Corporate card reconciliation

Banking software aren't the ideal choice for managing corporate credit cards anymore. Learn everything you need to know about modern corporate credit card management.
Corporate card reconciliation

Challenges in corporate credit card reconciliation process

March 3, 2020
Min Read

If you’re a growing business, the move towards getting a corporate credit card becomes a necessity. This small plastic card gives businesses higher power and convenience in managing business expenses and more. 

While all of this makes the corporate card seem like a boon, it also has a downside to it. If managing business expenses is a challenge for your business, chances are you also face challenges in your corporate credit card reconciliation process. These processes, if not handled efficiently, can cause financial leaks. This can prove detrimental to the health and growth of your business. 

Below, we will discuss:

  • The importance of Corporate Credit Card Reconciliation
  • How to effectively reconcile Corporate Credit Card expenses
  • Reconciliation challenges finance and accounting team face 
  • Efficient  and easy ways to overcome these challenges


How to select a Corporate Credit Card program for your business

Why is the Corporate 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 charges for their expenses. The expense details are then manually matched to the company’s internal finance record to look for any discrepancies. 

This process ensures:

  • The money leaving the account is equal to the amount spent in one fiscal period
  • No fraudulent activities 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. 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.

Pro tip:

Paper expense report forms, Excel sheets, and receipt scanners are the different ways that companies use to store the details of their business expenses.

Step 2: Matching expenses to transactions

With the receipts in hand, finance teams can now match credit card statements to reported business expenses.  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 error

There are always chances of error, either with or without intention. These errors can be corrected if you notify your bank at the earliest. Ensure timely action by reporting any unauthorized activities or fraudulent behavior.

Some examples of commonly occurring errors with card reconciliations are:

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


How to manage receipts effortlessly (For the modern employees)

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. This process is not only inefficient but also forces employees to put in long hours of manual labor. This, in the end, only 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 methods of reconciliation include a high-involvement of employees but do little to remove human-prone errors. 

In case an employee uses the card for personal expenses, there needs to be a way to flag violations accurately. 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 there are no errors made by the vendors or credit card issuers. 

  • Curbing an increase in the volume of transactions 

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

Along with multiple card programs for various employees, departments, and categories, all the data needs to be pulled and managed under one tab. 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 conducted 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 transactions that are already matching rather than with entry-related problems.

The traditional approach to credit card reconciliation offers no quick and coherent method to find policy violations. Employees have to painstakingly go through every transaction to make sure expenses are following the company's travel and expense policies. This further adds to the delay.

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 to multiple duplicate expenses.

Address your reconciliation challenges 

The manual corporate credit card reconciliation process is time-consuming, costly, and laborious. Additionally, if not done right, it can pose a huge threat to the financial health of your business. The modern approach to ensure a high benchmark of accuracy and efficiency is by implementing an automated expense management software . 

Opting for an automated solution over a manual system can help your business overcome these challenges:

  • Save time without manually reconciling card spends

Your team (employees and finance teams) end up wasting a lot of time manually inputting, verifying, and approving business expenses. Sadly, irrespective of all the time and effort they put in, duplicate and fraudulent entries still slip by. You can negate this by using a software that eliminates manual data entry and manual data verification.

An expense management software gives the ability to extract transaction details from the receipts virtually. Hence, expenses can be submitted, approved, processed, and reimbursed, all without the need for manually entering details. Therefore, the chances of human error and human bias also drastically reduce.

  • Automatic reconciliation of credit card expenses 

With an expense management software, all receipts and bank statements are automatically matched and reconciled within a few clicks. This saves the accounting team from having to verify and approve large quantities of transactions manually.

Additionally, an expense management software helps:

  1. View and store all transaction details under one centralized dashboard.
  2. Record all and any changes in the form of a digital audit trail
  3. Enable employers and finance teams to gain a cursory view of all expenses
  4. Identify and rectify any errors before they are processed.
  5. Streamline the entire process and also facilitate faster reimbursements. 
  6. Access information using any device from anywhere and at any time.
  • Increase employee compliance with real-time policy checks

Integration with an automated solution helps ensure that all stakeholders remain compliant at all times. A TEM software makes sure the expense policies and guidelines set by the company are in alignment with every expense report claim submitted by an employee.

In the case of a policy violation, an automated expense management software will:

  1. Notify all stakeholders of a flagged expense. 
  2. Run automatic policy-checks to reduce the chances of fraudulent activities, duplicate claims, and overspending by employees.
  3. Reduces the time taken to track and resolve any policy violations.
  • Streamline the entire corporate credit card reconciliation process

Implementing a robust expense management software can save valuable time and can quickly help identify and rectify errors. It also ensures the company stays ahead with its audit and tax filing. Lastly, it works as an active catalyst in increasing employee compliance.

The credit card reconciliation process consists of several phases and processes. These processes need to be followed to the dot to avoid any execution errors. Having a clear view of roles and responsibilities helps teams to stay prepared. 

Additionally, all stakeholders are well-aware of the process, rules, and consequences of not following them. This ensures transparency across the company. 

In conclusion 

The corporate credit card reconciliation process is a crucial task for understanding the financial standing of a company. It is also a necessary process to check if your employees are indulging in any fraudulent behavior. Lastly, it helps identify and solve credit card errors and settle disputes with banks and vendors, if necessary. 

Manual, paper-based methods can become a complicated procedure involving government policies and your employee’s time and money as well. But this is a tedious and time-consuming process that can be eased by the use of technology.

Do you want to upgrade the way your business  reconciles credit card spends? Fyle comes equipped with features like automated reminders, duplicate detection, and card transaction reversals to make the reconciliation process seamless.

Schedule a demo today to make expense management easier, faster, and accurate for all the stakeholders!


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