Financial productivity

Cost Reduction: The Complete Guide

July 11, 2024
|
8
Min Read

In today’s competitive business landscape, controlling costs is essential for long-term success. This guide delves into the concept of cost reduction, exploring its various aspects, strategies, and implementation. 

By understanding how to effectively reduce costs, businesses can improve profitability, strengthen financial health, and gain a competitive edge.  

What Is Cost Reduction?

What is Cost Reduction? A definition

Cost reduction refers to a company's deliberate strategies and actions to minimize its expenses. It’s about identifying areas where spending can be optimized or eliminated altogether without compromising quality or core operations. 

Differences Between Cost Reduction and Cost Avoidance

Cost reduction deals with what you're already spending, while cost avoidance focuses on what you might spend in the future. Here's a breakdown of the key differences:

Cost Reduction

  • Focus: Reducing existing expenses.
  • Action: Optimizes current spending to minimize costs without compromising quality or core operations.
  • Example: Renegotiating supplier contracts to secure better pricing on raw materials. This directly reduces the amount a company spends on production.

Cost Avoidance

  • Focus: Preventing future expenses from arising.
  • Action: Proactive measures taken to eliminate potential cost risks.
  • Example: Implementing a preventative maintenance program for equipment. This upfront investment can avoid costly repairs or breakdowns in the future.

Why Is Cost Reduction Important?

There are numerous reasons why cost reduction is crucial for businesses:

  • Increased profitability: Reduced expenses directly translate to higher profits, allowing companies to reinvest in growth initiatives or improve shareholder value. 
  • Improved cash flow and financial health: Cost reduction strengthens a company’s cash flow, providing a financial buffer for unexpected situations and enabling smoother operations. 
  • Enhances competitiveness: By lowering costs, businesses can offer more competitive pricing, attracting new customers and retaining existing ones. 

How Can Cost Reduction Help Improve Profit Margins?

The impact of cost reduction on profit margins varies depending on the initial profit margin and the amount of cost reduction achieved. However, even a small percentage reduction in costs can significantly improve profitability, especially for companies with lower margins.

Understanding Your Costs: The Foundation

Before implementing cost reduction strategies, you must fully grasp your company's cost structure. Here are some key concepts to understand:

Direct Vs. Indirect Costs

Direct costs are directly attributable to producing goods or services (e.g., raw materials, labor). Indirect costs support overall operations but aren't directly tied to production (e.g., rent, utilities).

Fixed Vs. Variable Costs

Fixed costs (e.g., rent, salaries) remain constant regardless of production volume. Variable costs (e.g., raw materials, direct labor) fluctuate with production volume.

Importance Of Cost Categorization

Categorizing costs helps identify areas with the highest spending and potential for reduction.

Also Read:

Techniques For Analyzing Spending Data

Source: Netsuite

Analyzing spending data is crucial for identifying cost-reduction opportunities. Here are some common techniques:

  • Trend analysis: Identify spending patterns over time to pinpoint areas with increasing costs. 
  • Benchmarking: Compare your spending against industry averages to see if there are areas for improvement. 
  • Variance analysis: Investigate discrepancies between budgeted and actual costs. 
Did you know that an expense management software can automatically track spending patterns and identify discrepancies between budgeted and actual costs?

Identifying Areas For Cost Reduction

By analyzing spending data, you can pinpoint areas ripe for cost reduction. Some common areas include:

  • Procurement: Negotiate better deals with suppliers, consolidate vendors, and optimize inventory management. 
  • Operations: Automate tasks, streamline processes, and eliminate waste. 
  • Overhead costs: Review subscriptions, memberships, and other recurring expenses to identify potential savings. 

How can an expense management software help?

  • Procurement: An expense management software can streamline this process by facilitating quote collection and comparison from multiple vendors, tracking purchase receipts to avoid duplicates, and flagging potential overspending.
  • Operations: Tools like Fyle can automate tasks like expense reporting and approval workflows, freeing up employees for more strategic activities. It can also provide valuable insights into spending patterns to identify areas for process improvement.
  • Overhead costs: An expense management software can categorize expenses and track recurring costs, making it easier to identify underutilized subscriptions or memberships that can be cancelled. It can also help identify duplicate subscriptions or memberships across departments.

The Benefits Of Cost Reduction

  • Increased profitability: As mentioned earlier, cost reduction leads to higher profits.
  • Improved cash flow and financial health:  Reduced expenses strengthen cash flow and financial stability.
  • Enhanced competitiveness: Lower costs allow for competitive pricing, attracting new customers.

Building A Successful Cost Reduction Strategy

Developing a successful cost-reduction strategy requires careful planning and execution. Here are the key steps:

Defining Goals and Objectives

  • Short-term vs. Long-term goals: Set both short-term (e.g., reduce marketing spend by 5% in Q3) and long-term goals (e.g., achieve a 10% overall cost reduction within a year).
  • Aligning cost reduction with company strategy: Ensure cost reduction efforts support the company's overall strategic objectives.

Assessing Cost Reduction Potential

  • Identifying areas with the most significant impact: Analyze spending data to pinpoint areas with the highest potential for cost savings.
  • Prioritizing opportunities: Focus on areas with the biggest impact and easiest implementation.

Developing a Tailored Plan

  • Considering company size, industry, and goals: The plan should be customised to your company’s specific context and needs.
  • Flexibility and adaptability in the plan: The plan should allow for adjustments as needed based on market conditions or new opportunities. 

Core Cost Reduction Strategies

Now that you understand the foundation and benefits of cost reduction, let's explore some key strategies for implementation:

Optimizing Procurement Processes

  • Supplier negotiation and consolidation: Regonitiate contracts with existing suppliers to secure better pricing and terms. Consider consolidating vendors to reduce administrative costs and leverage buying power.
  • Early payment discounts and contract management: Take advantage of suppliers' early payment discounts to improve cash flow. Actively manage contracts to ensure you’re not paying for unused services. 

Streamlining Operations

  • Automating tasks and workflows: Automate repetitive tasks to free up more employee time for more strategic activities. This can include data entry, report generation, and even some customer service interactions. 
  • Process improvement and eliminating waste: Identify and eliminate unnecessary steps in your processes. Look for opportunities to simplify workflows and reduce redundancies. 

Managing Expenses Effectively

  • Reviewing subscriptions and memberships: Regularly review subscriptions for software, services, and memberships to identify underutilized or unnecessary ones. Negotiate better rates or cancel unused subscriptions.
  • Analyzing and optimizing marketing spend: Analyze the effectiveness of your marketing campaigns and optimize spending towards channels with the highest return on investment (ROI).
  • Reducing unnecessary overhead costs: Scrutinize overhead costs like office supplies, utilities, and travel expenses. Identify areas where you can cut back without impacting productivity.

 What Are Some Creative Cost Reduction Strategies?

Beyond these core strategies, here are some creative approaches to consider:

  • Barter with suppliers: Explore bartering goods or services with suppliers to fulfill certain needs.
  • Implement a remote work policy: If feasible, allowing remote work can reduce office space requirements and associated overhead costs.
  • Encourage employee cost-saving ideas: Create a culture where employees are encouraged to suggest cost-reduction ideas. Offer incentives for valuable suggestions.

Implementation And Ongoing Management

A successful cost reduction strategy goes beyond simply identifying areas to cut. Here's how to effectively implement and manage your plan:

Getting Everyone on Board

  • Fostering a cost-conscious culture: Encourage a company culture where everyone is mindful of spending and seeks opportunities to save. Communicate the importance of cost reduction and its benefits for the company's success.
  • Communication and employee engagement: Keep employees informed about cost reduction initiatives and their progress. Involve them in the process whenever possible to generate buy-in and creative ideas.

Establishing Governance Structure

  • Assigning roles and responsibilities: Clearly define who oversees the cost reduction program and implements specific initiatives.
  • Tracking progress and measuring success: Establish key performance indicators (KPIs) to track progress and measure the effectiveness of your cost reduction efforts. Regularly monitor and analyze data to identify areas for improvement.

Continuous Monitoring and Improvement

  • Reviewing and adapting the strategy as needed: The business landscape constantly evolves. Regularly review your cost reduction strategy and adapt it to changing circumstances and new opportunities.
  • Identifying new cost-reduction opportunities: Develop a culture of continuous improvement where cost reduction is an ongoing process. Encourage employees to continually identify and suggest new ways to save money.

Special Considerations

Technology and Automation

Technology can be a powerful tool for cost reduction. Here are some ways to leverage it:

  • Investing in automation software: As mentioned earlier, automating tasks can free up employee time and reduce labor costs.
  • Utilizing cloud-based solutions: Cloud-based solutions can often be more cost-effective than on-premise software, offering pay-as-you-go models and reduced IT maintenance costs.

Inventory Management

Optimizing inventory levels can significantly impact costs:

  • Implementing forecasting tools: Utilize forecasting tools to predict demand and avoid overstocking or understocking inventory.
  • Negotiating with suppliers for better pricing: Negotiate bulk purchase discounts or implement just-in-time (JIT) inventory management to reduce storage costs.

How Fyle Can Help

An expense management software like Fyle can be a powerful tool for cost reduction in several ways:

  • Automated receipt capture: Fyle lets you submit expense receipts via text messages and other everyday apps. This eliminates the need for manual data entry and paper trails, saving time and reducing the risk of errors. 
  • Automatic categorization: Fuyle automatically categorises expenses based on receipt information, making it easier to analyze spending patterns and identify areas for cost reduction.
  • Real-time reporting: Fyle provides real-time dashboards and reports that clearly show company spending across departments, categories, and vendors. This allows for proactive cost management and identification of potential spending anomalies.
  • Improved budgeting: With clear visibility into historical spending data, businesses can create more accurate and data-driven budgets, ensuring they allocate resources efficiently.

Remember, cost reduction is an ongoing process, not a one-time event. Here's where an expense management software becomes an invaluable tool. It streamlines data collection and analysis, automates tasks, and provides valuable insights to help you continuously optimize your strategies.

Product update

Introducing Conversational AI: Collect receipts and expense details via text messages!

April 24, 2024
|
3
Min Read

Say farewell to the era of mobile expense apps; it's time to embrace a simpler way to manage expenses – through texting.

Over the past three decades, we've witnessed expense management evolve from cumbersome paper-based processes to spreadsheets and finally to the app-centric solutions we've grown accustomed to. But now, we’re gradually witnessing a shift towards AI, with smart computing doing more than just automating tasks. With Fyle’s new Conversational AI, go from “there’s an app for that” to “you don’t need an app for that”. Learn more about this launch here!

Introducing: Expense Reporting via Text Message 💬

Simply capture an image of your receipt and send it our way via text. Fyle's AI will handle the rest – automatically generating an expense, extracting all the important data, coding it according to your GL, and filing it away! Whether it's a credit card receipt or an out-of-pocket one, Fyle's got you covered. No more app downloads required.

Image of using text message to submit receipts and expense details with Fyle

OCR-Powered Data Extraction and GL Coding

The moment your receipt reaches us, Fyle's OCR engine accurately extracts details like Amount, Date, Currency, Merchant, Category, and more, seamlessly mapping them to your Chart of Accounts or GL Codes. 

Need to collect other mandatory information? Do that via text too. 

Fyle will prompt your employees to submit other mandatory fields like Projects, Cost Centers and more via text messages, ensuring you don’t need to constantly follow up with them for important information. Configure all the fields you consider necessary or mandatory in the settings, and Fyle will handle the rest. This means your users can not just submit receipt, but complete their entire expense without even using the mobile app!

Image of Fyle using text message and AI to submit receipts and expense details

Automated Credit Card Reconciliation

Fyle facilitates seamless reconciliation between your receipt and credit card expenses, regardless of which comes first. Users can submit receipts for all Visa, Mastercard, and American Express card transactions via text message. We'll make sure they're accurately coded and matched. With real-time and direct card transaction feeds, you can get instant visibility into card spend without even logging into your bank accounts.

Real-time Policy Checks

Fyle’s policy engine operates in real-time, checking expenses against your business rules before they even land in the approval queue. From spend limits to project-specific guidelines, Fyle ensures compliance every step of the way.

But Wait, There's More!

Fyle doesn't stop at automating receipt collection; it streamlines the entire expense reporting process, automating submissions and eliminating the need for constant reminders and verifications.

  • Merchant-based rules: Auto-fill expense fields like Projects, Categories, and more based on the merchant name extracted from receipts. For example, “if the merchant is Uber, make category taxi”. 
  • Automatic report submission: Create a schedule based on which Fyle will automatically create an expense report, add all the expenses, and submit it for approval. Users can literally submit a receipt, and forget about it.

Why Text-Based Receipts Are a Game-Changer

  • No learning curve: With Fyle's Text Messaging feature, there's no need for employees to learn a new app. Say hello to seamless onboarding and 100% faster adoption.
  • 5X faster receipt collection: Users can text receipts the second the spend occurs. Customers with real-time card feeds enabled also receive instant text notifications upon card swipe, slashing receipt collection time by nearly half.
  • Effortless book closing: With receipts pouring in almost instantly, there's no more chasing after employees. Fyle's direct accounting integrations and real-time sync ensure swift book closures.

Fyle is on a mission to ensure your software experience is not just limited to an app, but delivered to you everywhere. Say goodbye to unnecessary mobile apps and hello to expense management with text messages in real-time. Ready to see it in action? Schedule a demo with Fyle today!

Try Fyle's modern expense management solution with real-time feeds for your existing credit cards.

SEE ALL IN PRODUCT UPDATES  

Travel Expense Management

Travel expense management

Corporate Travel Management: From A-Z, Simplified

July 9, 2024
|
7
Min Read

Imagine this: you have a business trip coming up to New York City, the most expensive U.S. city for business travelers, with a daily average cost of $541. 

But instead of planning the trip, you’re drowning in a sea of flight options, hotel comparisons and car rental quotes. 

Enter corporate travel management, your ticket to an easy–boarding pass?

What is Corporate Travel Management?

Corporate travel management (CTM) is your one-stop shop for all things business travel. It’s a program that helps companies streamline the entire travel process, from booking flights and hotels to managing expenses and ensuring employee safety. 

Business Travel Statistics around tourism spending

Who Is A Corporate Travel Manager?

A corporate travel manager is the mastermind behind your smooth travel experience. They’re experts who design and manage your company’s travel program. They negotiate deals with airlines and hotels (remember, business travelers are highly valuable to airlines!), handle bookings, and provide support to traveling employees. 

Do I Need A Corporate Travel Management Program?

Absolutely! Here’s why:

Save Time and Money

CTM programs negotiate corporate rates and track expenses, saving you big bucks. Did you know that while business travelers only make up 12% of airline passengers, they account for 75% of an airline's revenue on some flights?

Corporate travel management programs help you tap into those corporate discounts. 

Simplify Travel for Employees

No more endless searches! Employees can book flights, hotels, and car rentals through a user-friendly online platform or app.

Imagine the time saved compared to the pre-internet days, when business travelers took 405 million long-distance trips a year in the U.S., mostly by car for destinations under 250 miles!

Source: U.S. Department of Transportation, Bureau of Transportation Statistics, 2001

Peace of Mind for Employees

Corporate travel management programs prioritise employee safety with features like travel alerts and emergency assistance. 

How Much Does Corporate Travel Management Cost?

Corporate travel management programs typically charge a small fee based on transaction volume or a retainer model. But guess what? The savings they generate often outweigh the cost. 

Let’s break it down with an example:

Scenario: Imagine your company takes 100 business trips per year, costing an average of $2,000 per trip (including flights, hotels, and car rentals). This translates to a total annual travel spend of $200,000 ($2,000/trip * 100 trips).

CTM fee: A CTM program might charge a fee of 2% per transaction. So, for your 100 trips, the CTM fee would be $4,000 ($2,000/trip * 100 trips * 2%).

Savings potential: Here's where CTM programs shine. Through negotiating corporate rates and optimizing travel spend, a CTM program could potentially save your company 10% on travel costs. In this example, that translates to $20,000 in annual savings ($200,000 * 10%).

The math: Even after factoring in the CTM fee, you come out ahead:

  • Total Travel Spend: $200,000
  • CTM Fee: -$4,000
  • Savings from CTM: $20,000
  • Net Savings: $16,000 ($20,000 - $4,000)

Can Employees Still Book Their Own Travel With Corporate Travel Management?

Yes, but with a safety net!  Most programs allow employees to book within the company's travel policy through the CTM platform. This ensures they get the best rates while adhering to company guidelines.

Business Travel Statistics around gender gap in corporate travel
(Source: Bureau of Transporation Statistics)

Some Things to Know About Corporate Travel Management Programs

Cost Savings & Budgeting

CTM programs negotiate corporate rates with travel suppliers and track expenses to optimize your budget. Think of it as having a travel connoisseur in your corner!

Duty of Care & Risk Management

Business travel can come with risks, especially for international travel which saw a massive decline during COVID (78.8% drop in U.S. business tourist arrivals from overseas in 2020). 

An excellent corporate travel management program provides features like real-time traveler tracking, emergency response services, and travel advice to keep your employees safe. Imagine your employees getting stranded due to some outbreak in the future–a CTM program can help locate them and arrange assistance. 

Compliance & Reporting

CTM programs help ensure employees follow your travel policy and provide clear reports on travel spend, allowing you to identify cost-saving opportunities.

Also Read:

Benefits of a Good Corporate Travel Management Program

For Travelers

  • Simplified booking: No more travel booking headaches! Book everything in one place with user-friendly tools.

  • Savings & deals: Get access to exclusive corporate rates and travel discounts. Remember, business travelers are more likely to buy last-minute tickets, and CTM programs can help you snag those deals.

  • 24/7 support: Need help changing a flight or have a question during your trip? Your CTM program is just a call or click away.

  • Enhanced safety: Travel with peace of mind knowing your company prioritizes your safety with features like travel alerts and emergency assistance.

For Businesses

  • Cost savings & control: CTM programs help you negotiate better rates and track travel expenses, leading to significant cost savings. Imagine the savings if you can avoid expensive last-minute flights that business travelers are more likely to book (remember, 74% of US business trips are under 250 miles and can often be made by car).

  • Data & insights: Get clear reports to understand your travel spend and identify areas for cost optimization. Did you know that airlines receive nearly 60% of their revenue from passengers? With CTM data, you can see how much of that is business travel and optimize your spending accordingly.

  • Duty of care: Ensure your employees' safety with features like travel alerts and emergency assistance.

  • Happy employees: A smooth travel experience keeps employees happy and productive. Imagine your employees returning from a business trip to San Francisco (the most expensive US city for food!) feeling refreshed and ready to work, thanks to a seamless travel experience facilitated by CTM.

Steps for Efficient Corporate Travel Management

Now that you're armed with this knowledge, you can implement a CTM program and transform your business travel experience. Here are some next steps:

  • Research: Identify your company's travel needs and budget. Consider factors like the number of business trips per year, typical destinations, and employee travel habits (car vs. air travel).

  • Choose a CTM provider: Look for a reputable Travel Management Company (TMC) with expertise in your industry. A good TMC will understand your company's unique needs and be able to offer customized solutions.

  • Develop a travel policy: Outline your expectations and guidelines for business travel. This should include things like preferred airlines and hotels, expense limits, and approval processes.

  • Train your employees: Educate your team on the new CTM program and how to use it effectively. This will help ensure a smooth transition and maximize the benefits of the program.

  • Implement Technology: Choose user-friendly online booking tools and most importantly, a travel expense management software. Make sure the technology integrates seamlessly with your existing systems.

Also Read:

Travel and Expense Management Software: The Backbone of Your CTM Program

A travel expense management software is the unsung hero of your CTM program. It goes beyond simply tracking receipts–it's a powerful tool that helps you develop, implement, and enforce your travel policy. Here's how:

  • Streamlined expense reporting: Say goodbye to piles of paper receipts and manual data entry. Employees can use a travel expense management tool to capture and submit receipts via text message. AI instantly extracts relevant information to create an expense report automatically.  This saves time for everyone involved and reduces the risk of errors.

  • Policy automation: Imagine pre-populating expense limits and category restrictions based on your travel policy. A travel expense management software allows you to set up rules that automatically flag out-of-policy expenses, ensuring compliance from the start.

  • Faster reimbursements: Employees get reimbursed quicker with streamlined expense reporting. This improves employee satisfaction and reduces administrative burdens for finance teams.

  • Data & analytics: With robust reporting features, you can gain valuable insights into your travel spending. See which categories are driving costs the most, identify areas for optimization, and make data-driven decisions to improve your travel program.

In Conclusion 

Corporate Travel Management programs are fantastic, but they're like a luxury car without an engine. They save you money, streamline processes, and prioritize employee safety, but for peak performance, you need a travel and expense management software.

That’s where Fyle comes in. Fyle automates receipt collection, expense report submission, expense reimbursements, enforces travel policies and provides valuable spending insights. 

The result? Streamlined processes, optimized costs, and happy employees.

Ready to take your CTM program to the next level? See Fyle in action! Sign up for a demo today and experience the future of business travel.

Travel expense management

The Best Business Travel Management Software

July 4, 2024
|
8
Min Read

Juggling business trips can be a nightmare–from booking flights and hotels to managing receipts and keeping track of expenses. But fear not; a whole arsenal of business travel management software exists to streamline this process and make your life easier. 

Let’s explore some of the top contenders to help you choose the perfect fit for your company’s needs. 

Corporate Travel Booking Tools

A business travel booking tool goes beyond simply finding flights and hotels. They offer a one-stop shop for booking, managing, and tracking all aspects of your business travel. 

1. TravelPerk

Imagine managing every aspect of your business travel in a single, user-friendly platform. That’s the magic of TravelPerk! This all-in-one business travel management solution streamlines your booking process to ensure that everything from flights, trains, and hotels is brought under one dashboard and ensures compliance with your company’s travel policy.

Their handy mobile app keeps you organized and in control, providing real-time flight updates, paperless confirmations of all your bookings, and easy access to your entire itinerary.

TravelPerk also understands that flexibility is key in the business world. That’s why their FlexiPerk feature allows you to cancel trips easily and get 80% of your money back–no questions asked!

Pricing

TravelPerk offers a free "Starter" plan with five monthly bookings, perfect for small businesses or trying out the platform. Paid memberships provide more features and increased booking limits. Here's a quick breakdown:

  • Premium: $99/month + 3% booking fee
  • Pro: $299/month + 3% booking fee
  • Enterprise: Custom pricing for high-volume businesses

Did you know TravelPerk integrates directly with Fyle, a travel expense management software? This means:

  • Automated expense creation:  Book your trip through TravelPerk and watch as Fyle automatically creates a corresponding expense report–no more manual data entry!
  • Effortless expense reconciliation: Fyle integrates with major credit card networks (Visa, Mastercard, American Express) to automatically sync and reconcile your expenses.  Reconciliation on autopilot? Yes, please!
  • Smart expense categorization:  Map payment profiles and booking types to ensure expenses are categorized correctly in Fyle.
  • Cancellation tracking made easy:  Fyle automatically tracks and records cancellations and refunds made through TravelPerk, saving you the hassle of managing them manually.

2. Airbnb for Work

Airbnb for Work goes beyond traditional hotels, offering a curated selection of unique spaces around the world that cater specifically to business travelers. This platform provides a win-win for both employers and employees. Companies can leverage Airbnb for Work’s suite of tools to streamline booking, manage travel spend, and ensure compliance with company policies. 

Employees can access various accommodation options, from modern apartments to charming boutique hotels, all designed to foster productivity and comfort during business trips. 

Pricing

  • Typically based on the stay, similar to booking through the regular Airbnb platform.

3. TravelBank

TravelBank joins the ranks of business travel management superstars, offering a comprehensive platform to streamline your corporate travel experience. Similar to TravelPerk, TravelBank is a one-stop shop for booking flights, hotels, and ground transportation for your employees. It goes beyond booking though, offering features to manage expenses, enforce travel policy compliance, and prioritize traveler safety–all within a user-friendly platform.

TravelBank boasts seamless integration with various business tools, including Slack, meaning you can book trips or submit expense reports directly from your preferred communication platform. This level of convenience translates to real time-saving benefits.

TravelBank empowers businesses with features like cost-saving tools, streamlined processes for booking and expense management, and clear visibility into travel spend for informed budgeting. 

With its feature-rich platform and focus on saving you time, money, and stress, TravelBank is a strong contender worth considering for your business travel management needs.

Pricing

  • Travel: $25 User/month
  • Expense: $10 User/month
  • Custom Pricing: Contact

4. Egencia

Egencia is a seasoned veteran in the world of business travel management. They offer a comprehensive suite of tools designed to elevate your corporate travel experience far beyond just booking flights, hotels, and ground transportation. 

Egencia boasts features like itinerary management, robust reporting for informed decision-making, and duty-of-care services that prioritize traveler safety with features like 24/7 customer support and real-time travel alerts.

Egencia's extensive industry experience and global network of travel providers make it a trusted choice for businesses of all sizes. They understand the importance of traveler well-being and offer features that keep your team informed, supported, and on track throughout their journeys.

Their focus on experience, expertise, and traveler well-being makes them a compelling choice for managing your corporate travel program with confidence.

Pricing

  • Pricing made available on request

Tools for Travel Expense Management

Travel expense reports can be a nightmare for both employees and finance teams. Travel expense management tools streamline the process, ensuring accurate record-keeping, policy compliance, and efficient expense reimbursements. These tools can handle a mix of corporate and business credit cards, cash advances and facilitate compliance with tax regulations. Here are some of our top contenders:

5. Fyle

Fyle emerges as a champion in the travel expense management category. This user-friendly platform automates the entire process, transforming tedious data entry and receipt sorting into a breeze.  

Fyle accepts receipts through various methods, such as text message, email, or its mobile app. Its intelligent data extraction then automatically creates expense reports, minimizing manual work and saving valuable time for both employees and finance teams.

Designed for seamless integration, Fyle connects with popular accounting software, allowing for effortless expense categorization and streamlined reporting.  This eliminates the need for manual data transfer and ensures all your financial data is consistently organized.

Fyle also offers an additional perk: an integration with TravelPerk. This powerful combo allows you to manage both the booking process and all related expenses within a single, unified system.  

Fyle effectively streamlines the entire travel expense experience, keeping your team focused on core business activities and free from the burden of manual expense reporting.

Pricing

  • Standard: $6.99 per active user*/month
  • Business: $11.99 per active user*/month
  • Enterprise: Custom pricing

6. ShoeBoxed 

If you're looking for something that isn't feature-packed like Fyle but can do simple tasks like receipt management, Shoeboxed is a good option. Shoeboxed offers two ways of managing receipts: you can either send them in a prepaid envelope to their processing facility or use its mobile app to scan them. 

By using OCR, they can scan and convert the paper receipt into a digital version that is also searchable. This makes tracking and organizing receipts easier. Shoeboxed also integrates with Wave accounting, Xero, FreshBooks, Intuit, and more.

Pricing

  • Startup: $22 /month
  • Professional: $45 /month
  • Business: $67 /month

Also Read:

Some Additional Business Travel Management Tools

7. TripIt

Tripit is a travel planner app that consolidates bookings into an itinerary. As soon as you book a flight, hotel, or other travel plan, you need to forward all the confirmation emails to their email. Tripit will automatically create an itinerary you can access while on the go.

Tripit Pro also has a seat and fare tracker that can help you choose the best seats and update you about dropping fares after you book.

Pricing

  • The basic app is free while Tripit Pro costs $49/year.

8. Google Travel

Google Travel is an aggregate site that consolidates all elements of trip planning into one platform. You can book flights, find a hotel, or check out vacation rentals without switching between multiple sites and tabs.

Input your destination, add your dates, and let Google search for you. It will help you compare dates, set notifications in case of price drops, and even show when it's on or off-season. 

The best part is that since all your bookings will be made using your Gmail, everything will be automatically added to your Google account and itinerary. 

9. Booking.com for Business

Booking.com for business is a go-to website for all your business travel bookings and management.  You get exclusive business rates, cash in on loyalty points, and 24/7 support from CWT, one of the leading travel management companies. 

It's free to use and has over 3 million listed properties across 150,000 destinations.

10. PackPoint

PackPoint is an easy-to-use app that helps you organize your travel luggage based on the type of visit, the number of days, and the activities planned. 

For example, if you're going on a business trip, you can input the location and the number of days, and PackPoint will automatically create a list of things you need to pack to make your travel less stressful. You can also customize the list and share it with others. 

PackPoint integrates with TripIt and can auto-create packing lists based on travels you booked using TripIt.

Pricing

The app costs $2.99

Also Read:

Conclusion

These tools address businesses' specific challenges with booking travel and managing travel expenses. However, there's no universal solution. Start by identifying the major bottlenecks in your business travel management process and the essential features you need. Once you have this clarity, review the tools available here to determine which best suits your business. Take advantage of demos, weigh the pros and cons, and select the tool to effectively streamline your travel expense management.

Travel expense management

Business Travel Expenses: A Guide to Management, Calculation, Tax Deductions & More

May 28, 2024
|
12
Min Read

Business trips are vital to the modern professional landscape, but managing travel expenses can feel like a constant battle. 

Did you know that the average U.S. business trip in 2023 cost a staggering $1,293, with daily expenses reaching $325? Unsurprisingly, business travel is also the second-largest cost factor for most businesses. 

For both employees and employers, streamlining business travel expense management and reimbursements becomes a top priority. This guide will equip you with all the necessary information: what qualifies as a travel expense, what you can claim as tax deductions, and, most importantly, how to manage it efficiently. 

Let’s take the stress out of travel expenses and get you back to focusing on what matters most–a successful business trip. 

What Is A Travel Expense?

For tax purposes, a travel expense is any cost you incur while traveling for work. This can include transportation, lodging, meals, and incidental costs directly related to your business trip. 

When does travel qualify as a business trip?

The IRS considers a trip a business trip if it takes you away from your tax home or main place of work for business reasons and requires you to sleep over for work purposes. 

Quick definitions

Tax home: Your tax home isn't where you live with your family but rather the general area where you report to work every day. This applies to your whole city or the surrounding region where your job is located.

Main place of work:

To identify your main work location if you have multiple workplaces, consider these factors:

  • The amount of time you typically spend at each location. The place where you log the most hours might be the frontrunner.
  • The intensity of your work activities at each location. Where do you take on the most crucial tasks and responsibilities?
  • The relative importance of your income from each location. Does one location bring in significantly more income than the others?

For more information, refer to IRS Publication 463 (2023), Travel, Gift, and Car Expenses.

A List Of Deductible Travel Expenses 

A List Of Deductible Travel Expenses 

Businesses can claim tax deductions when employees travel outside their main place of work. These expenses must be ordinary and necessary to travel away from home for business purposes. You cannot deduct expenses that are lavish, personal, or unrelated to work. Employers can also deduct costs associated with temporary work assignments lasting less than a year. 

Here’s a list of deductible business travel expenses while you’re away from home:

  • Transportation ✈️: Flights, trains, buses, or your own car to get to your business destination (including free frequent flyer tickets at face value).
  • Local travel 🚕: Taxis, shuttles, or rideshares between airports/stations, hotels, and work locations (clients, meetings, temporary assignments).
  • Shipping 🛄: Baggage, samples, and display materials between your regular and temporary workplaces.
  • Car expenses 🚗: Using your car (actual expenses or mileage rate), tolls, parking (business use only for rentals).
  • Accommodation 🏨: Lodging for your business stay.
  • Meals 🍽️ : Food that's not for entertainment purposes.some text
    • Instead of tracking every meal expense, you can use a standard meal allowance that changes based on your travel destination. However, remember that only 50% of the cost (even using the standard allowance) is typically deductible for business meals.
  • Laundry and dry cleaning 🧺: Keeping your clothes presentable during the trip.
  • Business communication📱: Calls, faxes, or other work-related messages.
  • Tips💰: Associated with any of the deductible expenses.
  • Other miscellaneous costs 💸: As long as they're reasonable and necessary for your business trip, like travel to/from business meals, stenographer fees, computer rentals, or maintaining a work trailer.

And What You Can't Deduct As Travel Expenses

You can only claim expenses that are ordinary and necessary for your business trip. This means no personal expenses like buying gifts, extravagant meals, fines incurred, or even expenses made for companions like a friend or family member who might have accompanied you on the trip. 

Can You Bring Friends And Family On A Business Trip?

Do you feel like taking your friends or your spouse on a business trip? While you can’t deduct the expenses of bringing your family on the trip, some costs can be offset indirectly. 

Carpooling on a business trip

  • Need a ride? No problem! If you're traveling for business and renting a car is a legitimate expense, you can still deduct your mileage or car rental costs even if you offer rides to others.
  • But be careful! You can't deduct extra expenses caused by carpooling, like the need for a bigger car to fit your family. The key is that the expense must be "ordinary and necessary" for your business trip.

Sharing a hotel room

  • Similar to carpooling, you can only deduct the cost of lodging you would typically use for a solo business trip.
  • However, there's some wiggle room! If you pay for a bigger room to accommodate your family, you can still deduct the portion a single room would cost.

So, What If I Extend My Trip For a Vacation? 

Great idea! But remember, you can only deduct business travel expenses. This covers getting you to and from your work location, plus any work-related costs while you're there. Personal detours or leisure activities won't count.

Example: Imagine you take a business trip to Seattle from your usual grounds in Chicago. The round-trip mileage for that work travel clocks in at 2,200. But on the way back, you take a quick detour to catch up with your family in Portland. Over your 10-day trip (including the detour), your travel, meals (excluding entertainment), lodging, and other expenses add up to $3,400. 

Now, if you'd skipped Portland and flown straight back, the trip would've been 8 days and cost $2,800. The good news? You can still deduct the full $2,800 for your business trip, including the round-trip flights to and from Seattle.

Some Methods of Reimbursing Travel Expenses

Per-diem

Per-diems simplify expense reimbursements by providing a fixed daily rate for meals and incidental expenses during travel. The rate varies depending on location and reflects typical costs. 

Employees don’t need to submit receipts for these covered expenses; they just need to document their travel dates and locations. This saves time but requires setting appropriate per diem rates and ensuring employees understand what’s included. 

Also Read

Corporate Credit Card

Companies issue corporate credit cards specifically for business travel. Employees use these cards for approved expenses, eliminating the need for upfront personal costs. The company handles the bill directly, and employees submit expense reports for record-keeping. This offers convenience but requires clear spending policies and monitoring. 

Post-trip Expense Reimbursements

Sometimes, accurately predicting all business travel expenses upfront can be tricky. Unexpected expenses like laundry, repairs, or tolls can throw off the estimate. 

To address this, you can reimburse employees for documented expenses after their trip. Traditionally, this involves manually entering expenses on a spreadsheet and submitting receipts for verification. 

But did you know there’s a faster and much easier way to do this? 

Travel expense management software like Fyle use Conversational AI, which enables employees to submit receipts via text messages for out-of-pocket and credit card expenses. Expense reports are automatically created by extracting all relevant information from receipts, and card expenses are automatically reconciled with the correct card transaction when the data flows in. 

This makes the reimbursement process faster, more efficient, and ultimately more convenient for employees. 

How To Manage Travel Expenses?

Automate with a Travel Expense Management Software

This is one of the easiest ways to manage business travel expenses. Invest in a travel expense management software that automates receipt collection, approval workflows, and your expense reimbursement process. 

It enables employees to submit receipts on the go and leaves little room for manual errors. Additionally, with real-time compliance, your approvers will know if expenses do not align with company policies and can take necessary action. This saves time and reduces errors for both employees and approvers alike. 

Establish Clear Travel Policies

Having clear and well-communicated travel policies helps employees understand what expenses are reimbursable and set spending limits. This can include guidelines for meals, accommodation, and incidentals. Specifying preferred vendors or booking platforms can also help control costs. 

Issue Virtual Cards to Your Employees

Do you use an Amex Business Credit Card? With travel expense management software like Fyle, you can create American Express virtual cards on the spot, perfect for one-time or regular costs like meals, travel, or office supplies. 

This eliminates the need for physical cards and simplifies expense tracking for traveling employees. Plus, you can monitor spending in real time, giving you greater control over your budget.

How To Calculate Travel Expenses?

Calculating business travel expenses involves two main steps: estimating the costs before the trip and then reconciling the actual expenses after the trip. Here’s a breakdown:

Before the trip

1. Research average costs

  • Use online travel booking tools and resources to understand your destination's average flight fares, hotel rates, and meal prices.
  • Consider factors like travel seasonality and location when researching.

2. Consider additional expenses

  • Factor in potential costs like local transportation (taxis, buses), laundry, internet access, and business calls made during the trip. 

3. Utilize corporate travel tools

  • Companies often have negotiated discounted rates with hotels, airlines, and car rentals. You could leverage folks in your network for the best deals. 

4. Set realistic budgets

  • Based on your research and additional expenses, set a realistic budget for each category (transportation, accommodation, meals).
  • This will ensure you stay on track during the trip.

After the trip

1. Collect and categorize receipts

  • Keep all receipts for flights, hotels, meals, and other business-related expenses incurred during the trip. 
  • Categorize expenses as per your expense policy (e.g., transportation, accommodation, meals)

2. Reconcile expenses with estimates

  • Compare your actual spending against the pre-trip estimates you made.
  • Identify areas where you might have overspent or underspent. 

3. Use a travel expense management software 

  • Consider using a travel expense management system to automate receipt management, expense categorization, expense reporting, and reimbursements. 
  • This can save you a significant amount of time and effort in the reconciliation process. 

Additional tips

  1. Get pre-approval for high-cost items: If you anticipate any large expenses (e.g., expensive client dinners), seek pre-approval from your manager to avoid any issues with reimbursements.
  1. Use travel rewards programs: Take advantage of travel rewards programs offered by airlines, hotels, and credit card companies to earn points or miles that can be redeemed for future travel. 

How Can Businesses Reduce Travel Expenses?

Leverage Technology

  • Video conferencing: Whenever possible, use video conferencing platforms like Zoom or Google Meet for meetings. This eliminates travel costs and saves employees time.
  • Travel booking tools: Implement online booking tools that offer negotiated corporate rates for flights, hotels, and car rentals.

Implement a Clear Travel Policy

  • Define trip approval criteria: Establish clear guidelines for what qualifies as a business trip and who can approve travel requests.
  • Set expense limits: Based on the destination and travel duration, set reasonable spending limits for different expense categories (e.g., meals and accommodation).
  • Promote alternative travel options: Encourage employees to consider cost-effective travel options like economy-class flights or budget-friendly hotels when appropriate.

Negotiation and Cost Optimization

  • Negotiate bulk rates: For frequent business travelers, negotiate discounted rates with airlines, hotels, and car rental companies.
  • Utilize travel management companies (TMCs): Partner with a TMC specializing in sourcing cost-effective business travel solutions.
  • Encourage early booking: Promote early booking of flights and hotels to take advantage of lower fares and rates.

Analyze and Optimize Travel Data

  • Track travel spending: Track and analyze business travel expenses to identify areas for cost reduction. Look at trends and identify destinations with higher-than-average costs.
  • Review travel policies regularly: Review your travel policies regularly and adjust them based on updated data and changing business needs.
  • Benchmark against industry standards: Compare your business travel spending with industry benchmarks to identify areas for improvement.

What Penalties Will I Face For Breaking IRS Rules?

The IRS takes tax compliance seriously, and there can be penalties for claiming non-deductible expenses on your business travel report. Here’s a breakdown of what you might face:

Owed-back taxes

If the IRS discovers you claimed non-deductible expenses, you’ll be responsible for paying back the taxes you avoided plus interest. This interest accrues from the date the tax was originally due. 

Tax-penalities 

The penalties you face will depend on whether the mistake was intentional or unintentional.

  • Negligence: If the mistake was unintentional due to negligence (not properly understanding the rules), you may face a penalty of 20% of the additional tax owed. 
  • Fraud: If the IRS determines the mistake was intentional fraud, you could face a steeper penalty of 75% of the additional tax owed, plus potential criminal charges. 

For more information, please refer to the IRS documentation on penalties

Additional filing requirements

In some cases, the IRS may require you to file additional forms, such as Form 8275, to disclose the error and potentially avoid penalties. 

How Form 8275 Can Help You Avoid Tax Penalties

Source: IRS Form 8275

The Form 8275 lets you explain any deductions you claimed that might not be perfectly clear on your tax return. As long as you had a good reason for claiming the deduction (which wasn't something the IRS specifically disallows), filing Form 8275 can help you avoid owing extra taxes or facing penalties.  However, it's important to note that this form won't work if you intentionally tried to mislead the IRS.

For more information, please refer to Instructions for Form 8275 (01/2021)

How Fyle Can Help Manage Business Travel Expenses

Fyle streamlines expense reporting from start to finish. Thanks to Conversational AI, you can submit receipts with a simple text message, and Fyle's integrations with Visa, Mastercard, and American Express give you real-time notifications on all card spending while also automatically reconciling credit card transactions.

Fyle goes beyond automation, offering features like business mileage tracking and the ability to issue Amex virtual cards specifically for travel expenses. Plus, real-time compliance checks keep your spending on track. This comprehensive approach helps you identify cost-saving opportunities and ensures your business stays within budget.

See how Fyle transforms your travel expense management. Sign up for a demo today!
Effortless expense management for all business spends. Earned time, saved costs, improved productivity, happy employees - achieve it all with a single software.

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Corporate Card Reconciliation

Corporate card reconciliation

A Complete Guide to Credit Card Reconciliation

March 3, 2020
|
5
Min Read

This post was originally published in 2020, but the content has been updated for 2024.

Post COVID-19, businesses have seen a massive surge in credit card transactions for incoming and outgoing payments. While this made the payment process easier, it also meant a looming nightmare for finance teams at the end of every month – reconciling credit card expenses.  

But where do business owners and finance teams start regarding business credit card management?

This blog discusses everything you need to know about credit card reconciliation, how it works, and why it’s crucial for businesses in 2023. We’ll also address some challenges accounting and finance teams face with reconciliation, after which we’ll give you the easiest way to solve your reconciliation woes. Let’s dive in! 

What Is Credit Card Reconciliation? 

Credit card reconciliation is the process by which accountants ensure that the transactions in a business’s credit card statement match its general ledger. For accurate and efficient financial reporting, companies need to know that these transactions took place and that the expenses on both sides are correct and valid.

If done manually, accountants sit and compare an organization’s credit card statement against its general ledger. If every payment on both sides matches, they can determine that the ledger was recorded correctly and can close books for the month.

However, if there are discrepancies, the responsibility of clarifying these values would fall on the financial controller. They need to find out who made the additional payments manually.

The reconciliation process typically occurs at the end of every month, while a more significant financial closing happens towards the end of each quarter or financial year.  

What Are The Different Types Of Credit Card Reconciliation?  

As mentioned earlier, a credit card transaction can impact two sections of your business finance: income and expenses. This means companies will have two types of reconciliations:

  1. Credit card statements

This would include all your business expenses – payments your organization makes for goods or services. For example, if your business is habitually issuing cards to its employees, they must be reconciled individually. 

  1. Credit card merchant services

This would include all your incoming payments. Reconciling these transactions takes a little more effort than your outgoing payments, but there are defined ways to make this easier.

In this blog, we’ll only be looking in detail at the business expenses side; that is, transactions made by you or your employees to purchase goods or services for your organization.

Why Is The Credit Card Reconciliation Process Important? 

Making a payment for your credit card statement without a second glance may not be the wisest thing to do. Big financial institutions make mistakes too, and it can end up costing you a lot more than what you should be paying. 

The reconciliation process starts when a business receives statements for its expenses. The expense details are then manually matched with the company's internal finance records and checked for discrepancies. 

This process ensures:

  • The money leaving the account equals the amount spent in one fiscal period. 
  • No fraudulent activities or manual data entry mistakes get by.
  • The company’s records always stay audit-ready. 

How to Reconcile Corporate Credit Card Expenses?

Reconciliation, as we know, involves the process of matching expenses with your internal finance record. But how do you go about the entire process?  

Step 1: Collecting and Sorting Receipts

Receipts are proof of expenses. It comes in several forms and helps account for money spent. For example, a purchase made using a credit card comes with an invoice given to the customer at the time of sale. These receipts should be collected from all the cardholders and stored for future reference.

Companies ideally use expense reports to collect and store employee receipts. This can be done manually using paper-based excel sheets and reports or by automation-driven tools like an expense management software.

Step 2: Matching Expenses to Transactions

Finance teams should match credit card statements to reported business expenses with the receipts. Businesses can do this with the help of any preferred system for reconciling. 

Pro tip: Ensure that other than fees and interest charges, there shouldn't be any other unmarked items in the credit card statement.

Step 3: Notifying Your Bank In Case of Errors

There are always chances of error, either with or without intention. Thus, your finance teams need to be careful in identifying and notifying the bank authorities in cases of mistakes. In addition, ensure timely action by reporting any unauthorized activities or fraudulent behavior.

Some examples of commonly occurring errors with business credit card reconciliations are:

  • Refund for a canceled purchase 
  • Charged for a failed transaction 
  • Bill payment processed twice, leading to duplicate charges

3 Challenges Finance Teams Face With The Corporate Credit Card Reconciliation Process

Most companies reconcile credit card expenses with paper-based and spreadsheet-driven methods. Unfortunately, this process is inefficient and forces employees to work long hours of manual labor. This also results in more inefficiencies and loopholes in the process. Given below are some challenges that can hinder your finance team's progress:

Ensuring Accuracy and Efficiency In The Entire reconciliation Process

For employees, reconciling corporate credit card expenses means entering data without making an error. Even a single missing number or double entry can put the employee's reimbursement on hold. Also, routinely submitting expense reports to get back their own money can affect employee happiness.

For finance teams, inaccuracy and inefficiencies in the credit card reconciliation process make the company vulnerable to financial exposure. Also, the traditional reconciliation methods include a high involvement of employees but do little to remove human-prone errors. 

Curbing an Increase In The Volume Of Transactions 

Corporate credit cards have helped revolutionize the speed and efficiency of business payments. But this also implies a high volume of transactions. Moreover, the ever-growing number of transactions increases the chances of missing human errors, duplicate submissions, and inaccurate information.

Your accounting team has to sieve through all the transactions and reconcile one-to-one and one-to-many transactions. This can prove to be a costly and cumbersome expense for your company and employees.

Recognizing and Correcting Policy Violations

According to a survey by Ernst & Young, financial departments spent up to 59% of their resources on managing transaction-intensive processes. Of this, 95% of the effort goes into already matching transactions rather than ones with entry-related problems.

The traditional approach to credit card reconciliation offers no quick and coherent method to find policy violations. Instead, employees must painstakingly go through every transaction to ensure expenses follow the company's travel and expense policies. This further adds to the delay.

Financial Leaks Because There’s No Way of Flagging Personal Expenses

Whenever an employee uses the company's credit card for personal expenses or overspends, there is no way of getting notified unless checked manually. Additionally, a loose policy framework coupled with weak enforcement of T&E policies can misinform employees and cause unauthorized purchases. This also increases the chances of fraud and claims of multiple duplicate expenses.

For employees who use the card for personal expenses, there must be a way to flag violations accurately. For example, when matching the expenses with the bank statements, the finance team has to identify and address personal expenses. While reconciling, finance teams also have to make sure that no errors by vendors or credit card issuers get by. 

How Fyle’s Real-Time Credit Card Feeds Solve Your Reconciliation Challenges Permanently

Do your accountants still rely on broken bank feeds and delayed statement uploads for credit card reconciliations? 

Just imagine how much easier their lives would be if these transactions were recorded and matched in real time. Well, Fyle’s real-time credit card feeds let you do exactly that.

By connecting directly to credit card networks like Mastercard, Visa, and American Express real-time credit card feeds bring credit card transaction data directly to your expense management system as soon as a card is swiped. This means accountants don't have to wait for bank statements to arrive or chase employees for receipts. 

Since the transaction data is available instantly, accountants can track credit card spend, reconcile card expenses, track budgets, and identify unauthorized spend in real-time.  

Ryan Mckenzie Co-Founder & CMO | Tru Earth®

But this is just the beginning; here’s what else you can do with Fyle’s real-time feeds:

Receipt Collection via SMS and Other Everyday Apps

Fyle's integration with credit card networks like Visa and Mastercard allows employees to receive instant SMS notifications of all their credit card transactions. This helps them submit receipts for reimbursement quickly and easily, ensuring accurate and timely expense report submissions.

SMS receipt collection allows accountants to collect receipts instantly, which has reduced the time our customers spend on receipt collection by 48%. This simplifies the process by eliminating the need for employees to scan and upload receipts, reduces back-and-forth communication between accountants and employees, and eliminates the need to send reminders.

Normand Chevrette President & CEO | CME CORP

Automated Credit Card Reconciliation

Depending on your card program, accountants need to wait until the bank makes card data available to manually match transactions. 

But now, Fyle's real-time credit card feeds automatically reconcile transaction data with receipt data as soon as the receipt is uploaded by the user. The credit card reconciliation process, which takes days to finish, can now be completed in less than 2 minutes with Fyle. All this without changing your existing credit cards!

Also Read:

Increase Employee Compliance With Real-Time Policy Checks

Fyle automatically checks expense reports for policy violations as employees create them. Depending on the organization's settings, the following may happen:

  • The expense report will not be submitted.
  • An automatic cap will be placed on the expense.
  • The expense report will be sent for additional approval.

Fyle's duplicate detection and implicit merge feature automatically checks for duplicate expenses. If two submitted expenses are found to be the same, the user is instantly notified and given the option to merge the two expenses. This helps to ensure that expenses are not duplicated, which can help to prevent fraud and improve compliance.

In Conclusion 

In today’s world, information is at your fingertips. But when it comes to your business credit card transactions, you’re stuck in the dark. You have to wait days or even weeks to get visibility into where your employees are spending money.

That’s where Fyle comes in.  We let you see it all in real-time, from anywhere in the world and it’s changing the way businesses manage and reconcile their credit card expenses. With Fyle, you get real-time insights into your credit card spend so you can make informed decisions about your finances.

Want to see how Fyle can help you? Schedule a demo today!

Corporate card reconciliation

Best business credit cards for small businesses and start-ups

September 20, 2019
|
5
Min Read

Did you know that making enough money to finance a business is the most prominent fear entrepreneurs face? 

A recent article by Forbes lists the most common fears entrepreneurs associated with running a business. Without financial support, small business owners and entrepreneurs risk falling behind on payments and operating expenses. Hence, this makes for an obvious worry for all small business owners and entrepreneurs. 

To help ease out these financial constraints, most small businesses and start-ups are now opting for business credit cards. They offer higher credit limits and reward programs which are available only on these cards.
Business credit cards are the go-to solution for easily accessible funds.

With the multitudes of options available in the market today, choosing the right card may get difficult. It is essential that you pick a credit card that not only meets your business needs but also brings along with it a host of benefits. In this article, we take you through some of the best business credit cards that can help your business scale.

What are the best business credit cards right for small businesses and startups?

Business credit cards aid long-term financial goals. They are a great financial tool that can fulfill your business needs. They also help you build a long-lasting impression while seeking out long-term solutions for expanding your business.

How can business credit cards benefit your business?

  • Manage employee spending
  • Build business credit
  • Separate personal and business expenses
  • Earn rewards on everyday expenses

SUGGESTED READS:

Best practices to manage corporate credit cards

Best business credit card for travel

Chase-ink-business-credit-cards

The Chase Ink Business Preferred Credit Cards offer high rewards and amazing travel perks which make up for its $95 annual fee

The credit card currently offers a welcome bonus of 80,000 ultimate rewards points if you spend $5k in the first 3 months of membership

Benefits of Chase Ink business credit cards:

  • 3 points per $1 on the first $150,000 spent on travel, shipping, internet, cable, phone services, and online advertising
  • 1 point per $1 on other purchases
  •  $0 for additional employee cards and foreign transactions

Pro-tip:

  • The point value also increases to 1.25 when points are redeemed for travel booked through Chase Ultimate Rewards. 
  • Though the card offers a 0% introductory APR for a balance transfer or purchase, pay attention to the variable APR of 18.24% - 23.24%.

Best business credit card for owners with fair credit

What is a credit score?

Credit scores are often used by banks or lenders to weigh whether they should issue your business a credit card, a mortgage or a loan. A credit score can affect credit rewards, interest rates, and down payments.

You can measure your credit score using a FICO score ranging between 300-850. A fair credit score falls between 580-669.

FICO score ranges:

Credit score300-579580-669670- 739740-799800-850RatingVery poorFairGoodVery goodExceptional

Most businesses may not have a good credit score. As a result, they may not be able to apply for business credit cards of their choice but instead, apply for credit building cards which allow people with a low credit score or little to no credit history to get credit access. If in fact you have less than the desired credit score, Capital One Spark Classic for Business is also a good choice for you.

Spark-classic-business-credit-cards


Benefits of Capital One Spark Classic business credit cards:

  • No annual fee 
  • No foreign transaction fee
  • 1% cashback on all purchases with no caps 

Pro-tip: 

  • The card comes with a variable APR of 25.24% and could go as high as 31.65%; if you delay payments.
  • This business credit card is great if you do not carry a balance and want to improve your credit score.
  • A good credit score opens an opportunity to graduate to higher reward programs at lower interest rates.

Best business credit card at 0% introductory APR

What is APR? 

The Annual Percentage Rate or APR is a term you’ll usually hear when applying for a credit card. APR is the charges that your bank or lender charges for the money you borrow.

0% APR means no interest will be charged on the borrowed money.

The U.S. Bank Business Cash Rewards World Elite MasterCard qualifies as one of the best business credit cards for a 0% introductory APR. For new business owners and entrepreneurs who want financial freedom, this may be the card for you!

The card offers introductory rewards of $500 cashback on spending $4500 within the first 150 days

US-bank-cash-business-credit-cards

Benefits of U.S. Bank Business Cash Rewards World Elite™ Mastercard® business credit cards:

  • Free financing for the first 15 billing cycles on spending and transfers
  • 3% cashback on gas, office supplies, and phone/network providers
  • 1% cashback on all other purchases
  • 25% annual bonus up to $250
  • No annual and employee fee
  • No expiration on cashbacks and rewards

Pro-tip: 

  • The card offers one of the most extended no-interest periods on balance transfers and purchases. 
  • After the introductory APR has expired the variable APR of the card is 14.24%-25.24%.

Best business credit card for cashback

What are cashback business credit cards?

Cashback business credit cards are among one of the most popular reward cards. They allow the cardholder to earn rewards while making a purchase.

Most cashback cards pay around 1%-2% cashback, with some pay as high as 5%.

For example, if you hold a flat-rate 2% cashback card and spend, $1,000 for a statement period (say one month.) At the end of the month, you would have earned $20 cashback.

The  American Express Blue business credit cards are one of the best business credit cards that allow you to make larger purchases while earning cashbacks. These cards are particularly helpful as they help you make purchases above your credit limit.

American-express-blue-business-credit-cards

Benefits of American Express Blue business credit cards:

  • 2% cashback on all eligible purchases on up to $50,000 per year, then 1%
  • Cashback automatically credited
  • No annual fee
  • 0% introductory APR on purchases and balance transfers for 12 months

Pro-tip:

  • The introductory APR takes away a massive chunk of worry for the first year of your business. 
  • Keep in mind that the variable APR of the card is currently 14.99% - 20.99%. This is applicable after the 12 months period.

Choosing business credit cards for your business

The best business credit cards allow budding start-ups and small businesses to keep more money for their business. They offer lower APRs and rewards that help them save money and aim for scale. 

A higher credit score means you qualify for higher rewards. Remember that maintaining your business credit score can help you with future business expansion. This means consistently paying on time and not carrying a balance.

If you’re worried about keeping track of receipts, expenses, and transactions, set up your credit card with an expense management software. This will simplify and automate your workflow process and more.  

An expense management software will also help you to track and monitor employee expenses, match expenses, and reduce administrative effort. While you are at it, we suggest you also look out for an expense management software that can cater to all your business needs.

Fyle does much more than just streamlining your business processes. Schedule a demo today and witness Fyle’s magic!

best-business-credit-cards-fyle


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