Virtual Cards Help Businesses Solve Legacy Spend Management Silos

The more archaic and manual a system, the riper it is for abuse.

Just take, for example, the news of Citi firing a senior analyst for inflating his meal expenses and later lying about it, which became widely reported on last week (Oct. 15).

But reimbursement fraud is no joke, and businesses relying on spend management processes with manual expense reporting and reconciliations can find themselves increasingly vulnerable compared to their peers who have more fully embraced digital spend programs and virtual cards.

After all, in today’s constantly shifting macro environment, CFOs and their finance teams no longer have the luxury of taking company spend at face value — and should be turning over every available rock to cut costs and unlock capital.

By integrating digital-first spend management solutions that are connected to an organization’s financial systems, it is possible for firms to get a holistic view of their business that informs better decision making.

Innovations such as virtual cards and digital spend management platforms can help simplify expense management bottlenecks, streamline processes, provide better control over budgets, and ultimately offer a healthier view of financials.

And it may seem simple, but establishing greater operational transparency into employee and departmental spend can transform the way businesses manage their finances overall and unlock new levers to optimize financial workflows and payments.

Read also: Businesses Give Commercial Cards a Fresh Look

Real-Time Visibility and Advanced Security Measures

PYMNTS Intelligence has found that virtual cards and digital spend management solutions can help finance departments close the books faster while simultaneously protecting against fraud.

Digital payment solutions bring an increase in transparency that allows companies to coordinate expenses across different groups within their organization, ensuring efficient allocation of financial resources with real-time visibility into expenses while removing the complexity and redundancy inherent to the process of trying to track disparate expenses across multiple categories.

“The single biggest challenge…is that [payments] are so fragmented across the company… The larger the company, the more departments, and the more frequent it is that the left hand doesn’t talk to the right hand because there’s no visibility. And a lot of the efficiency of the dollar that can be spent comes from getting the right visibility [and translating that into spend efficiency],” Karandeep Anand , chief product officer at Brex , told PYMNTS.

“The need for expense management to understand the spend , to understand how it maps back to policies and budget, is fundamental and really rudimentary,” Herman Man , CPO at Bluevine , said to PYMNTS in August.

And when organizations are still using manual and paper-based processes, this can lock up payments and hinder accurate tracking.

See more: Citi and Navan Introduce All-in-One Travel Solution for CCB Cardholders

Advantages of Going Digital

Digital payments and virtual cards provide organizations with several spend management benefits.

For one, virtual cards can mimic a variety of traditional commercial card products, which reduces redundancies and eliminates the need for separate purchasing cards across departments.

Firms that use virtual cards can tailor specific solutions for unique purposes, helping to ensure that expenses are allocated correctly and efficiently, and controlling for any abuse or misuse.

“On the back end [of virtual cards], everything is so streamlined . Firms can put controls around the virtual cards at a merchant level, so that they are able to know by each card that these are all my purchases with this vendor or with this airline for travel, whether it’s a single purchase or a repeat expense occasion… [we are seeing a lot of] one-time or short-term use corporate cards that are tailored with specific occasion-based spend controls such as not being able to be spent at a bar, or daily limits on food, that get built right into the card itself,” Dan Hanks , vice president of global product development at i2c , told PYMNTS.

This provides enhanced security, helping firms avoid fraud and helping employees adhere to internal compliance programs.

It also makes closing the books on expenses much easier for finance teams, who no longer have to manually close the books and do reconciliations, because all the payment data and input is captured automatically, without the need for human input.

PYMNTS looked at the role AI can play in the spend management space earlier this year in a conversation with Jamie Anderson , chief revenue officer at U.S.-based global spend optimization firm Emburse .

He said AI could be transformative , assisting firms that have collected years’ worth of data on their platforms to better grasp spending at a more granular level, and establish policies based on a previous year’s spend or forecast future outcomes.