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October 10, 2017
David Johnson, Senior Vice President, Emerging Commerce Products
Would you use prepaid cards for your business expense management needs?
We turned out to be correct when we described opportunities available in the market for prepaid as an expense management solution, last year. Alternative expense management solutions using prepaid cards are now actively working and succeeding in multiple markets, but that may just be the tip of the iceberg. We are finding that prepaid cards can be a versatile form of payment that can be used for various expense management events.
Prepaid corporate cards with stored value, underpinned by easy-to-use mobile app interfaces, can provide simple and safe expense management facilities – suitable even for the smallest businesses, wherever they do their business. With a prepaid card alternative, an owner or designated administrator can distribute and track company funds to any employee prepaid card. Funds can be added or removed instantly from each card and the whole process can be conducted online or through a service provider’s mobile app.
The benefits seem more pertinent than ever. The migration toward prepaid stored value cards as a primary expense management tool is driven primarily by the ease of use and convenience. Funds can be made available to all employees, in real time, and are available to every employee because there is no application process necessary. With a mobile app-based interface, receipt capture, and pulling funds from cards to the master account is simple and helps facilitate instant reporting and streamlined funds reconciliation. A business owner confidently knows what funds are available, and the built-in automation means it is easy to get all the data input into accounting software packages for reporting and end-of-year taxes.
Let’s look at a couple of examples that highlight the efficiencies of prepaid expense management.
Consider a home improvement business that is always on the go. Multiple teams of contractors on various sites all need to be able to acquire materials quickly in order to complete their jobs without delays. Consequently, the business owner must to be able to fund the necessary purchases for these teams quickly and efficiently. When a new project demands that a house needs to be repainted, the painting contractor heads off to the store. The painter then estimates the bill and makes a request for funds to cover it through a smartphone expense management app. The business owner instantly transfers $1,000 to the painter’s prepaid expense card from a phone via the same app. When the purchase turns out to be $850, the painter takes a photo of the receipt, uploads it to the app and can go back to work. The business owner then returns the remaining $150 to the master account. He or she can even lock the painter’s card until the next job. At the end of the month, the business owner can pull all the expenses from the app into an accounting software to balance their books.
A similar scenario can apply equally well to a large-scale energy company – particularly timely when you consider the recent spate of hurricanes impacting so many areas. With thousands of workers heading into the impacted zones, how can a centralized utility company ensure their frontline workforce have the funds they need for food, gas, accommodations and material expenses while out on the road for days or weeks? Instead of requiring a worker use his or her own money or share a credit card, a manager simply applies a daily fund amount for living expenses. Each day, $200 could be added to the prepaid card account for food, gas, motel, incidentals, etc. The employee simply takes photos of receipts and uploads them through the mobile app. If the employee runs into unforeseen circumstances such as a broken or damaged truck, the app can even send a message to the head office requesting additional money to make the necessary repairs. The funds can be loaded to the card instantly, with a photo of the final receipt returned on completion.
The use cases above may have differing requirements, but the same underlying features are leveraged effectively. These enablers can be advantageous across many sectors. Consider truck drivers heading across the country who need food, gas, and motels for a four or five-day trip. In sports arenas, stadium managers need flexible expense management to keep the place stocked with supplies, merchandise, and other concessions. Across corporate America, travel and expense management officers are turning to prepaid cards to help limit costs and reduce the exposure of credit cards for employees who travel regularly.
The prepaid card model, with a flexible online and mobile interface for instant reporting and top-up facilities, fits well into businesses’ expense policies no matter their size. No time is lost to paper expense tracking, no funds are misplaced or go missing, and risks and liabilities are greatly reduced. Prepaid transactions can be tagged and categorized for simplified reporting and analysis, and receipts can be electronically attached from a phone, with all the data uploaded into the business owner’s preferred accounting software to simplify tax reporting.
The prepaid card is clearly a winning proposition for business expense management because it is easy to use, and is convenient and secure – especially when managed in a powerful mobile application. The prepaid model saves time with the allocation of funds, reconciliation of accounts and processing of expense reports. Even larger corporations are seeing prepaid cards as a lower-risk alternative for many low-expense-claiming employees than issuing large numbers of underused credit cards. With prepaid cards, you can grow the business more efficiently, avoid chasing receipts and finally have the exact financial position of funds available in real time, in the palm of your hand.
Senior Vice President, Emerging Commerce Products
DJ is the Product Division Lead over Loyalty, Prepaid, EBT – Government and Merchant Products. DJ joined FIS in 2007 and has over 20 years of payment industry experience with roles in product development, strategy, consulting and business development. Before FIS, DJ managed Online Banking and Bill Pay for a Top 15 US bank. DJ earned his MBA from Emory University and a degree in Finance from the University of Florida.
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