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How Business Credit Cards Help SME Expense Management

By Frances Coppola

For small and midsize enterprises (SMEs) with tight profit margins, keeping close control of business expenses can be essential. But expense management can eat up large chunks of time better spent developing the business. Business credit and charge cards can help SMEs manage their expenses effectively while reducing the administrative time and cost involved.

Using Cards to Centralize Travel and Expense Management

 

When expenses are scattered across multiple bank accounts and credit cards, it can be hard for business managers to stay on top of costs. Centralizing expense payments on a single business credit or charge card means that managers can view all expenses on a single statement. It’s often better to centralize expenses on a credit or charge card, rather than a debit card linked to a bank account, because then the business can take advantage of rewards points and interest-free payment periods.

 

For owners/managers of very small businesses, separating business and personal expenses can be a headache. But if the business is to benefit from tax deductions available for legitimate expenses, it must cleanly separate out business expenses. Using a dedicated business credit or charge card can help. Even if some personal expenses do creep on to the business card, the detailed monthly statements that card providers typically issue make it easy for owners/managers to strip out the personal items, leaving a single set of business expenses to go into company accounts.1

 

Some SMEs may wish to use different cards for expenses of different types. For example, a business may want to buy office equipment with a card that offers double reward points on that category, but pay for travel expenses on a card that offers air miles. This can complicate expense tracking. However, using an app to bring together statements from multiple cards can help SMEs better manage those expenses.2

 

For larger businesses, issuing key employees a charge or credit card on a single company account can make travel and expense management much more efficient. All employees’ expenses appear on a single monthly statement that can be reconciled against receipts they submit.3

 

Additionally, businesses can set spending limits on each card and restrict the merchants from which purchases may be made.4 Some cards feature automatic alerts that notify business managers when an employee is using the card, enabling them to plan for an incoming expense or contact the employee if the expense is unauthorized.5

 

Online Tools for Business Expense Management

 

In addition to providing a detailed monthly statement, many card issuers provide SMEs with online tools to help them manage their expenses on a day-to-day basis. Business managers can log in to view current transactions on the card, including pending items, together with the current balance, the payment due date, and any interest charges or fees. If the card issuer gives reward points, managers can typically view the points awarded and redeemed. Many card issuers provide online reports, such as a yearly analysis of card activity, to help businesses prepare their year-end accounts, as well as analysis tools that help accounts clerks identify and monitor different expenditure types.

 

Managers can also download credit card transaction data into spreadsheets or accounting software. Some accounting packages include an interface to data from a wide range of popular business cards, creating a seamless view from expense payment to company accounts.6

 

There are also mobile apps for expense management that, for example, pull down online credit card data and automatically reconcile it with electronically stored receipts.7

 

The
Takeaway:

By providing detailed statements and a range of online tools, issuers of today’s business credit and charge cards can help SMEs cut the cost and complexity of expense management, giving business managers a firm grip on day-to-day spending. These cards can help businesses improve their bottom lines while freeing up managers to focus on developing the business.

Frances Coppola

The Author

Frances Coppola

With 17 years’ experience in the financial industry, Frances is a highly regarded writer and speaker on banking, finance and economics. She writes regularly for the Financial Times, Forbes and a range of financial industry publications. Her writing has featured in The Economist, the New York Times and the Wall Street Journal. She is a frequent commentator on TV, radio and online news media including the BBC and RT TV.

Sources

1. “How A Separate Credit Card Can Make Business Expenses Easier,” Money Under 30; https://www.moneyunder30.com/how-a-separate-credit-card-can-make-business-expenses-easier
2. “The 7 Best Expense Tracking Apps For Smarter Business Travel,” Zapier; https://zapier.com/blog/best-expense-tracking-software/
3. “How using a Business Credit Card can help manage spending,” Smart Business; http://www.sbnonline.com/article/how-using-a-business-credit-card-can-help-manage-spending/
4. “Tips to manage employee use of business credit cards,” AZCentral.com; https://eu.azcentral.com/story/money/business/abg/2015/10/11/tips-manage-employee-use-business-credit-cards/73158338/
5. “How to create a business credit card expense policy,” Business.com; https://www.business.com/articles/business-credit-expense-policy/
6. “Card Integration: Manage all company spend in one solution,” SAP Concur; https://www.concur.co.uk/card-integration
7. “The 7 Best Expense Tracking Apps For Smarter Business Travel,” Zapier; https://zapier.com/blog/best-expense-tracking-software/