A Guide to Improve Internal Control Over Financial Reporting
Internal control over financial reporting (ICFR) refers to the legal obligation of a company to provide accurate financial statements. It requires you to adopt policies and processes that show the true picture of the company's finances. This involves:
- Avoiding errors, fraud, or omissions
- Meeting deadlines
- Reviewing statements regularly.
An example of ICFR is inventory control, which involves maintaining accurate records of the company's goods. This requires adopting practices such as:
- Maintaining documents, such as receipts, shipments, and adjustments
- Segregating duties to different individuals or teams for handling, recording, and verifying inventory
- Matching physical inventory counts with recorded inventory levels
- Valuing inventory in accordance with generally accepted accounting principles (GAAP) principles, such as FIFO, LIFO, or the weighted average method.
These practices minimize the risk of inventory discrepancies and enhance the accuracy of financial statements.
What is the Purpose of ICFR?
ICFR is mandatory as per the Foreign Corrupt Practices Act (FCPA) of 1977 and the Sarbanes-Oxley Act (SOX) of 2002.
FCPA requires public companies to establish and maintain accounting controls. This reasonably ensures that financial statements comply with GAAP.
SOX takes this a step ahead and mandates public companies to assess the effectiveness of ICFR efforts and share the results with the public. Additionally, it demands large companies to get independent auditors for the evaluation.
Why is Internal Control Over Financial Reporting Important?
ICFR’s purpose is not restricted to being a statutory obligation. Here are five reasons why ICFR should be on your priority list:
Accurate Financial Statements
ICFR ensures accurate financial statements that reflect the company's financial position and performance. Such reports enable investors, creditors, and internal management to make informed decisions.
ICFR emphasizes the use of automation, standardized procedures, and clear documentation. This reduces the risk of errors due to human oversight, saving time and resources.
Preventing Fraud and Misconduct
ICFR employs strategies such as segregation of duties, multiple approvals, and regular audits. This reduces the chances of oversight and ensures employees do not engage in fraudulent activities.
Stakeholders (including investors and creditors) rely on financial reports to assess a company's performance. Effective ICFR policies build confidence in the company's financial reports.
Avoiding Costly Errors
ICFR detects errors and discrepancies before they can escalate into expensive matters. This saves significant expenses and protects its long-term viability. For example, identifying accounting errors eliminates the need for financial restatements.
What are the Components of Internal Control Over Financial Reporting?
There are five main components of internal control over financial reporting. These are defined by the Committee on Sponsoring Organizations (COSO) of the Treadway Commission.
These five components are also known as the COSO framework.
The control environment includes the organization's standards, processes, structures, and values. It comprises:
- Ethical values of the organization
- Organizational structure and authority workflow
- Processes to build a competent team
- Focus on performance measurement, incentives and rewards.
These elements create an environment that fosters internal control in the organization.
Risk assessment is an agile process for identifying and assessing risks. It involves:
- Identification of potential risks that impact the ICFR efforts. This includes both internal and external risks.
- Evaluation of the potential impact of identified risks. Some risks have a higher likelihood and a greater impact than others.
For instance, an internal risk could be employees intentionally inflating their expense reports to receive higher reimbursements. The potential impact will be financial misstatements if the risk goes undetected.
Control activities refer to the plan of action to address the risks identified during risk assessment. This requires establishing specific policies and procedures, such as:
- Segregation of duties to prevent fraud and collusion
- Controls in information security, application development, and system maintenance
- Implementation of entity-level controls, such as reviewing differences between planned budget and expenditure
- Employing preventive control, such as limited access to IT systems and automated approvals
- Using detective control to identify misstatements via reconciliations and management review controls
One such example would be accounts payable automation to eliminate manual data entry. For instance, an OCR-based automation tool will improve receipt retrieval if there are recurring manual errors.
Information and Communication
Information and communication ensure that key stakeholders know their roles and responsibilities. It involves:
- Defining expectations from each stakeholder in the financial reporting process
- Educating employees on ICFR policies, procedures, and compliance requirements
- Providing channels for reporting concerns and issues related to ICFR.
An example would be communicating reimbursement policies to manage company spending. These rules set clear limits and expectations for employees.
Hence, if the policy says entry-level employees can't claim travel expenses, they should not submit such expenses for reimbursement.
Monitoring activities involve regular review of financial controls and processes to identify and rectify issues. It includes the following steps:
- Review expense reports, receipts, and other data to verify the accuracy.
- Test sample data to ensure that controls are operating as intended.
- Detect unusual patterns or anomalies in the data.
- Verify that employees are following established policies and procedures.
One such example would be reviewing travel expense reports as a part of expense management. It involves verifying receipts and approval compliance. Any detected exceptions trigger investigations and corrective actions.
A Better Way to Manage Internal Control Over Financial Reporting
Setting effective policies for ICFR requires financial data visibility and proper reconciliation processes. Hence, achieving this demands more than policies and procedures.
You need software to support operational efficiency transformation. Here is how Pluto offers a helping hand to get better control over your ICFR efforts:
Seamless Financial Reporting
Pluto generates detailed financial reports, providing more accurate and effective financial reporting. You can automate the process of data entry with OCR-based receipt capture. This reduces the manual errors and ensures accuracy.
A multi-layer approval workflow ensures that financial transactions are reviewed and authorized on time. This helps you comply with company policies, enhancing control and accuracy.
The seamless integration with accounting software provides real-time data sync. This keeps the data up-to-date, enabling faster report generation.
Simplify Financial Audit
Pluto centralizes financial data, enhancing auditing capabilities.
Document management becomes simple with the easy uploading and retrieving of financial records. You can bulk download all audit logs and supporting files in a single click. This eliminates the time-consuming task of searching for and gathering individual paperwork.
Pluto's automated systems keep expense records for all financial transactions. As a result, auditors can trace every step of the transaction, ensuring transparency and accuracy.
With end-to-end encryption, Pluto meets bank-grade security standards to safeguard sensitive financial information. This ensures the safety and easy accessibility of financial data.
Accounts Payable Automations
Pluto automates the accounts payable (AP) process to simplify procurement and payments. From purchase request (PR) to goods received notes (GRN) matching, you can streamline the entire AP process.
Multi-layer approval workflows accelerate purchase requests and approvals. The purchase order (PO) process becomes faster with custom workflows and ERP integration.
Pluto automates the entire invoice management process. OCR technology makes it easy to capture and auto-fill invoice details, ensuring accuracy and speed.
Pluto's cash flow management features provide alerts for upcoming payments. This enables you to schedule payments and avoid penalties.
Pluto enables budget control by facilitating spending limits and approval workflows.
Not only can you decide the limit for corporate cards, but also reject an expense if it goes against company policies. In contrast, you can also approve the spending limit for legitimate expenses.
This ensures that employees adhere to predefined budgets. Moreover, this gives your finance teams immediate visibility into spending against budgeted amounts.
Pluto's ERP integration streamlines vendor management and fosters an efficient control environment.
It imports vendor lists from your ERP and exports them back. This reduces data discrepancies and duplicates, leading to data consistency.
Pluto's dashboard further makes tracking invoices and payments straightforward. This simplifies the payment and reconciliation process, preventing any errors.
Pluto automates and simplifies expense management processes.
Each expense prompts a WhatsApp notification for employees to upload receipts. Administrators and managers also receive notifications to approve expenses. Approved expenses get reimbursed immediately to employees' bank accounts.
This seamless approval workflow ensures proper control and accurate financial reporting.
Go Beyond Statutory Obligations
ICFR is not just a legal compliance. It is a practice to ensure financial visibility and control. While implementing policies and procedures is the main focus, finding the right tools to support your journey will make the process easier.
Pluto automates your financial processes to reduce manual errors and accelerate reconciliation. You close books 10X faster with more confidence.
Book a demo today, and see how Pluto gives you better control and visibility from day one!
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Why A Legacy ERP Is Not Enough For Modern Procurement Teams
In today's fast-paced business environment, most organisations rely on Enterprise Resource Planning (ERP) systems as foundational tools to manage and integrate various business processes. ERPs traditionally offer a broad spectrum of functionalities, assisting in handling essential operations such as procurement, data management, accounting, and supply chain management.
ERP systems provide a comprehensive suite of software functionalities to enhance and optimise various aspects of business operations. Over time, these systems have evolved, shifting from on-premises solutions to cloud-based platforms. However, organisations still face challenges when implementing ERP solutions across their enterprise.
One significant aspect often overlooked in ERP systems is their limitation regarding financial operations & intelligence. ERP solutions primarily focus on improving business processes and management but do not directly handle monetary transactions or provide financial products. This necessitates the integration of external financial institutions and banks with ERP systems.
Moreover, traditional ERP systems struggle to keep pace with the dynamic demands of modern procurement, particularly in the ever-evolving supply chain environment. Today, ERP systems need to be more proactive, incorporating features like real-time analytics and flexible processes to meet the ever-shifting requirements of procurement. Adapting to these changes is essential for businesses aiming to enhance their procurement efficiency and agility.
ERP Systems vs Procurement Solutions: How Are They Different?
ERP systems were initially designed to automate business processes and offer insights for internal controls, while procurement solutions comprehensively manage the ecosystem.
A P2P or a procurement solution is primarily built to meet an organisation's procurement and supply chain needs, an arena always problematic for traditional ERP.
Innovative organisations are now adopting leaner and cheaper solutions for their procurement processes. These tools can deftly handle specialised tasks and yield instant results.
Limitations of ERP
Factors like market volatility, evolving work dynamics, and shifting supply chains have made it challenging for businesses to integrate their procurement processes into their current ERP systems. Hence, it is vital to use specialised solutions to cater to dynamic business processes.
But before exploring the benefits of specialised solutions, let us consider the limitations of ERP:
Long Implementation Duration that Impedes ROI
Customising legacy ERP to meet procurement or supply needs is a hassle. It contributes to a longer implementation duration lasting several months. Customisation projects are resource-intensive. That makes a fast ROI virtually impossible to achieve.
Moreover, businesses must hire ERP consultants or trained partners for the implementation. The success rate and the implementation duration heavily depend on the expertise of such third parties.
With many companies already strung tight regarding capital, implementing legacy ERP to function as procurement systems may prove counterproductive.
Expensive Implementation and Maintenance
Legacy ERP licenses come at a high price. Depending on your software, ERP implementation costs can range from $150,000 to $750,000.
Moreover, procurement processes almost always require extra modules that can further increase costs. It also includes the additional burden of maintenance costs and training employees to use the software.
Failures To Meet Business Goals
The success rate of ERP implementation is dwindling. Recent studies from Gartner indicate that the failure rates of ERP implementations can exceed 75%. McKinsey, a reputed global consultancy, supports this claim as it quantifies the failure rate of all digital transformations to be higher than 70%.
One famous example is Hershey's ERP implementation failure in 1996 as they set out to replace their legacy IT systems with an integrated ERP environment. They chose SAP's R/3 ERP software, and an implementation time of 48 months was recommended, which was later cut down to 30 months. The result - a $10 million investment leading to a loss of $150 million in revenue, a 19% reduction in share price, and a 12% loss in international market share.
With such massive costs and periods involved in achieving numbers from legacy ERP solutions, using specialized procurement systems can make achieving business objectives far easier.
Lack of analytics and insights
ERP systems often fail to deliver the necessary analytics and data for effective operations. Managing vast volumes of data within these systems can be daunting. Challenges include ensuring data quality, the lack of real-time insights, limited data analysis capabilities, and integration issues with other software applications.
Poor User Experience
Many ERP systems require makeshift solutions to modify their functionality according to user demands, leading to frustration with end-users.
Legacy ERP systems are notoriously complex, making them challenging for end-users. Frequently, users must navigate between multiple interfaces, hindering productivity and adoption.
Furthermore, the lack of mobile apps and scattered functionalities exacerbate the issue—problems that a dedicated procurement solution can readily address.
Complex User Interfaces
ERP systems offer enterprise-grade capabilities, yet their inherent complexity and poor user experience pose significant challenges. Users often struggle with confusion, as traditional ERPs are overly intricate. The need for add-ons further exacerbates the complexity, as these additions must seamlessly integrate with the existing ERP system. This constant juggling of different user interfaces not only hampers productivity but also hinders widespread adoption.
One of the most disappointing aspects of legacy ERP systems is the lack of in-built communication channels. ERP systems struggle with establishing themselves as a medium of dialogue between internal business users and external suppliers, as they are not accessible from outside the business network. It tangles communication channels through unnecessary phone calls and scattered information exchange lines.
They are also severely limited in their capacity to maintain supplier pipelines, requiring most data to be entered and managed through several spreadsheets.
Urgent reports, design changes, and other important information cannot be communicated promptly, which may lead to losses. It leads to unnecessary time consumption and inaccuracies.
Solving ERP Issues with Dedicated Procurement Solutions
Addressing the limitations of ERP systems, organisations are increasingly turning to dedicated procurement solutions to streamline their purchasing processes and enhance efficiency. These specialised solutions offer advanced analytics, real-time insights, and improved data quality, making it easier for businesses to manage their procurement operations effectively.
By integrating dedicated procurement solutions with their ERP systems, organisations can bridge the gap between data management challenges and their need for comprehensive procurement intelligence, ultimately driving better decision-making and cost savings.
Addresses Overspending Issues
Integrating P2P software with ERP can prevent overspending in procurement. By harnessing ERP with eProcurement solutions, you can efficiently assess expenses across purchasing categories.
It allows you to manage budgets and increase savings. Moreover, integrating procurement solutions with ERP simplifies procurement management by automating approval processes.
Boosts Vendor Collaboration
Vendor collaboration is one of the most essential aspects of procurement. Keeping them informed of the relevant business operations helps avoid miscommunication.
By integrating procurement solutions with ERP systems, buyers and suppliers can access real-time data, empowering them to make informed decisions. This integration brings advantages such as:
- Enhanced collaboration: Seamless collaboration between buyers and sellers, achieved through transparent access to purchase orders, invoices, and receipts.
- Supplier empowerment: Suppliers are empowered with real-time insights into payment statuses via a supplier portal, which enables sound financial planning.
- Stronger buyer-supplier relationship: Heightened transparency nurtures and strengthens the critical relationships between buyers and suppliers, a fundamental cornerstone for any successful business.
- Improves Scalability and Flexibility
As businesses expand, stakeholders must seek platforms that can swiftly adapt to increased operational demands and changes in the operational cycle.
Procurement software provides essential features like mobile and remote access that most businesses require to scale operations. It also allows businesses to create highly specialised and efficient platforms, saving money, time, and human resources.
Helps Eradicate Duplication Issues
Procurement solutions can help connect all departments to ensure office supply orders are placed through a centralised system. They help share real-time data across tech, IT, finance and accounting, HR, sales, and marketing teams. It helps prevent duplicate purchases by coordinating buying across departments. Improved coordination also allows teams to maximise discounts and negotiation opportunities while saving time, money, and effort.
Reduces Procurement Errors Through Automation
Specialised software can help organisations optimise deals, accelerate processes, and reduce errors through automation. It helps allocate repetitive and simple tasks to the system rather than to users.
For example, businesses can automate their supply ordering with this technology. Automation helps set limits to ensure timely orders, prevent shortages, and follow any restrictions they have in place.
Handles Compliance and Risk Management Issues
Managing procurement-related risks and complying with regulations can be pretty challenging. An ERP-procurement integration empowers the software to handle compliance matters and mitigate risks during procurement processes, even involving multi-currency transactions.
Supplier Performance Management
Managing supplier performance during the procurement process can be quite challenging without the right tools at your disposal. However, by integrating procurement software with an ERP system, you can simplify collecting and analysing data related to supplier performance.
This valuable information encompasses delivery times, product quality, and responsiveness, enabling you to decide whether to maintain or end supplier relationships.
Inadequate inventory management can result in too much or too little stock. These outcomes affect working capital and operational efficiency. One practical approach to tackle this problem is integrating procurement solutions with ERP systems. Such integration offers benefits like:
- Real-time visibility into inventory levels, allowing for monitoring.
- Automated reordering process, reducing the burden on manual efforts.
For example, a supermarket chain can leverage sales data to automate the reordering of items, minimising waste and ensuring the availability of products.
Provides Analytics for Better Insights
By integrating procurement solutions with ERP, businesses gain a flexible data model capable of handling big data. It manages the data and offers valuable insights to enhance information generation, storage, and decision-making. Procurement software encompasses advanced spend analytics, supplier benchmarks, and comprehensive performance management.
Drastically Improves End-User Experience
Procurement solutions are built from the ground up, keeping procurement operations as the top priority. It helps avoid a cluttered, mismanaged UI that comes with legacy ERPs, enabling users to be more productive.
End-users can adapt to changes in the software much quicker, increasing efficiency.
Procurement and sourcing processes require a dedicated platform in 2023. Unlike legacy ERP, such dedicated solutions can handle complex sourcing and procurement operations. They ensure a streamlined and seamless flow of relevant information between internal business organisations and external suppliers, allowing all stakeholders to have complete project visibility.
The outcome of implementing a smaller yet far more efficient tool will facilitate faster time to market, subsequently letting you achieve your ROI at an expedited rate.
While customising an ERP may sound enticing, opting for an eProcurement solution is smarter.
Travel Expense Management: Quick Guide For 2023
Travel and entertainment expenses are necessary for doing business, but that doesn’t mean that these expenses should be left unchecked.
As the person in charge of managing your organization's finances, you should be obsessed with making all expense management as efficient as possible in order to save money.
But how can you simplify the T&E management process when there are so many moving parts and people involved? By using the right tools for the job.
In this guide, you’ll learn the importance of having a good travel and expense management policy, how to make your T&E management more efficient, and what to look for in travel and expense management software.
Why Is Travel Expense Management Important?
As a finance professional, you know that cost management and expense reduction are crucial aspects of financial management work. One of the ways you can do this is by tracking all deductible expenses for tax reduction purposes.
And when it comes to the hierarchy of expenses you need to keep track of, those related to corporate travel and entertainment are of particular importance.
According to Mastercard, corporate travel and entertainment expenses have become the second-highest expense category.
But not only does T&E account for a large portion of the business expenses that companies have to deal with, but it’s also been identified as the second most difficult operating cost to control.
That’s why it’s so important that your organization develops and maintains effective T&E management policies, and uses the tools available to simplify T&E management.
The Challenges of Travel and Expense Management
If you don't have clear policies and infrastructure in place, reporting and reconciling expenses can be a tedious task for both you and your employees. But your policies and structure can only go so far when you are limited by outdated technologies and manual input. And that’s just the tip of the iceberg.
Some of the most common challenges related to T&E management you’ll have to deal with include:
- Limited fund access
- Security risks
- Outdated policies
- Lost reports
- Inefficient bookkeeping
- Lack of spending visibility
- Slow reimbursement process
Luckily for you, all these pain points can be handled through a combination of digitization, automation, and of course use of Pluto.
How To Make Travel Expense Management Process Efficient
While there are more than a few challenges associated with travel and expense management, there are also more than a few ways to tackle these issues in order to make your expense management more efficient.
For instance, digitizing and automating your processes will go a long way toward simplifying your expense management, but reviewing your existing policies and ensuring they are simple and clear is also important.
Here’s a list of tips to follow if you are trying to simplify your expense management:
Review Your Travel Expenses and Reimbursements
One of the first things you should do is take a look at your current travel expenses to see if there are any changes to be made.
Business travelers will always need to take trips, but perhaps there are some interactions that could be handled via videoconferencing.
You can also look for ways to minimize the expenses that need to be reimbursed. For instance, by using Pluto corporate cards, you could help eliminate, or at least reduce, the need to reimburse food expenses while giving you better control over them.
Examine Your Travel Policy and Keep It Simple
If you are having trouble with your T&E management, you should take a look at your current travel policies (and if you don’t have one already, you should make that your top priority).
Your T&E policies need to strike a balance between flexibility and strictness. Too flexible and you create waste; too rigid and you limit the ability for people to do their jobs.
A good T&E policy should include the following:
- How travel will be booked
- The process to follow for reimbursement (including what type of supporting documentation is necessary, due dates, and other stipulations).
- Any budget or spending limits, including the specific transportation methods or hotels that can be used.
- Meal allowances.
And you want to keep your policy simple and easy to read. Minimize the jargon, use short paragraphs, and a simple format with bullet points, tables, and clear headings.
You should continuously review your expense policy, particularly as your business expands, to ensure that it’s aligned with any changes in your organization.
Your team should be able to access your expense policy from anywhere and at any time. But more than that, you should aim to digitize the expense report process as much as possible.
For instance, implement the ability to submit digital expense reports and capture receipts digitally. Not only will this allow you to get a clearer view of your operations at all times, but it will help simplify your bookkeeping and easily manage receipts.
Pluto has this function!
Use Travel Expense Management Software
Through effective use of travel and expense management systems, you can consolidate the different scaffolds in your expense process, automate them, and eliminate time-consuming approvals while minimizing, or outright eliminating, human error.
Using Pluto allows you to cut a lot of the fat out of the reimbursement process. Automate reports, data gathering, and approvals for expenses that meet your policies, leaving only those that don’t meet your policies for manual approval.
Furthermore, it can help you detect fraud by auditing your reports for duplicate expenses and any other anomalies.
And through software integration, you can use these different tools to create a unified T&E management process.
Look Into Other Software Solutions
There are many tools you can use to make your T&E management more efficient, for instance:
- Pluto Card allows you to issue unlimited virtual cards, create travel specific card limits monitor spending in real-time and most importantly, it allows your employees to reimburse quickly!
- A travel expense tracker can provide you with automated expense reporting and expense tracking.
- You can use a travel management platform that allows your employees to book flights, trains, and hotels and even rent cars from one place.
- Pluto mobile app makes the expense reporting process much simpler for your employees.
- You could take data from Pluto and travel management system directly into your accounting platform to further automate and simplify the T&E management process.
Important Travel Expense Management Software Features
One of the best ways to simplify your travel and expense management is by making use of the right T&E management software. However, with the increasing amount of options available, knowing which one fits your company best can be difficult.
Since no two businesses are exactly the same, there won’t be a one-size-fits-all solution. Having said that, you’ll have an easier time choosing between the different options by focusing on the specific features that you need, or at least should consider, in a T&E management platform.
Here’s a list of some of the features we believe you should look for in your T&E management software:
Pluto gives you the ability to create virtual cards for online purchases. These cards can be generated as single-use or recurring, giving you complete control in terms of how you set up your spending limits.
Virtual cards offer you similar benefits to corporate cards, in the sense that you get full visibility of your expenses and your employees don’t have to pay upfront, but they have the added benefit of being more customizable.
Flexible Spending Limits
Our expense management software can also give you a lot of control and flexibility over the spending limits that you set. Pluto allows you to set specific spending-limits for vendor and change them in real-time online.
This allows you to track expenses for specific countries or cities, while removing the need to manually configure spending limits each time someone makes a trip request.
Expense Reports and Analytics
If you want to make your expense management more efficient, you’ll need accurate data and insights into the spending habits of your employees.
Pluto gives you real-time reporting and analytics, to give your finance teams an easier time combing through all the expense data. For instance, a system with robust reporting capabilities should:
- Categorize expenses and organize reports by expense type
- Reconcile your reports
- Give you spending insights across all your departments
- Keep track of violations of your expense policies
- Provide you with real time spend visibility
By getting a clear picture of your expenses, you’ll have an easier time ensuring policy compliance, preventing fraud, and reducing travel costs.
No FX Fees and Multi-Currency Functionality
If your employees travel internationally frequently, you’ll want a product that comes with a card that doesn’t have additional fees or surcharges for international purchases.
At Pluto we have 0 FX fees. Furthermore, you’ll have an easier time managing these expenses due to multi-currency functionality automatically converting all transaction information to your country’s currency.
If you are trying to simplify your expense reporting process for travel expenses, then you need a way to work on those expenses on the go. Pluto’s mobile app would allow your employees to report their expenses right away from any location, while also giving them the ability to submit receipts digitally.
Integrated Card Management
If you opt for a software provider that also offers corporate credit card services, you’ll be able to automatically reconcile expense report entries with your card statements, detect any expense bottlenecks, and generally reduce the chances of fraud or misuse.
Pluto card management software will also give you more control over your corporate spending. Plus, you’ll be able to set and control your spending limits with much more ease.
Compatibility with Other Tools
When it comes to the use of technology in expense management, the more, the merrier.
Pluto can be integrated with your accounting software so that it can automatically populate expense reports and simplify your reimbursement through the use of your organization's accounting data.
Furthermore, by integrating your TEM system with your travel management system you can instantly take the travel booking information and add it to your expense reports.
Automated Workflows, Expense Categorization, and Tax Calculation
The entire point of using travel expense management software is to automate as many processes as possible.
This includes the ability to customize your travel policies and approval workflows, categorize expenses for more straightforward tax calculation, and determine whether they are tax deductible or not.
Furthermore, by categorizing your expenses, you’ll have an easier time complying with the tax regulations of your country.
One feature that is sometimes overlooked in software platforms is the ability to scale your operations as your company grows. You don’t want to choose a system now only to realize it no longer meets your needs further down the line.
In this regard, Pluto is a great pick as we have the backend to support any business sidez from small teams to enterprise level accounts.
Effective expense management is all about visibility, flexibility, control, and automation. The most common pain points from T&E management come from outdated policies and manual inputs, which you should seek to update and simplify via means of a robust expense management platform.
When it comes to making your travel and expense management more efficient, the key things to remember are:
- Review and update your policy continuously to ensure it meets the needs of your business and employees.
- Examine your current expenses to look for opportunities to reduce reimbursements and consolidate expenses.
- Use Pluto to automate approval workflows and simplify the expense reporting process.
- Pluto also offers strong reporting capabilities, gives you a lot of flexibility for spending limits, and can be integrated with other tools for maximum effectiveness.
Best Virtual Corporate Card For Business 
In modern business, cash and checks have gone the way of the horse and buggy: they’re simply too inefficient. But even their replacements – traditional payment methods like debit and credit cards – are overdue for an upgrade.
Welcome virtual corporate cards.
These digital payment methods offer numerous perks, from faster payments and reconciliation to greater control and security. They’re quicker, safer, and easier to integrate and use for accounting and operational teams alike.
Plus, the industry is on the cusp of an explosion, which could send innovation through the stratosphere. Between 2021 and 2026 alone, virtual card spending is predicted to skyrocket from $1.9 trillion to $6.8 trillion.
Here’s what to know.
First, A Brief Refresher on Corporate Cards
Corporate credit cards are credit cards issued to a business entity – not a person – as the responsible party.
In most other respects, corporate cards are like regular credit cards. They require a credit check to apply, charge a regular interest rate, and even come with reward systems. Corporate purchase cards are also unique in that the business can issue dozens of employee cards on the same account.
Pluto corporate cards come with specific controls to help your business manage spend. Real time tracking, setting limits on the go and quick reconciliations are just a few of the things that Pluto can provide.
But there is more. For companies who need to act quickly and require flexibility in their card issuing, there are virtual cards.
What is a Virtual Corporate Card?
Virtual corporate cards, like regular corporate cards, are linked to the business’ budget. Employees can use these cards to pay for business expenses without using their own personal cards or cash.
But unlike physical cards, virtual credit cards reside solely in the digital realm. These cards are essentially unique, digitally-generated 16-digit card numbers that tie to a specific spending account. (In this case, the business’ account.) Each virtual card contains other essential card details, too, like the following:
- Cardholder’s name
- Company’s billing address
- Card number
- Expiration date
Virtual cards are also unusual in that they can be generated and destroyed in moments. They can be designed to permit one-off charges, expire same-day, or hold only a specific dollar amount. Some virtual cards can even be linked to a particular vendor for one-time or recurring payments, perhaps with weekly or monthly spend limits.
Virtual cards can be accepted anywhere that online payments, and even some in-store payments, are accepted. Due to their ability to generate new numbers on demand, they offer additional security and control for business accounts. Plus, they can’t be lost or stolen like a regular credit card.
Virtual Credit Card vs. Virtual Corporate Card
A virtual corporate card is simply a digital credit card issued to a corporation. For the most part, you can use virtual cards the same way you could use regular cards. However, like corporate cards, these virtual equivalents allow the issuing firm and receiving businesses to set particular spend and monitoring controls.
Because virtual credit cards are 100% digital and able to generate new 16-digit numbers on demand, they’re optimized for safety and flexibility. They also make it easier to reconcile books and otherwise manage spending.
Why Use Pluto Virtual Corporate Cards?
Pluto virtual cards offer tons of perks and use cases. With more control and yet unparalleled flexibility, your business can remain nimble as you grow.
At the same time, department heads can keep an eye on expenses, spending, and accounting practices.
Flexible Setup and Spending
Modern companies need to be nimble, able to make purchases on the fly and reconcile their books in minutes, not days. Virtual cards let your business do so –without breaking their budgets.
Virtual cards provide unprecedented levels of flexibility to businesses of all sizes. After signing up, cards can be generated and issued to individuals with just a few clicks.
They also permit companies to limit available vendors, set a specific spending limit, expiration dates, and even the specific department budget the card should link to.
One of the biggest perks of Pluto's cards is that you can create as many as you need in a matter of seconds.
The times when an employee had to wait several days for the approvals and the card details to arrive are over.
For example - at 9:00, we had a team discussion about additional performance marketing activities.hile we were on the call, the department head created 3 virtual corporate card numbers for us to use.
It took him roughly 2 minutes to create them. All that without missing a beat on the call itself.
Right after we finished the call, we could start setting up ads.
Once you’ve generated a card – either for your team or by employee request – you can quickly personalize them for added constraint.
These controls are admittedly extensive, allowing your business to:
- Lock cards to a particular merchant or vendor
- Ensure cards can only pay to specific accounts
- Generate cards with set one-time, monthly, or recurring expenditure limits
- Institute purchase approval practices for individual cards, persons, or teams
Companies can use these various limits to prevent overspending, surprise fees, and unnecessary surcharges. Plus, with specific cards linked to individual employees or vendors, compartmentalized spend management becomes even easier. For many businesses, this is a welcome alternative to issuing high-limit cards to every employee that requires one.
In the example above, you can see one of the popular uses of Pluto virtual cards - employee benefits.
When a new employee joins, how much time does it usually take your HR department to get wellness or children's educational benefits to that employee?
With Pluto, it’ll take you leess than 2 minutes.
Another perk of virtual cards is that they can be generated for and linked to a single individual or team.
That makes purchase tracking easier, which increases personal and departmental accountability.
By using built-in accountability and analysis tools, your business can better track how and when money is spent at every level.
Streamlined Accounts Payable
Virtual corporate cards simplify the role of the finance team. Pluto can integrate with your accounting software, making it easy to sync your chart of accounts, automate mapping your GL accounts, and bulk verify & export your expenses so you can close your books 10x faster.
From there, settlements can happen immediately rather than taking days or weeks. This eliminates the slow, potentially error-riddled manual accounting process with a faster, cheaper, and more efficient digital alternative.
Pluto's virtual cards can help greatly reduce your overall card risk profile. Their increased security is due to their unique design, including their:
- Digital nature, which precludes them from being physically stolen.
- Set spending limits to prevent overcharging.
- Ability to block vendors and retailers from storing personal or card information long-term, helping to prevent fraud
- Ability to include one-time or vendor-specific expenditures and other spending controls, limiting financial hemorrhaging
- Auto-lock features to freeze cards instantly
- Ability to delete and regenerate virtual cards in seconds rather than days
Pluto's virtual cards feed their data directly into a centralized interface, allowing all data to show up in real-time reports, simplifying the analytical process. The spend management systems also offer real-time notifications.
Together, these features offer companies greater real-time visibility over their expenditures. This level of transparency can inculcate a healthier spending culture within a company beyond merely increasing accountability.
Plus, real-time reporting means that accounting teams and department heads can immediately respond to budget requests, verify receipts, and manage card limits.
Pluto expense management dashboard allows you to see everything and makes spend control a breeze.
Virtual credit cards provide an easy approval system to allow finance teams to take advantage of automatic reconciliations whenever possible.
Accounting teams can set codes for recurring transactions and tag controls to identify transactions before posting them to the general ledger. Each card can be linked to a specific employee to link specific transactions to each employee.
With the right card and accounting integrations, it’s possible to automate the bulk of manual data entry and reconciliation out of the gate. Plus, you’ll increase the accuracy of your data and insights.
Efficient Vendor Payment and Management
You can also use virtual cards to simplify vendor management.
You can link specific cards to particular vendors, allowing you to track which teams use them regularly and how their prices change over time.
By setting limits and expiration dates to your specifications, you can prevent teams from “forgetting” about upcoming auto-renewals.
Pluto virtual corporate card offers a wide range of perks and benefits!
Instead of giving you Starbucks gift cards, we formed partnerships with some of the most critical services for the day-to-day operations of your business.
Reduce the Risk of Fraud
When multiple employees and vendors share a high-limit physical card, you run the risk of operational problems and fraud.
The more people who can access a single 16-digit number, the more likely unauthorized expenses can slip through the cracks.
Virtual credit cards don’t come with the same fraud and data loss risks that physical cards do.
- They’re impervious to hacks that come with swiping physical cards at in-person terminals.
- You can create cards for a particular purchase, vendor or project.
- You can easily link cards to specific employees and/or vendors, offering full control while minimizing risk.
Virtual Corporate Card Use Cases
Due to their innate flexibility and unprecedented control, virtual credit card programs offer multiple potential use cases. There are too many to go over here – but we’ll address a few of the most common or impactful.
Digital agencies need to be able to make payments on behalf of their clients. This can be done using virtual cards, which allows the agency to keep track of spending and ensures that funds are used for the intended purpose.
With Pluto, you can create virtual cards for every PPC campaign or bigger project and keep track of your agency's spending in one place.
Not only does this allow you to scale the clients' performance marketing efforts, but the spend control dashboard shows you exactly how much was spent. You can go as far as naming and tagging your virtual cards, so you can see how much was spent per PPC channel on individual clients.
Catering, lights, music, production, venues, drivers so many things that even organizers have to keep in the air! If you are an event organizer, chances are you understand how important it is to keep your spending in one place. That way when the time comes to file taxes or show ROI, everything is itemized and accounted for.
With a virtual card, all your charges will be automatically filed under the right categories. You can also set limits on how much can be spent per vendor, so you don't have to worry about overspending.
And if you have a team working on the event with you, you can give them each their own virtual Pluto card (or physical) with their own spending limits. That way, you can see at a glance who is spending what and where.
When you are a startup, your want to fully focus on your product and leave the rest to someone else. With a virtual card, you don't have to worry about setting up a corporate credit line or dealing with complex expense reports.
Just set up your team with Pluto virtual cards and let them manage their own expenses. You can see what they are spending in real-time and track progress against your budget.
Also, when you are at your early phase, there is no time for lengthy approvals. SaaS, ads, tools, plugins - virtual card can service them all.
You business is digital and so should be your payment tools. With a virtual card, you can make payments online without ever having to worry about the security of your information.
Worried about that Alibaba supplier? Create a virtual card with a limit just for that vendor and you're good to go. Put a spending limit on it, and you limited any potential risks as well.
- Need your team to buy TikTok ads? -> Done. TikTok Ads Virtual Card
- Need to pay an Upwork freelancer? -> Done. Upwork Specific Virtual Card
You see where we are going with this. Create as many virtual cards as you need for as many occasions as you need.
Consultants are on the road most of the time, and when they are not - they are seated in the client premises, helping to grow the business.
Employee travel is one of the most commonly-cited reasons for individuals requiring their own corporate cards. Travel expenses may include hotel rooms, a food allowance, or additional budgeting to purchase essential materials while they’re away from home, so to speak.
However, even in your own teams, it’s possible for employees to get carried away. An expensive dinner, unexpected expenses, and hotel room upgrades may all be well within your budget. But if you want to prevent excessive spending on your dime, virtual card controls hand you that power.
Any company that have a vehicle fleet knows that a lot of time can go into fuel cards management.
Pluto can provide both virtual and physical corporate cards which makes it a perfect solution for efficient fleet management.
You can issue fuel cards to the drivers as needed, and scale up and down depending on the current business situation.
In addition to that you see the fuel expenses real-time and can set limits and approvals where required.
- Virtual corporate credit cards pave the way for the future while addressing a multitude of modern business pain points.
- They hand companies greater control over their spending, simplify accounting across the board, and even help protect employees.
- Plus, with so many nuances and use cases, it’s incredibly easy to personalize virtual cards to meet your unique needs.
Modern finance teams save time & money with Pluto.
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© Pluto Card is a Pluto Financial Services Inc. company 2023
The product and services mentioned on this webpage belong to Pluto Technologies Ltd (Pluto), a company incorporated under the laws of Dubai International Financial Centre (DIFC), Dubai holding commercial license number CL5294. Pluto is a financial technology provider and not a bank. Pluto provides certain facilities for the utilization of payment services through Nymcard Payment Services LLC under the applicable payment network and Bank Identification Number Sponsorship of Mashreq Bank PSC. This is pursuant to the license by Visa® Inc and is available for the residents of UAE subject to Terms and Conditions of use