Card Management: A Practical Guide

Effective corporate card management goes beyond issuing cards to employees. It includes implementing systems that strengthen financial control, minimise the risk of fraud and streamline expense reporting processes for a company. 

In this blog, we will discuss the best practices to manage your company’s corporate cards better. 

Why do businesses need corporate card management?

Corporate cards are powerful financial tools that assist organisations in streamlining expense management, simplifying reporting, and empowering employees on the go. They are changing how companies handle business purchases, eliminating the need for petty cash and endless expense reports.

Corporate card management is the process of monitoring and regulating the use of corporate cards within a company. It involves setting up guidelines for card use, monitoring transactions, reconciling expenses, and ensuring policy adherence. 

Without effective corporate card management, your company might face multiple challenges, such as:

• Unauthorised spending might occur if employees use corporate cards for personal expenses, leading to financial losses and potential legal issues. 
• Tracking expenses might become difficult, resulting in inaccurate financial reporting, which may affect your budgeting and forecasting processes. 
• Loss of time and resources to check and identify non-compliant expenses.

Effective corporate card management ensures better budget control, as you can set spending limits and monitor card usage in real time. A good corporate card management also improves financial reporting with features like automated expense tracking and seamless integration with accounting systems. 

Best practices for efficient corporate card management

To optimise the use of corporate cards, you can consider a strategic approach focused on the following best practices:

Have a clear corporate card policy in place

Create a comprehensive corporate card policy. This policy should clearly mention the expenses that can be charged to the card, such as travel costs related to client meetings or office supplies. It should also detail the approval workflows for large expenses and the repercussions for misuse.

You can effectively communicate all terms of this policy to all employees through training sessions or by distributing written copies of the policy to each cardholder. Every employee who is issued a corporate card should be familiar with all the rules and should know whom to ask in case of questions.

Clear policies can prevent unauthorised spending and ensure all employees know their responsibilities. 

Set budgets for each department

Creating realistic and effective budgets for each team and department helps in managing corporate cards. Analyse the past expenses to identify the spending patterns and understand what each department requires. 

For example, your marketing department may require a higher budget for digital ads, whereas the office maintenance department may need a small budget every month to ensure smooth operations. 

When setting these budgets, it is important to factor in the company’s overall financial situation. Do not set limits that are too tight, but do not be too loose with money, as this may lead to wasteful spending.

Good budgeting holds each department accountable for staying within its allocated limit. It is the best way to control costs and encourage fiscal responsibility throughout the company. 

Determine who will get cards

Corporate card management involves selecting the right employees as custodians of these cards. Issuing corporate cards to all employees who may need them is a crucial part of this process. Here are some important aspects you can consider:

• Carefully analyse employee job roles and the associated nature of their business expenses. For example, employees who often travel for work can be good candidates for a corporate card.
• Take a balanced approach, giving cards to all employees might not be a good idea. Start with key personnel and then gradually include other employees in the corporate card programme.
• Implement a tiered card system and set different spending limits and approval needs based on employee roles and responsibilities. For example, employees can have a monthly spending limit of AED 2,000, while an executive manager can have a monthly spending limit of AED 5,000. Closely monitoring card usage patterns will help find ways to improve the tier system by optimising the company spending limits, refining the approval needs or identifying misuse.

Set limits and approval process on corporate cards

Setting corporate card spending limits is another effective corporate card management practice. Spend limits can prevent excessive or unauthorised spending and ensure adherence to company policies. Consider setting limits for different categories like travel, office supplies and meals. For instance, you can set expense limits for meals, accommodations, and transportation for each card when used during business travel.

Besides setting spending limits, consider creating approval processes for larger expenses. For example, you can set a rule in the expense management software application (provided by your corporate card company) requiring employees to get manager approval for travel expenses exceeding AED 2,000. This rule will automatically block any expenses over AED 2,000 from being charged to the card without approval. The manager will be notified about the expense and have the flexibility to approve or decline the purchase with reasoning on their mobile app.

By clearly defining the spending limit and approval process for every card, you can help employees feel comfortable with what expenses they can or cannot make on the company card. It will also reduce the back-and-forth emails and endless calls for queries at the time of expense report filing, thereby reducing your administrative burden.

Use virtual cards rather than physical cards

For better corporate card management, consider using virtual cards instead of physical ones. Virtual cards are the digital variants of physical cards, issued instantly and used for online transactions. 

Virtual cards offer the unique advantage of instant availability and the ability to generate unlimited new cards as needed. This feature is particularly useful for cases when employees need temporary cards either for specific projects or for ad-hoc expenses. Instead of waiting for a physical card, employees can start using virtual cards instantly. Did you know Alaan offers virtual corporate cards along with physical cards, providing a secure and flexible solution for streamlining your expense management processes?

‍

Monitor employee spending habits

Many corporate card issuers provide analytics tools that help you monitor corporate card spending. These tools offer insights into how, when, and where employees spend the allocated budget, enabling you to track purchases by month, year, department, employee, or vendor. Such detailed tracking helps identify opportunities to cut costs and improve the cash flow.

For startups and companies with limited capital, daily monitoring of corporate card usage is particularly beneficial. Knowing that each transaction is tracked and reported can deter employees from making unnecessary expenditures, promoting mindful spending habits.

Make expense reporting easy

Making it easy for employees to submit receipts and file expense reports increases compliance and timeliness. Determine whether every expense requires a receipt or if the card statement suffices. 

If expense reports are necessary, clearly define the required level of detailing and the submission frequency to ensure smooth business operations. 

Consider using an expense management solution like Alaan to automatically track and report expenses made on corporate cards. This can reduce the need for manual data entry, making the reconciliation process faster and less prone to errors.

Automate receipt management

Proper documentation of all purchases made with the cards is a crucial aspect of corporate card management. However, managing physical receipts is a complex process, as there is an inherent risk of losing the receipt or recording incorrect amounts.

By digitising receipts, you enjoy easier storage, retrieval, and accurate expense tracking. For instance, digital receipts can be stored in cloud-based systems, making them accessible from anywhere and reducing the risk of misplacement. You can also easily categorise the expenses, making reporting efficient.

Pro Tip – Encourage your employees to capture and upload receipts immediately after making a payment to ensure timely documentation.

At Alaan, we offer multiple solutions to streamline your receipt management processes. Such as OCR (Optical Character Recognition) technology, which automatically extracts information from digital receipts, thereby reducing the need for manual data entry.

Sync cards with your accounting software

Integrating corporate card transactions with your accounting software creates an efficient financial management system. This system makes it easier to track and manage employee expenses, which helps maintain up-to-date financial records and provides a real-time view of your company’s spending. 

Another benefit of this integration is improved accuracy. Manual entry of transactions may be prone to errors, but with auto sync, the chances of mistakes are significantly reduced.

Optimise your expense management with Alaan corporate cards

Effective corporate card management requires a robust platform. It can help you with centralised visibility on all expenses, along with setting controls and managing individual cards. This is where Alaan can make a difference.

Alaan, UAE’s leading provider of smart corporate cards, offers an integrated corporate card and spend management platform. We help you streamline your expense management operations and achieve better financial control with features like: 

• Granular spending limits: Our platform allows for granular spending limits, enabling precise controls on how much each employee can spend to prevent overspending.
• Easy locking and unlocking of individual cards: This allows you to manage cards’ access in real time, ensuring only authorised personnel use the cards.
• Compliance with expense policy: Alaan ensures that all spending aligns with your company’s policies and reduces the risk of unauthorised transactions.
• Real-time visibility on business transactions: Alaan supports real-time expense monitoring, ensuring financial transparency and informed decision-making.
• One-click reconciliation: This feature saves valuable time for your finance team and reduces the risk of errors, ensuring accurate and timely financial reporting.

Our corporate cards are accepted worldwide and support over 200 currencies. They can be used either as physical cards or as virtual cards on Google Pay and Apple Pay. If you are looking to streamline your expense management, we will be happy to help. Contact us here to learn more about the right corporate card for your company.