Most times employees may think about what comes and what not under a valid business expense. To overcome this confusion, some businesses have turned to prepaid credit cards to manage employee expenses much better. Though prepaid cards come with a lot of benefits, on the flip-side there are a few disadvantages. If you are planning to implement prepaid card system in expense management, have a look at the pros and cons that help you decide if they are right for your business.
Advantages of Prepaid Cards
Advantages of managing expenses using prepaid cards are as follows:
Streamline the expense reporting process
Prepaid cards can help you avoid intensive process like reimbursement and tracking expenditures. This would take the pain out for accountants and would save a lot of time.
More Limits, More Control
Most times employees spend more than allocated while on a business trip. By giving prepaid cards, you can enforce more limitations over spending and employees will know they have a limited budget in hand, which will make sure that they don’t go over the expected costs.
Implementation is Easy
Deploying corporate credit cards means you have to deal with a lot of paperwork and processes like getting approval from credit card companies. In contrast to this, prepaid cards can be distributed to anyone, even to one-time travelers, thus avoiding a lot of paperwork.
Disadvantages of Prepaid Cards
On the flip-side, some disadvantages of managing expenses using prepaid cards are as follows:
Fee Costs More
Right from activation costs to monthly fees and withdrawal transaction penalties, all the fees can add up as extra expense to the company.
Limits will Adversely Affect Employees
At times, additional or unplanned costs will add up for employees while on business travel. Sometimes they need to extend their trip or the city may be more expensive than expected or your employees might run out of money. This would leave your employee stuck on the road and add extra accounting work while processing their expense claim requests. This would frustrate employees.
No monthly statements
Like corporate credit cards, prepaid cards do not generate monthly statements for your company, so you will have no cross reference in the future. Hence, it is very easy for employees to commit expense report fraud with prepaid cards rather than corporate cards.
Hope this information will help you decide whether to go with the expense prepaid cards.