We’ve all seen movies depicting employees whipping out the corporate credit card to pay for extravagant meals and entertainment.
Business owners shudder at these scenes, and they should. The Association of Certified Fraud Examiners tells us that 15 percent of all employee expenses can be categorized as fraud. In another study, 66 percent of employees admit to abusing the company card with:
- High-priced dinners
- Office supplies for home use
- Mobile phone and app purchases and upgrades
- Airline upgrades
Another portion admit to inflating transportation expenses, getting a cash refund from an expensed item and even creating a fake expense. These last three are full-on fraud. Still, with every opportunity, some people will take advantage. The credit card with a limit of thousands of dollars just trips some kind of spending wire in some employees. When a card’s limit set at $5,000, a $75 dinner for one seems reasonable.
Business owners can reduce their exposure to “expense padding” and fraud when they give their employees secure prepaid debit cards as opposed to credit cards. Like a teen with a set spending amount, employees must budget within a the debit card’s finite amount.
When presented positively, the prepaid debit card can be just as appreciated by employees as the credit card. Simply explain that the debit card works best for your taxes and/or accounting structure. Make this expense tool a decision based on business goals, not something to keep employee spending in line. Avoid mentioning potential expense abuse or fraud all together.
Other benefits of the prepaid debit card for business includes:
- Easy availability: get instant approval from the best online sources. With online banking now as secure as traditional, bricks-and-mortar banking, anyone can apply for and receive prepaid debit cards within days of ordering. Pay using your credit card or business bank account.
- No credit card dings: prepaid debit cards do not intersect with your business’s credit rating in the least. From the moment you buy it until the moment the employee spends the last $5, the debit card involves only up-front cash transactions.
- Convenience: Prepaid business cards are accepted everywhere the issuers’ cards are accepted. In-store, online and phone purchases all work with a prepaid debit card.
- Better employee spending control: Load the card with a set limit of money and task the employee to stay within that amount. As with a credit card, debit cards allow you to track exactly what the employee spends. Some companies even let you monitor business card transactions from your computer or mobile app. Business owners can even freeze and unfreeze the debit card as needed.
Prepaid Debit Cards Control Employee Spending So You Don’t Have to!
Some businesses choose company credit cards rather than debit cards because of the potential for rewards and the lower fees. Debit cards can also come with more fees than credit cards. Still, when compared to the financial losses due to abuse, these fees are negligible.
When a small business becomes a mid-sized business, expenses accounts follow quickly, especially for sales professionals. Then, additional office locations can mean travel expenses. Debit and credit cards empower employees to make their own decisions while keeping spend under control.