Many companies don’t offer corporate cards anymore. This has given rise to the “invisible bank of the employee,” wherein a worker takes on a financial burden for their employer that may lead to a hefty debt that becomes unaffordable.
Studies suggest that close to 40% of all employees in the United States and United Kingdom use their own money to pay for work expenses, and the average business transaction costs them well in excess of $100. This can be both frustrating and financially challenging for many, as there is no guarantee that they will be reimbursed for their expenses on time once purchases have been made.
Fifty-eight percent of employees said they would not make a business purchase if required to pay out of their own pocket, according to the B2B Workforce Spend Playbook, a PYMNTS and Conferma Pay collaboration.
Get the report: B2B Workforce Spend Playbook
These challenges have only been heighted by the shift to working remotely.
Read more: How Automation Can Help AR Teams Meet Remote Work Challenges
Flaws of Traditional Expensing and Reimbursement
The experience is not much better when employees do have company-issued corporate cards. These cards provide funds so individuals can make the purchases they need to do their jobs, but they also require workers to manually fill out expense reports for later approval.
Traditional expensing and reimbursement processes is not only difficult from an employee’s point of view, but also expensive for businesses.
In addition, when businesses reimburse their staff members for company purchases after they are made, they have little or no insight into how much money those workers spend until transactions have been finalized. This uncertainty ultimately makes it difficult for financial professionals to manage their budgets and cash flows.
And, with the shift to working remotely, businesses also need to be able to authorize transactions remotely.
The Benefits of Remotely Issued Virtual Cards
In the corporate world, remotely issued virtual cards are emerging as a popular, easily deployable solution. Two of the primary draws of using virtual cards are their ability to cut costs and increase security.
Virtual cards offer a cost-effective alternative to the paper check, with some studies suggesting that it costs the average accounts payable (AP) department 82 cents to create a check and only 13 cents to generate a digital payment.
There are also potential security benefits to using virtual cards such as a reduced risk of fraud and enhanced payments transparency. Virtual cards often allow employers to set spending limits and other parameters on card users’ transactions.
In addition, digital everyday spend solutions such as virtual cards, spend controls and analytical tools can help companies provide digital options to manage their day-to-day expenses and reduce the frustration, paperwork and manual effort required to submit expense reports to finance.
With benefits like these, decentralized and digital everyday spend management solutions can fundamentally make daily work expenditure easier for both employers and their workers.