What is a business expense card and what are the benefits for an employee?

In this blog, we'll explain all about a business expense card, and the benefits of using one, for employees.

The popularity of business expense cards is increasing in companies of all sizes and sectors. So, before we start, let's think about a few basic questions.

Business Expense Cards for Employees: What are they?

Think of a business expense card as being just like a debit or credit card. It helps you to make purchases at shops which take cards. The main distinction is that it is intended for work related spend, with funds on the card preloaded by the employer.

How does a business expense card operate?

These cards are usually allocated to specific employees, and that’s generally how these cards work for everyday company spending and employee spending. The employer loads money onto a company issued payment card, so employees can pay for company related purchases, and prepaid cards are pre-funded, which can reduce fraud risk.

Unlike a business credit card or other credit cards linked to corporate credit, they do not need to be repaid at a later date and interest is not applied.

Payment cards discourage reckless spending because there are spend controls in place. Employers have real-time oversight of transactions made using the card, and they can disable the business expense card if needed.

They can also set spending rules to control the types of purchases which are (and are not) allowed on the card, including by merchant category. For example, Expend Mastercards can be used anywhere, anytime - but limits can be set to restrict spending online, at ATMs, or on non-working days.

Providers may also offer physical and virtual options which are great for subscriptions, including physical cards and virtual cards.

What advantages does a company card offer an employee?

A corporate expense card ensures that employees have access to funds for company purchases when needed.

This is significant because employees may not wish to use their personal money to cover expenses for their employer's goods or services and then waiting for reimbursement. The traditional process involves keeping receipts submitting claims and waiting for approval before receiving refunds. This process requires time and effort, and can lead to delays in getting the money back. With some employers, this can take weeks!

Using a business expense card is convenient

A business expense card streamlines the reimbursement process for employees by eliminating inconvenience and complexities. Instead of paying with personal credit cards, employees can use the card for approved business transactions without blurring business and personal spend.

Employers have the option to customise spending limits, for individual team members, allowing them to use their business expense card for day to day weekly, monthly or one-time expenses.

With Expend, employees are able to add receipts and details to their expense transaction, as it happens. In the expense management app, receipt capture lets them photograph a receipt, select a category, and submit it in real time through approval workflows in seconds. This supports expense management by helping the finance team track spending in one place, with an audit trail that feeds expense reports and simplifies month end, while also supporting VAT reclaim processes. It also gives employee expense cards and company cards stronger control through a single platform with accounting integrations to accounting software and other accounting tools.

Utilising business expense cards and expense management software can also lead to enhanced expense tracking and reporting. Traditional claims often depend on manual expense reports, which can create extra admin. It becomes simpler to monitor and document all transactions made with the card whilst also reducing the risk of fraud and improving visibility over card spend.

By using a business expense card and a dedicated business expenses app with receipt scanning, employees find it easier to adhere to their company's expense policy as the spending guidelines are pre-established on the card. This makes management cleaner and helps ensure records support tax deductibility.

Could business expense cards contribute to boosting employee satisfaction?

Certainly. Even dedicated employees may find it challenging to cover their company related expenses out of pocket. Personalised expense cards eliminate this obstacle and remove the financial strain of personally funding business purchases.

How are business expense cards useful for expense management in the cost-of-living crisis?

The cost-of-living crisis means that more and more people are struggling to cover their personal rising costs. So, asking them to shoulder the burden of business expenses is an additional drag on their personal cash flow.

The challenge of increased living costs often forces employees to find ways to stretch their income further. Employers who provide business expense cards are sympathetic to the needs of their employees, and can reduce the financial stress caused by asking employers to fund business purchases through their own overstretched cash.

Disclaimer: This is not legal, accounting, or tax advice - it's simply a guide. If you need help, check with your accountant or contact HMRC directly.