It’s no secret that unplanned expenses caused by ad hoc spend requests can disrupt budget planning. Enter temporary virtual cards: an innovative solution designed to streamline expense management. In this blog, we explore how these cards can improve how businesses manage ad hoc spending, thus offering flexibility and transparency. Temporary virtual cards not only simplify your company's spending processes but also enhance overall financial health and accountability.
What Are Ad Hoc Expenses?
Unlike regular and recurring expenses, ad hoc expenses are one-time claims. They are expenses made outside the usual invoicing system and check request processes. They’re not part of the employee’s monthly salary. Instead, ad hoc expenses are like an extra allowance for specific periods or unusual circumstances.
Some examples of ad hoc expenses include:
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- Late or adjusted timesheets
- Extra or miscellaneous costs
- Donations
- Freelancing services
- Emergency expenses
- Event tickets
- Overtime bonuses
With temporary virtual cards, you no longer need employee expense reimbursement. Here’s why.
1. You get more flexibility — A temporary virtual card allows you to set specific spending limits for each card, enabling flexibility in expense control based on the company’s budget. You can also generate multiple virtual cards for different purposes, such as allocating funds for specific projects or departments.
2. You empower your employees — It’s not very empowering when the company limits spending to a certain few. Instead, you can opt to provide temporary virtual cards where anyone can spend without the risk of overspending or fraud. That way, employees feel trusted and empowered while the finance team keeps track of the spending in real time.
3. You improve the business’s efficiency — When the company uses temporary virtual cards, you don’t have to spend a lot of time creating, chasing and approving spending requests. These tasks are done in one system in a streamlined manner, so no time goes to waste.
4. You protect the business — Temporary virtual cards come with advanced security features to help prevent fraud and unauthorised transactions, reducing the risk of financial losses for the business. The card can no longer be used once you complete the transaction, minimising the exposure of sensitive payment information.
Why Employee Expense Management Is a Challenge
Employee expense management poses several challenges for businesses, such as the following:
1. Approvals and reimbursements take a long time
When every employee is given a physical company card, approvals and reimbursements can take hours, days and even weeks of admin. Teams will be drowning in the responsibility of sorting expense claims after paying out of pocket, which consumes a huge chunk of their day and gives less time for more important work.
2. Errors in expense claims can lead to friction between employees and finance departments
As long as there’s manual intervention, there will always be human errors. Manual involvement can lead to data entry errors, duplicate payments and so much more, thus also leading to disputes and/or friction between employees and finance departments.
3. Employees might incur expenses without prior approval
Employees may incur expenses without prior approval for various reasons. For example, a company researcher may encounter a research source that requires a paid subscription. In such situations, employees may prioritise fulfilling their tasks even if it means incurring expenses without prior approval from their managers or finance teams. Furthermore, the lack of clarity on expense policies and procedures can contribute to employees making discretionary spending decisions without seeking prior approval.
4. Employees may not be fully aware of or understand the company’s expense policies
Expense claims outside of the company’s policies can be a huge pain point for the company’s finance department. There are various issues such as lack of communication and difficulty in accessing the policy, leading to policy violations. As usual, this leads to a snowball effect wherein employees have to wait longer to settle the issue, while finance teams have to deal with the company's financial burden.
Managing Ad Hoc Spending? Get Temporary Virtual Cards
Temporary virtual cards allow for precise control over the company’s spending limits. This is especially useful for ad hoc expenses where the amount and frequency of spending can vary. Since temporary virtual cards come with tracking and reporting features, you can easily monitor ad hoc spending without any worry. This visibility helps in expense management and compliance with financial regulations.
