Using prepaid cards for business
Handling business expense claims can be very time-consuming and complicated the more employees you hire, which is why companies are increasingly opting for prepaid cards, allowing their members of staff to make purchases easily.
How do prepaid cards work?
The business puts a specific amount of money on to the card before giving it to an employee. They are then restricted on how much they can spend depending on the limit you set on the card.
This is a convenient and secure way to enable your staff to make purchases or withdraw cash from an ATM, as they can only spend what has been loaded on to the card so cannot exceed their budget.
The difference between prepaid cards and credit cards
You might have credit cards for your business and do not think there is a need for prepaid cards, but the latter can be a far easier and simpler method of providing your staff with money.
For a start, neither the business nor the cardholder needs to pass a credit check to be able to have a prepaid card, as you are not borrowing money from the provider. This also means you cannot get into debt, as there is a limit on their spending.
Credit cards typically incur a higher fee than prepaid ones, so you might find it is less costly to have a prepaid card. However, it is worth keeping an eye out for monthly charges, and fees for making purchases, withdrawing money or issuing new cards.
Why are prepaid cards good for keeping track of business expenses?
Not only can you maintain a tighter reign on spending, you can look at spending reports online to find out what the money has been spent on. Therefore, you can see whether an employee is charging too much to the company.
You can also dictate how your staff members use the cards by being able to ban them at ATMs, for instance. This stops employees from spending money on things you cannot keep track of, so allows you to have more control over their finances.
Similarly, you can also see when an employee needs their card ‘topping up’, adding a bit more money to their account if they need it.
While credit cards typically only allow a few people to have a card on one account, you can issue prepaid ones to a much larger group. This enables you to provide money to a greater number of employees, and limits the expense claims your accounts department has to deal with.
Indeed, not only is it easier than reimbursing expenses, it means your staff do not have to pay for company items from their personal accounts first.
Using them to pay staff wages
Businesses can also use prepaid cards to pay temporary staff members wages instead of putting them on the payroll. This is often easier than giving them a salary, as they can simply spend the money – or withdraw it – from the card, as opposed to receiving it in their bank account.
As the application process for prepaid cards is so simple, more businesses are taking advantage of them to help manage their company expenses.