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 that could prove detrimental to the health and growth of your business.
In this article, we will identify 5 signs that indicate your corporate credit card reconciliation process is broken. Furthermore, we will also see how to tackle them successfully.
Best practices to manage corporate credit cards
5 signs your corporate credit card reconciliation process needs attention
Are you failing in managing and maintaining a spotless audit trail?
Have the challenges of the corporate credit card management slowed you down?
Do you feel like using a credit card has created more work for you and your team?
If your answer to these questions is a yes, then it is most likely that your broken corporate credit card reconciliation process is broken. Most companies spend a lot of time choosing the best credit cards to suit their business needs. But the massive chunk of work in the corporate credit card reconciliation process is neglected.
Neglecting your corporate credit card reconciliation process can later catch up, causing deeper trouble. Hence, businesses should ensure the utmost care while managing business expenses.
Red flags that indicate your corporate credit card reconciliation process is broken
You are unable to establish an accurate balance
The corporate credit card reconciliation process involves matching internal financial records with the credit card statements that traveling employees submit. This helps provide clarity into the company’s financial health and productivity. All of this can be easily achieved if you have a seamless corporate credit card reconciliation process.
But, what happens when businesses suffer from a broken process?
Broken processes would mean incorrect numbers. Incorrect numbers can give incorrect insights into the company’s finance. Giving out the wrong numbers while filing tax can also cause issues for the business.
Why can’t businesses establish an accurate balance?
- Missing records of completed and pending transactions
- Internal errors while reporting, reviewing or approving expense claims
- Wrong or missing inputs of failed and reverse transactions
You’re unable to manage multiple cards and cardholders
Using cards for business purposes has become one of the most preferred payment methods today. This is primarily because swiping a card is a breeze that seldom has any liability on the user. But, smoother purchasing power also means expenses and transactions pile up faster. This can prove challenging to manage corporate credit card expenses.
While reconciling, you should get an idea of what needs to be paid to avoid late payment. Delaying payments can also affect the credit score.
Different employees handle corporate credit cards for different types of business expenses. Unusual activities such as unauthorized purchases or overspending should be looked into and dealt with.
It is recommended to monitor multiple cards and cardholders under one centralized system. This can help you to manage and minimize late fees and fine.
Fraud and bank errors go undetected
One of the purposes of reconciling credit cards is to keep fraud and mistakes at bay.
According to a news report by Independent,
“In the year 2017, fraudsters were responsible for over £1 billion fraudulent credit card spending in the United Kingdom.”
Misusing company cards can disrupt the company’s budget. Red flags on fraudulent activities must be raised during reconciliation. Additionally, financial institutions can also make mistakes. It is always wise to give a quick skim through the bank statements and check for discrepancies. Keeping a tab on these activities can help you devise better strategies to tackle these problems.
Additional costs incurred in the operational process
Additional expenses incurred for running the reconciliation process is a noteworthy sign that it isn’t working. A broken corporate credit card reconciliation process can cause unnecessary losses to the business.
Some of the reasons why companies may spend more than what’s needed are:
- Employees are required to work overtime. This obligates the companies to pay their employees for extra time.
- Some companies even opt to outsource resources to keep up with the massive chunk of work and deadlines.
- Being unaware of bank deductions like payments, interest, fees, etc.
Corporate credit card reconciliation process can prove to be an expensive affair. With unplanned operational and hidden expenses, it can generate unnecessary expenses.
Reimbursing employees takes a long time
An ideal reimbursement process would involve cutbacks in operational cost, smooth operations, and no delays in reimbursements.
If your company struggles to meet reconciling deadlines, it may be due to:
- Missing documentation (receipts, forms, etc.)
- Back and forths of expense reports to resolve multiple policy violations
- Procrastinating in fixing bank and card issuer’s errors
- Verifying expense records at the last-minute
- Trying to reconcile months of expenses in one go
Taking a longer time in reimbursing may affect an employee’s happiness and satisfaction. It can also create distrust and affect productivity.
For the finance team, longer delays in reimbursement mean more routine work, frustration, and pressure. This can affect the financial productivity of the finance team. Over periods of time, these factors can severely affect your brand reputation and growth.
Reconcile expense on Corporate cards with Fyle
How to mend your corporate credit card reconciliation process?
Most of the trouble in reconciliation is due to manually combing through huge volumes of credit card transactions. This not only takes time but also creates serious doubts in accuracy and efficiency.
The process doesn’t necessarily have to be associated with endless hours of mindless work. All these problems of a broken system can be fixed by switching over to an automated solution.
An expense management software creates an automated workflow for the entire reconciliation process. This allows your team to work smart and keep up with deadlines.
How can expense management software help with the corporate credit card reconciliation process?
- Allows finance teams to send reminders to employees to report expenses on time.
- Enables management of all corporate credit cards and cardholders in a unified window.
- Every purchase are attached with receipts and direct bank feed in one system,
- One-to-one and one-to-many statements are stitched automatically to each other. This ensures better efficiency and accuracy.
- Seamless enforcement of policies in real-time. In the case of policy violation, it is flagged immediately. This minimizes fake charges and illegal purchases.
- Operational costs and turnaround time decrease drastically.
- Cloud-based expense management software can be accessed from anywhere, at any time and using any device.
Are you interested in moving your reconciliation process to an expense management software? Schedule a demo to learn more about making the process easier for you and your team!