Going Beyond Prepaid To Push Expense Management Beyond Travel Spend

When it comes to employee spend management, innovations often circle around the business trip, tackling challenges like a lack of visibility and control over how employees spend corporate money while away from the office.

It’s this environment that has given rise to the virtual card as one of the most promising payment technologies for corporates. David Peterson, CEO of small- and medium-sized business (SMB) expense management company Penny, Inc., says business spending trends have given rise to even more reasons to deploy a virtual card solution. But, he told PYMNTS, physical prepaid cards are also worth a look.

“There’s an element of control with prepaid over what funding can be placed on the card,” he explained in a recent interview. “If you have a credit card, you’re giving an employee balances of maybe $1,000 or even more. Prepaid debit cards allow a small business owner to place enough funding on the card based on expense history, so that spending doesn’t impact their cash flow.”

Prepaid cards empower business owners and their administrators with the ability to set limits on spending, while still enabling employees to make the purchases they need, Peterson said. At the same time, spend control limits employees’ ability to abuse corporate spending power.

“That’s why the debit cards are so popular,” the CEO noted.

But Penny, Inc. is witnessing an increasing interest in virtual card technology, too, though according to Peterson, small business owners still need to get familiar with the tool.

“Many of the small business owners we’re working with today are typically not familiar with a virtual card,” he said.

“They don’t know how they work, and that’s part of the education process.”

But, as familiarity grows, virtual cards are proving a beneficial payment solution and, according to Peterson, SMBs see benefits beyond business travel spend.

“We find virtual cards are popular for companies with high-dollar recurring spend, such as monthly rent or lease payments to landlords, parking fees, or large payments for insurance,” he said.

“They find the virtual card is a great way to eliminate the need to write a check or set up multiple online banking profiles where they need to remember to go in and initiate the payment processes.”

That ability to eliminate manual processes like logging into online portals to initiate a recurring payment or taking out the checkbook is incredibly valuable to the small business owner, said Peterson, largely because it frees up time.

“What a lot of small businesses don’t realize is there is a lot of effort and costs associated with writing out hardcopy physical checks every month,” the CEO said.

Prepaid cards, too, can play their role in boosting efficiency and providing more time for small business owners to work strategically for their companies.

“Small businesses and CPAs are really looking for something that allows them to run their businesses more efficiently, [and] they’re looking for a one-stop-shop solution,” Peterson said.

In Penny, Inc.’s case, that means linking prepaid and virtual card solutions to a virtual dashboard that consolidates transaction information and control capabilities for managers and administrators. It now also means integrating with QuickBooks. According to Peterson, that means the data of transactions made using Penny, Inc. solutions is automatically integrated with QuickBooks and categorized for faster, more efficient accounting and cash management purposes. The CEO said this was in direct response to SMBs calling for these one-stop-shops.

“One of the biggest benefits for the small business owner comes down to productivity,” Peterson said of the integration with QuickBooks, which was announced last week.

“It allows them to run their business as opposed to re-entering data and information.”

Peterson added that this initiative to integrate and consolidate services for small business finance will continue to drive Penny, Inc. forward, with the company now exploring a potential marketplace solution for its SMB users.

“I think the small business owner wants one-stop-shopping, and the ability to keep everything within one solution, plus clear, easy integration with other solutions, and the ability to run their businesses without having to get pulled back into the office and sit in front of a computer for hours on end,” he stated. “Increased efficiency from using mobile technology is a must, as most business owners [time] away from their physical offices to operate their companies. That’s really what I think is going to be the future for business expense solutions.”