Average Firm Loses $85K Annually on Purchases Made Outside of Company Policy

The shift to remote working arrangements during the pandemic has complicated some operations for finance teams, especially in employee spending.

Today, 31% of finance professionals say employees are submitting more expenses than before the pandemic; the same percentage, 31%, say they are finding more errors in their expense reports, and 78% say many employees are not cognizant of company spend policy.

As a result, companies on average lose $85,000 annually on purchases made outside of company policy, according to the October 2021 Corporate Spend Playbook, a PYMNTS and Airbase collaboration.

Setting Administrative Spend Controls

To cut down on unauthorized corporate spend, many B2B companies are adding virtual cards to their financial efficiency toolbox. With virtual cards, they can set administrative spending controls, which can also make accounting quicker and more transparent.

“We experienced a recent issue with a vendor that agreed to charge a certain amount but instead tried to charge a higher amount to the virtual card on file,” Marten Abrahamsen, chief financial officer of Fundbox, told PYMNTS. “If not for the controls put in place for that specific card, we would have had to spend time attempting to claw back the incorrect charges.”

Virtual cards are gaining popularity for a number of reasons. First, they can help organizations closely monitor and maintain clear records on employee expenses to control overspending. They thereby provide a way to control corporate spend while giving corporate leadership and shareholders more visibility into where wasteful expenditures can eat into company profits.

The cards also empower managers to monitor and ensure compliance with company policy. Companies can set spending limits, select which merchants to pay and set expiration dates automatically.

At the same time, virtual cards offer employees a convenient and frictionless payment tool for work-related expenses. They help companies give their employees the flexibility to buy what they need without dealing with expense reports and receipts.

Generating Substantial Cost Savings

In addition, virtual cards offer many other advantages over traditional credit and debit cards. For one thing, they are touchless. For another, they are more secure than plastic cards; they are not physical cards that can be lost and they use a one-time card number for each use, so it’s essentially impossible for a bad actor to steal that number.

These solutions can also make the monthly closeout and general cash flow accounting much simpler and more efficient for financial teams. When combined with a spend management platform, they contribute to the streamlining of a B2B company’s internal processes.

“We use Airbase to eliminate the traditionally lethargic process of making payments to third parties, accelerating access to the tools and applications our team needs to address customer needs,” Abrahamsen said.

Virtual cards can equip companies with the maneuverability they need to respond to a business climate that is rapidly changing. Virtual cards have the power to generate substantial cost savings, placing managers back in charge of their expenses even as the work environment evolves.