B2B Payments

Prepaid Gets Proactive In Employee Spend Control


With so many ways to manage expenses, it’s a surprise so many businesses still use manual processes like Excel spreadsheets. At the end of 2015, travel and expense management company Certify found in its 2016 Expense Management Trends Report that 70 percent of small businesses are still using manual expense management tools, for instance.

But even if CFOs and treasurers deploy ways to digitally and automatically capture the data necessary for expense reporting — for instance, mobile apps that can scan receipts and input transaction data into an online platform — companies are still stuck finding out what an employee bought, and for how much, only after the purchase was made.

Paul Thedinga, VP of strategic alliances at expense management firm ExpenseWatch, finds that one way to more adequately manage spend is to control the tool with which employees make purchases and not just the tool with which they record them.

The company recently announced the launch of a Visa prepaid card (developed in conjunction with PEX) that enables managers to set spend limits and other controls for employees. While manual expense reporting can be a hassle, Thedinga told PYMNTS that simply understanding how corporate funds are being used is the bigger problem.

Automation, he said, provides one level of spend visibility.

“Businesses today are being asked to manage their funds much closer than they ever have before,” said Thedinga. That goes for companies large and small — any company, he continued, with multiple locations where employees are going between sites and making purchases.

A solution that provides insight into how employees are spending money not only gives managers more control but combats fraud, whether by intentional employee misuse of corporate funds or by simply making a careless mistake on an expense report.

“Any time that you own a business where you’re allowing employees to either expense or buy items, you’re always worried about people not utilizing it 100 percent correctly,” Thedinga noted.

But even when a controller or treasurer can identify fraud or another type of mishandling of corporate funds, it is often too late to remedy the issue.

“There’s no perfect model out there. There are always employees that do things by accident or make a mistake,” the executive continued. “And then, there are those that maliciously go out and have an intent to take goods and money from an organization.”

But that’s where a prepaid card comes in. While businesses largely lack insight into how money is being spent, Thedinga explained that expense management tools may only increase that insight for managers after a purchase is already made.

“I don’t think a lot of companies really know what their true spend is,” he explained, “and they find out at the end of the month when they’re reimbursing employees or at the end of the month when they’re going through their general ledger systems.”

A prepaid card can add another layer of transparency to employee spending, he said, by enabling businesses to know how much will be spent, where and on what items before a purchase is ever made.

“Most companies do their expenses via manual systems, whether it be paper copies or Excel spreadsheets,” he said. “They don’t know what the true spend is, and they find out after the fact, once it’s already spent. You can’t do anything about it; it’s already gone.”

Thedinga pointed to one example of a company that needs to purchase laptops; if five are needed but an employee buys six and then expenses that transaction to the employer, there aren’t many options for a company to mitigate this excess spend.

“You don’t know about it until they submit the expense report,” he said. “And what are you going to do? You have to pay the employee for what they put out based on what they spend.”

A prepaid card solves this problem, he argued, with its ability to allocate a certain spending limit. Managers can adjust that limit on a necessary basis and control where the money is spent, he said.

“It really helps with spend control,” Thedinga noted. “It helps with making good decisions about where money is being spent and how. But it also gives control at the administrative level, to keep employees up-to-date on what they need to buy and where they need to buy it.”


New PYMNTS Study: Subscription Commerce Conversion Index – July 2020 

Staying home 24/7 has consumers turning to subscription services for both entertainment and their day-to-day needs. While that’s a great opportunity for providers, it also presents a challenge — 27.4 million consumers are looking to cancel their subscriptions because of friction and cost concerns. In the latest Subscription Commerce Conversion Index, PYMNTS reveals the five key features that can help companies keep subscribers loyal despite today’s challenging economic times.

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