No matter what stage of growth your business is in, a corporate credit card is a standard financial must-have for your company. That said, modern technology has changed how businesses pay vendors and bills and manage their overall finances. Virtual cards, a new entrant in the payment industry, are currently making waves among modern entrepreneurs and business owners.
An Overview Of Virtual Cards
At its core, a virtual card is a unique digital card number tied to your existing business accounts. In general, every digital card number generated is intended for one-time use for security purposes.
Every transaction you make via a virtual corporate card will appear on your business bank account. Virtual cards are often used for online purchases, although you can also use them in physical stores that accept virtual card payments.
It’s important to note that virtual cards are different from digital cards. Think of digital cards as copies or versions of your physical card that can be stored on your mobile device. Meanwhile, a virtual card hosts its own unique card verification code (CVC) and expiration date.
Today, only a handful of major card companies offer credit virtual corporate cards, including Capital One and Citi cards. Beyond these issuers, several third-party tech companies like Weel have also explored the idea of virtual corporate cards. In addition, some providers enable you to generate an unlimited number of virtual cards linked to your existing business bank account.
5 Reasons Why Businesses Are Switching To Virtual Cards
Did you know that the estimated annual value for virtual corporate cards will be over USD$1 trillion by the end of this year? That’s a lot of business spending via virtual cards. But why do companies opt for this digital payment option?
#1: It Is Convenient
Modern entrepreneurs prefer the convenience that comes with virtual corporate cards. It allows for easy and quick payments without the need to pass around a physical company card. You only need a few taps on a mobile device to conveniently complete transactions online, making your business as efficient as possible.
#2: It Improves Transparency And Accountability
The more people who have access to the corporate card, the greater the risk of payment fraud from vendors, employees, and even subscription services. You can track spending more accurately by using a virtual card and creating card numbers for individual uses or for specific vendors.
You no longer have to worry about mysterious payments or always check in with the accounting department to get receipts of processed payments. Every business expense is categorized and organized, ensuring transparency and accountability.
#3: It Controls Spending
With better transparency, virtual cards also help in controlling business spending.
Businesses are constantly striving to cut costs and expenses. Unfortunately, with a physical card, it’s difficult to determine how often it’s been swiped and how much the actual expense is in every transaction.
Switching to a virtual card allows you to set up a card for each transaction and designate budgets. It prevents employees from exceeding the approved spending limit. If additional funds are necessary, it will require approval from managers. This provides better control over expenditure and prevents unnecessary spending.
#4: It Streamlines Your Accounts Payable
With improved transparency and accurate organization, virtual cards also contribute to streamlined accounts payable processing.
Virtual cards can replace the labor-intensive and inconvenient paper accounts payable management. Since there are several virtual cards for each expense and payment category, you have a visual trail of how your money is spent. With everything accurately recorded, your accounting team will have no trouble reconciling and tallying your accounts payable and overall financial statement.
Ultimately, it helps overcome the challenges of traditional accounting processes, thus saving time and minimizing human error.
#5: It Simplifies Vendor Payments
In terms of vendor management, virtual cards also prove advantageous. In general, you can create unlimited virtual card payments based on the number of vendors and partners you have while getting full insight into how much money is spent on them.
In addition, virtual cards are also beneficial in terms of boosting relationships with vendors. Since virtual cards don’t require time-consuming processes, your business partners and vendors can be paid immediately and on time. As a result, your vendors will be more inclined to continue doing business with you and may even help you score more favorable deals.
Takeaway
Virtual corporate cards have become one of the businesses’ best and most reliable digital payment solutions. Virtual cards can help you streamline your payments and overall finance management thanks to their versatility and secure nature. In addition, switching to virtual cards can help grow businesses financially and contribute to improving competitiveness and success in the long run.
