Giving employees a corporate card seems like an invitation to overspend. How will a company know that an employee treated his family to dinner on an outing? Or that someone else decided to allocate $5,000 for a family vacation instead of a client-retreat focused weekend?
But corporate cards are designed with elements that prevent such overspending. It’s not a question of whether you trust someone not to spend inappropriately; it’s whether the system will allow them to do so—in conjunction with what else they could pay for with their cards.
Let’s break down how it works.
Spending Limits Are Like Bumpers
The most straightforward element is a card limit. But it’s not like the general credit limit an individual has—this limit is much more personalized. Each corporate card has a different limit per individual employee, sub-employee (certain manager) and type of expense.
So, for example, the sales team member may have a $5,000 one-month inclusive amount for all uses including travel and client dinners, while the operations employee may have a $500 one-month amount for equipment as well.
But these are monthly limits. They’re not individual transaction request limitations. They’re cumulative.
But some companies take it further to ensure transaction limits as well—you’re allowed to spend up to $3,000 this month, however, anything over $500 must receive managerial oversight.
Category Controls Keep Expenses From Going Through
This is getting technical. Cards can be shut off for merchant-type categorizations where they shouldn’t be used.
For example, an employee authorized for subscriptions and supplies may not have access to buy something at Bed, Bath & Beyond or Petco because that’s not an approved category.
It doesn’t mean mistakes are caught; it means mistakes cannot be made in the first place. Thus, an employee who incorrectly buys something for themselves on a personal card accidentally thinking it’s for their family’s trip will never happen because it won’t go through.
Companies can whitelist individual merchants or types. A marketing team credit can only be used at Google and Adobe and not anywhere else should that group card be utilized.
Real-Time Access Gets Everyone Informed Quicker
In the past, corporate cards could be swiped all over town and unless someone looked through their statement realized something was out of the norm several days later, there was no idea before funds were spent and out of reach.
Now companies have real-time access tracking. The second you swipe your card, finance gets a notification. They can confirm and check instead of waiting 30 days to see what was out of sight and out of mind.
Real-time access is also good for employees who can check their balances against limits at any time. Some systems will even notify individuals that they’re close to maxing out their budgets to prevent frustration down the line.
Receipt Automation
Another reason purchases get overlooked is because receipts get substantiated or accounting support fails to receive them down the line (i.e., no one comes forward with them).
Many systems require receipts before processing automatic purchases. If someone buys something over a certain amount, they get flagged with a receipt—a return-type receipt—for justification.
Some systems are stricter and actually hold up a purchase until someone uploads a receipt. The items can be held in limbo until data is provided to meet a requirement that won’t happen without extra info.
While this may seem annoying—extra steps—it’s better than scrambling for that crumpled receipt at the end of the month down the road when things could go faster without extra hassle in the first place.
Virtual Cards/Locked Merchants
Some companies rely on virtual card numbers that only function at select merchants. Are you using software? Generate a card number that only works at that one vendor.
This is particularly powerful for subscriptions because it won’t work anywhere else—even if somehow the number is leaked—and if it’s time for the subscription to end, just delete it.
Company cars work similarly with one-time-use card numbers.
Need to buy something for something once? Generate a new card number with a max limit just for that one-use transaction; after it goes through it’s no longer good anymore.
Approval Processes
Where cards can function where they automatically decline purchases over a certain amount without initial approval first—an employee wants to spend $2,000? The transaction halts temporarily as it pings a manager to approve or deny it.
It happens in real-time; people are checked out standing by waiting for their specific managers who are pinged for notification; usually, it takes less than two minutes for everyone to be on the same page.
It’s better to take five minutes to wait for approval than fifteen thousand dollars worth of damage for spending without prior notice.
Integrated Expense Policies
The best corporate cards exist in tandem with expense policies of the company—they aren’t PDF’d policies hidden behind hyperlinks and templates—they’re incorporated into the credit itself.
So when the policy states that meals cannot exceed $50? The card will accommodate. If the policy states approval from management is required before purchasing any equipment? It will be required without employee memory limitations.
This makes compliance easier—employees cannot forget rules they never even knew existed; finance no longer plays the bad guy consistently telling them what they cannot do.
Why It Matters More As Companies Grow
When a company consists of five employees, it’s likely purchase is seen by everyone anyway. They don’t care about reimbursements; they hand people cash sometimes or choose not give credit at all—and it all blends into one big budget and everyone knows everything what’s being spent,
But once it gets up to twenty or fifty or one hundred employees, this everyone-can-ask-for-approval approach fails. Administrators do not have time every day to approve a coffee or office supply request.
But they also don’t want free spending without anyone knowing what’s going on. Corporate cards allow companies to walk this fine line between happy options for purchases with limited stupid approvals holding everyone back without compromising integrity,
The Trust Factor
People don’t realize that great controls instill more trust than less—for example—it’s easy to trust someone when there’s zero chance they can screw up because it’s being monitored every second; therefore, managers would rather grant access.
Without controls, companies either NEVER give cards or if they do tentatively give them then play hawk over everyone for what they’re doing,
Neither works.
How It All Works
A sales rep books travel for client meetings—it goes through seamlessly; travel is an allowed category and it’s below their limit regardless. Receipts are automatically captured from their email associated from booking confirmation.
A sales rep tries using his card for her new laptop—denied; electronics are not part of approved categories. She submits a request—the manager approves—and then it can go through.
At month end, finance sees all the approvals given and all categorized receipts attached—and there’s no surprise and nothing lost from anyone’s blind spot.
Summary
Corporate cards facilitate better spending by leveraging adjustments based on smart policies built into them—not restricting spending across the board but creating smart bumpers easily facilitated within payment systems themselves to keep policy spending intentions met with grace.
It’s not about limiting spending potentials; instead, it’s about making it easy to spend money on good things while making it hard or impossible to spend money on bad things. If that’s accomplished, no need to play hawk over spending—it’s already taken care of!