Healthy organisations are always looking for ways to reduce their operational cost. However, many business owners don’t realise just how much revenue is lost from bad expense management.
Research shows that up to 10 per cent of a company’s budget is spent on expenses, so it’s crucial to find efficient ways to manage it. However, 43 per cent of companies are still tracking their expenses manually.
Prepaid corporate cards in organisations
Prepaid corporate cards are preloaded debit cards that automate the expense management process in an organisation.
Using a preloaded card is extremely simple. Employees are allocated a set budget in their cards which they can use, and receipts are stored in the app by taking a picture of it. All transactions are then automatically recorded and reconciled in the software.
Preloaded cards help organisations spend wisely. But more importantly, it significantly reduces their operational costs. So let’s look at how companies can save money using these cards.
Prepaid corporate cards cut the cost of manual time
Companies can save around 70 per cent of finance operations costs through automation, and it’s not hard to see why.
According to the Global Business Travel Association (GBTA), companies spend 20 minutes on average to process one expense report. Plus, it costs them around $81 on average to manually do it. This does not include any report errors that cost additional money to amend
Organisations that automate using a preloaded card can significantly cut down the manual time from processing these reports. They can also reduce the number of full-time staff needed for manual admin work.
They limit overspending
Businesses that allocate corporate credit cards to staff often overspend on their expenses. Because receipts are given after the purchase is made, employees may not produce the appropriate receipts during their claims, resulting in a heap of unaccounted transactions.
Studies show that expense fraud accounts for 21% of fraud in small businesses and 11% in larger companies. By using a prepaid corporate card, organisations can approve transactions after the receipts are produced and set caps for spending, making employees more accountable for their claims.
They make transactions more visible
When asked about the top pressures that lead to automating their expense management process, many companies cited ‘lack of visibility’ as one of the most significant. Traditional methods such as reimbursements only allow companies to see a transaction after it happens, which is not ideal when cutting costs.
Preloaded cards allow financial controllers to view transactions in real-time and have better control over their employee spending as it happens. For example, childcare provider Hillsborough OOSH reduced their costs by improving staff accountability and transparency when making purchases.
“I can now set a cap on my [company] spending. For example, previously, staff would tell me that they would spend $400 on equipment, but now I can set how much they should spend on equipment, and I can even set this for each school term. So that’s handy.”
Judy O’Leary, Hillsborough OOSH
They help companies budget better
Once financial controllers know where the money is spent, they can automatically set goals for their companies through budgets. Preloaded cards allow companies to view any categories that went over budget and take steps to reduce it.
A significant issue with setting monthly budgets for teams is trying to reclaim any extra cash that’s not spent for the month. Because of the tedious check-and-balance involved, most companies simply roll over their budgets to the next month, which is an inefficient way of allocating funds.
With automated software, companies can choose to either reset or roll over their budgets to the next month. As seen in our case study, an NDIS service provider saved money by resetting their budgets every fortnight.
By reducing manual work, having better visibility, and smart budgeting, prepaid corporate cards are an underrated method in reducing cost. For more information on Budgetly’s prepaid corporate card and how it works, schedule a demo with us today, or watch a 10-minute recorded demo.