Manual Spend Management Is Disaster Waiting to Happen in Digital Era

Enterprise spend is increasingly digital, globalized and instant. It is also stubbornly manual in key areas, particularly across financial back offices. This creates an operational plateau that leaves a lot of room for human error, especially around corporate spend when effective spend controls are not in place.

In the past week alone, for example, Citigroup had two transactional slipups: one near miss of $81 trillion, and another erroneous copy-paste of around $6 billion; both as a result of human error.

While not a direct parallel to corporate spend management, the incidents at Citi highlight that the control framework around any form of enterprise payment has always necessitated striking a balancing act between oversight and efficiency. It also illustrates the significant risks of human error.

The rise of digital payments, remote work and globalized supply chains has created a complex web of corporate expenditures that demand tighter control. Yet, despite these challenges, many organizations still rely on outdated processes to manage expenses, exposing themselves to inefficiencies, fraud and compliance risks.

Fortunately, as the Wednesday (March 5) announcement that Emirates NBD has become the first bank in the United Arab Emirates to offer Visa’s Commercial Pay Mobile module for its small business and corporate clients shows, businesses are wising up to the benefits of virtual cards and unified expense management platforms in corporate payments.

Read more: How Back-Office Leaders Are Selling the C-Suite on Risk and Compliance

Virtual Cards Are a Modern Solution

Stolen or misused corporate cards can account for a significant portion of business fraud cases, and traditional corporate cards often aggregate multiple expenses, making it difficult to track spending at a granular level.

Underscoring the scale of the threat, payroll and payments platform Papaya Global on Wednesday launched a partnership with verification and compliance solutions provider Sumsub to deploy artificial intelligence (AI)-powered fraud prevention and verification solutions, helping ensure compliant payment transfers for companies and their workers.

“Fraud is growing as fast, or faster, than the pace that the overall B2B market is growing,” Eric Frankovic, general manager of business payments at WEX, told PYMNTS.

This is the backdrop against which virtual cards are emerging as a game-changer in corporate payments. Unlike traditional credit cards, virtual cards are generated digitally and designed for one-time or recurring use with customizable spending limits.

“Virtual card numbers offer a modernized solution with flexibility in transaction amounts, merchant types and frequencies,”  Marcos Gelfi, vice president and global head of commercial fraud/dispute products and cardholder solutions at Discover® Global Network, told PYMNTS.

“By leveraging data and defining clear corporate policies, businesses can achieve greater efficiencies and robust fraud prevention. … The data that you capture is pretty important and can help you negotiate better with suppliers, and help you manage your budget better,” Gelfi explained.

Recent data from the second edition of the “Growth Corporates Working Capital Index” done in collaboration between Visa and PYMNTS Intelligence, has found that virtual cards are being used more often, finding a strong place as a working capital solution, and the use of these cards have grown by nearly a third, year over year.

Many virtual card platforms integrate with enterprise resource planning (ERP) systems, accounting software, and expense management tools, creating a frictionless financial ecosystem.

Read more: CFOs Embrace Data Clouds Amid Shift Away From Pure-Play Record-Keeping

Power of Unified Expense Management

While virtual cards address a significant piece of the expense management puzzle, they are even more powerful when integrated into a broader, unified expense management solution. These platforms consolidate corporate card transactions, reimbursements, accounts payable, and vendor payments into a single ecosystem, giving businesses a holistic view of their financial operations.

Industries with high volumes of vendor payments, travel expenses, and procurement costs stand to benefit the most from virtual cards and unified solutions.

With real-time visibility, finance teams can now get instant access to spending data, allowing them to make split-second decisions that can mean the difference between profit and peril.

Unified platforms can also automatically enforce company policies, ensuring every dime is accounted for — and that rogue spending is caught before it spirals out of control. Ultimately, with a bird’s-eye view of payables, smarter expense forecasting, and real-time working capital optimization, businesses can keep their cash flowing smoothly and their balance sheets rock-solid.