Benefits of virtual cards for budgeting & cost control

Conventional approaches, such as out-of-pocket expenses and corporate cards, lack real-time monitoring and fail to provide the necessary tools for effective cost control. In the era when controlling and actually cutting costs is paramount, every penny counts, and an increasing number of businesses cannot afford to go outside of the pre-allocated budgets. Increasingly, businesses are seeking innovative solutions to sustain their growth trajectory and ensure long-term financial stability.

Recent years have seen the emergence of virtual cards, which offer finance teams and CFOs a modern approach to budgeting and cost control. Virtual cards provide real-time tracking and spending controls, empowering businesses to enforce effective budget control, reduce costs, and optimise resource allocation. In this article we will delve into how virtual cards can be used by cross-border SMEs to enforce greater budget control, cut costs and optimise resource allocation.

Virtual cards work exactly like physical cards - they can be prepaid or debit (connected to your current account) with the added benefits of extra flexibility, control and security when it comes to managing budgets and spending. The growing adoption of virtual cards globally underscores their effectiveness as a payment method for both business expenses and employee transactions - Juniper Research projects that the total volume of virtual card transactions will reach 175 billion by 2028, up from 36 billion by 2023.

The cards can be customised to suit individual employees or teams, allowing companies to align spending with specific projects. By regaining visibility and control over allocated budgets, organisations can mitigate overspending and transform expenses into value-generating opportunities.

Compared to traditional methods, virtual cards provide finance teams with unparalleled budget control features.

Setting Limits: Precise spending limits can be imposed on different categories, projects, or teams, ensuring adherence to predefined budgets and preventing unauthorised overspending. You can also opt to use a prepaid card and load the specific amount set out in the budget for a specific purchase. This streamlines the approval process and keeps the project or business operation on track.

Documentation: Virtual cards generally come with online dashboards and/or mobile apps for streamlined expense management, which let employees upload receipts and invoices on the go. Fyorin, for example, allows you to make documentation upload mandatory and block the card if no receipts are attached after a set period. The feature reduces the time spent chasing invoices at the end of the month and streamlines expense reconciliation.

Real-time Visibility: The same centralised dashboard provides real-time insights into spending across departments and teams, enabling prompt adjustments to limits and proactive management of potential spending issues.

Virtual cards streamline resource allocation processes - once the budget is approved you can top up the card with specific amounts. This eliminates the need for repetitive approvals on every purchase and facilitates timely access to funds for specific projects or teams, without slowing down business operations.

Remote Top-ups: Finance teams can remotely load additional funds onto virtual cards upon request, minimising delays associated with traditional bank transfers and ensuring uninterrupted business operations.

Merchant or vendor controls: Virtual cards are equipped with special controls to restrict transactions from specific merchants. This way you can protect your business from overspending or unauthorised purchases and keep the allocated budget within its intended use.

In addition to the above, virtual cards safeguard your funds with enhanced protection mechanisms against fraud and loss.

Fraud Protection: Advanced security features such as tokenization and dynamic CVV codes make virtual cards a safer option for online transactions, reducing the risk of unauthorised individuals getting access to card details and misappropriating funds.

Loss Mitigation: In the event of loss or misplacement, traditionally used plastic cards can be a hassle. Blocking the card and issuing a new one requires the involvement of the bank, which may take days or even weeks, and may slow down regular business operations. Instead, virtual cards can be promptly destroyed and replaced remotely, minimising disruptions to regular business and safeguarding the funds.

Overspending Prevention: Apart from the aforementioned vendor controls and limits, virtual cards have another feature that gives greater control over unauthorised spending - single-use cards. These can be used for trials and one-off purchases to prevent recurring payments.

For businesses conducting cross-border transactions, virtual cards can offer some additional cost-savings that improve the bottom line and free up budgets.

Virtual cards mitigate currency conversion challenges by allowing transactions in multiple currencies, minimising the impact of fluctuating exchange rates. This means you can transact globally regardless of the currency or location of your vendor, which can be a great solution for one-off projects with a supplier in a new location or when you’re just setting up your operations in another country. Bear in mind, however, that this is not a long-term solution, and to continue transacting in multiple currencies, you may need to have an account in a given currency.

Certain virtual card providers like Fyorin offer cash back incentives on transactions made with cards - which means you will effectively reduce costs and free up a large portion of your budget.

This feature is particularly beneficial for large purchases or recurring expenses such as paying for fuel in aviation or logistics or hosting subscriptions like AWS. The larger the bill, the greater the cashback.

Fyorin offers multi-currency virtual cards for cross-border SMEs to control spending, manage budgets and reduce costs.

Turn costs into earnings: Earn a cash rebate every time you make a high-value purchase with a Fyorin card and improve your bottom line.

Flexibility without giving up control: Effortlessly manage the cards - issue, schedule top ups, set limits and rules through the online dashboard.

Cost-efficiency at a global scale: Enjoy one of the best FX rates on the market and zero fees on card transactions.

Global employee expenses made simple: No more out-of-pocket expenses and reimbursements with single and multi-use cards for individuals or teams.

Reconcile on Autopilot: With seamless integration to your accounting tools you get touchless reconciliation and all records in one place.

Our clients report savings of around €12,000 a year, plus extra cashback from their cards! Ready to streamline your budget management at global scale? Request your card by emailing [email protected] or book a demo.