July 25, 2022

3 Ways Virtual Cards Help Startups Control Spending


Virtual cards are quickly becoming the new standard for many startups.

People who work in startups are pioneers. They’re innovators by nature and hard workers by necessity, pulling together to build their vision of the future. Many of them also have another thing in common - When they pay for important things like software, they use virtual cards instead of a single physical company card. Why? Read on! 

What are virtual cards?

Virtual cards are more convenient, secure, and user-friendly for fast-growing startups.

Similar to plastic cards, virtual cards have their own unique card number, expiry date, and CVC. You can use them in just the same way as you would use a plastic card to pay online. 

Critically, virtual cards are different from plastic cards because they allow you to create multiple unique cards within the same account and even apply automated spending controls and limits to each. This means you can have as many virtual cards for as many apps or purchases as you require. This is a safer, more controlled way to manage your spend. 

The benefits of virtual cards

There are lots of ways that startups can use virtual cards to their advantage. They help empower remote teams, enable purchase automation, and keep costs for everything from software to agencies to travel under control. The wider business benefits are significant: 

1. Free up time for Finance

Virtual cards remove the need for a centralized sign-out process. Instead, you can instantly issue a new card for each team member, project, agency, or service.

That makes it much easier to see exactly how much is being spent, by whom, and on what – saving hours of chasing down receipts and reconciling line items. It’s easier to control that spend, too, since virtual cards can be programmed with spending limits. Virtual cards like Cledara’s also offer automated spending analytics, so Finance teams get a better view of business-wide expenses and assets.

2.  Improve company culture

Issuing team members with their own virtual cards improve internal working relationships. Practically, employees don’t have to wait to sign out company cards, and emotionally, it makes them feel more trusted and empowered to make their own decisions.

Virtual cards are especially beneficial for scaling teams with remote workforces. With 25% of professional jobs in North America forecasted to be remote by the end of 2022, that’s a significant portion of employees. Using virtual cards means you can apply the same, inclusive process to all of your employees, wherever in the world they are.

3. Increase security 

Virtual cards are less vulnerable to attack than physical cards. That’s because they’re used by fewer people, for fewer purchases, and because they can’t fall victim to RFID theft.

If the worst happens and a virtual card is compromised, the repercussions are smaller and easier to manage. If you’ve only used a virtual card for one service or subscription, then you only need to cancel and set up one new payment method. And that’s an easy task because new virtual cards can be generated instantly, without the need to wait for your bank to send a card by mail, and then send the PIN afterward.

Cledara’s virtual cards

Cledara’s virtual cards help startups get visibility and control over company-wide software spend. Coupled with a streamlined approval and cancellation process, Cledara’s virtual cards make it easy to manage your second-biggest expense: software. And because Cledara offers 2% cashback on all software subscriptions, and 1% on almost everything else, our virtual cards are the perfect tool to help lean startups manage their finances responsibly and get the most out of their software.

The drawbacks of physical company cards

Physical company cards have their limitations, and chances are that most of us have experienced frustration with them at one time or another. No matter when you ask for the company card, someone else always seems to be using it, and if it is available, card numbers get shared in company channels, not to mention a lack of control and visibility of who is spending what. But the problems with company cards go beyond inconvenience for the team members trying to buy – way beyond.

1. Additional work for the finance team

Company cards add to the finance team’s manual workload. For one thing, they have to create some sort of sign-out process, and then act as gatekeepers – usually bearing the brunt of other teams’ irritation when it doesn’t work as smoothly as it should.

Even as custodians of the card, finance teams rarely have very much insight into what it’s being used for. They might get a topline explanation (like travel, or software), but have no idea whether those things are necessary, let alone valuable. Then, they have to match up individual expenses to each team’s respective budget.

For recurring payments (like for software), things get even more complicated. Payments happen at irregular intervals, or renew unexpectedly, typically without the finance team’s knowledge, approval, or ability to ensure funds are in place. That interferes with forecasting and leaves finance teams in the unenviable position of having to chase subscription owners for receipts and information.

2. Lack of autonomy

Life isn’t much easier for teams buying, either. They shouldn’t have to wait or jump through hoops to get the basics they need to perform their jobs well. Delays stop them from being able to manage their own time effectively, and in some cases prevent them from executing altogether. 

The situation is even worse for remote teams. They can’t access physical sign-out sheets at all and might have to wait for someone from Finance to be available to share card details over the phone or on Slack instead. Neither practical nor secure.

And if Finance teams do push back, or try to get more insight into what the card is being used for? Teams can wind up feeling they aren’t trusted, damaging company culture.

3. Security risk

To get around these issues, some team members might avoid using the company card altogether. Instead, they’ll often choose to use their own cards, and expense the payment back to the business. But that puts you at risk of shadow IT. Trying to reconcile individual payments on the company card might be painful, but it’s nothing compared to trying to figure out what employees are spending on their own cards.

Having one company card also puts business continuity at risk. The more people who have access to a single card, the higher the risk of fraud. So while it might seem sensible to pay for all your subscriptions with one card, if that card is compromised, all those subscriptions go down with it. That means canceling and setting up new payment methods for every single service. This process, plus the wait for new cards to be delivered in the first place, interfere with core business processes and even causes service downtime.

It’s time to go virtual 

The snowball effect when companies switch to virtual cards will have a big impact on the way you do business. When you can instantly create unique cards for specific transactions, apply automated spending controls, and automatically collect invoices, you don’t just reduce the hours spent on administrative tasks, you also improve the lives of your employees.

For more details, and to find out how Cledara can help you make the switch to virtual cards, sign up for a 15 min demo today.



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