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Best Virtual Corporate Card For Business [2024]

Vlad Falin

November 29, 2022

5

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.

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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
  • CVV

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.

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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.

Unlimited cards

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.

Spend Control

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.

Higher Accountability

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

Enhance your finance team's efficiency with Pluto, featuring virtual corporate cards and integrated accounts payable software.  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.

Better Security

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

Real-Time Reporting

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.

Simple Reconciliation

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.

Reward Options

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.

Agencies

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.

Event Organizers

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.

Startups

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.

E-Commerce

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.

Consulting

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.

Fleet Management

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. 

Key Takeaways

  • 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.

Find out how much your business can save with Pluto

Discover your savings with Pluto's Cost Saving Calculator and take control of your expenses. Unlock cost-efficiency now!

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Learn how Pluto is helping Keyper        to eliminate petty cash spending and optimize spend management

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At Pluto Card, our mission is to assist businesses of all scales make well-informed choices. To uphold our standards, we follow editorial guidelines to guarantee that our content consistently aligns with our high-quality benchmarks.

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5
All
Procurement
December 20, 2023

Vlad Falin

Procure-to-Pay Process: What it is, Benefits, and Steps Involved

The procure-to-pay process doesn’t mean the procurement process. It is a subset of procurement that integrates purchasing and accounts payable.

Traditionally, the procurement process is scattered across the business, and the procurement team needs help to gain visibility or control. The employees purchase from different vendors, the approval process is chaotic and delayed, the stakeholders are stuck in email threads to review the expenses, and the procurement team struggles to get an overview of the organization’s needs.

Procuring the best goods and services becomes problematic since the team is left with open information loops. As a result, it spends more time optimizing the procurement cost and improving the bottom line.

What is the Procure-to-Pay Process?

The procure-to-pay process streamlines the scattered procurement parts to combine purchases and payments. Instead of a process spread across different software, the procurement process shifts to a centralized platform.

The employees get a dedicated platform to raise purchase requests and obtain approvals. The platform notifies stakeholders, such as managers, legal teams, finance teams, IT teams, and other relevant decision-makers to review and approve the proposals. As a result, the procurement team seamlessly moves to the vendor evaluation and negotiation stage without worrying about approvals or delays. The finance team efficiently handles accounts payable since the purchase and payment process is integrated.

So, while earlier, the purchases were handled solely by the procurement team and payments solely by the finance teams, the procure-to-pay process gives both teams an overview of the process from start to finish. In this post, we will discuss how this procure-to-pay process helps you optimize your procurement function and improve your bottom line.

Why Do You Need a Procure-to-Pay Process?

The procure-to-pay process is not just for your finance team or procurement team. It helps the entire organization to gain resources efficiently. Here are eight ways that demonstrate how moving to a streamlined process benefits you:

1. Visibility

All the relevant stakeholders get visibility into the process and the status. Be it the employee, managers, finance team, legal team, IT team, or procurement team — each one can track the progress without delving into multiple email threads. Additionally, teams get insights that help procurement teams optimize costs with data-driven decision-making.

2. Compliance and Control

You can implement advanced controls, such as customized approval workflows and spending budgets, without micromanaging the teams. You can successfully enforce internal control over financial reporting without creating unnecessary team resentment. 

So, for instance, if any expenses or purchases beyond $50,000 require additional approval from the legal and IT team, you can easily configure those controls within the approval workflow.

3. Streamline Workflows

The traditional process demands the employees to go from one office to another or spend days on email and Slack conversations before the managers give the green signal. At times, approval of a critical stakeholder is missed, causing delays and disrupting the workflow.

With the procure-to-pay process, you can create custom workflows depending on the purchase category, department, amount, etc. This accelerates workflow, and all the relevant stakeholders get notified right away.

4. Centralized Management

The procure-to-pay process integrates purchases and payments to bring all the critical information on a single dashboard. As a result, any discrepancies in the procurement process are identified in minutes. The entire procedure accelerates the real-time visibility of each stage.

5. Reconciliation

A centralized management system makes collecting and storing documents easy; additionally, since it integrates purchases and payments, the information syncs across accounting systems and ERPs.

During the audit season, this becomes a blessing where the finance team doesn’t have to chase teams for complete records. Also, it becomes easier to store and lock all the transactions and share these records with external parties.

6. Risk Management

The procurement operation is prone to financial, operational, and reputational risks. With the procure-to-pay process, teams can efficiently manage the vendors, purchase requests, approvals, and payments on a centralized platform in real time. It reduces the risk of fraud, ensures policy compliance, and provides visibility into spending patterns without burdening any team.

7. Insights

You can easily see the inside out of your procurement process, whether you want to know how much the marketing team spends or which vendor costs you the most. It makes it more convenient to reduce procurement costs and optimize purchases to improve the bottom line. Also, as all the information is centralized, there are no gaps or missing loopholes, providing complete transparency of your expenses.

8. Invoice Management

The procure-to-pay process ensures that all the invoices are captured and extracted into a centralized platform. This facilitates two-way and three-way matching without causing delays. Moreover, the reconciliation process becomes easy as all the records are systematically recorded.

So, whether you receive an invoice via email, WhatsApp, or physical copy, you can easily add it to the system without risking losing an invoice.

What are the Stages in the Procure-to-Pay Process?

The traditional procurement process has over nine steps strewed across different platforms. These include identifying goods and services, purchase requests, vendor selection, negotiation, purchase orders, inspection of the goods received, three-way matching, approvals, and payment and reconciliation.

While the procure-to-pay process doesn’t alter these stages, it integrates them for a streamlined workflow. So, earlier, if the approvals took days or weeks, keeping employees and the procurement team on hold, now it only takes a few minutes or hours. You centralize the procurement process and save money and time.

Here are five key stages in the procure-to-pay process:

1. Purchase Request

Purchase Request

Employees no longer need to travel from one office to another, seeking approvals manually from managers. The streamlined procure-to-pay process gives employees a centralized dashboard to raise requests and specify their needs. It helps the procurement team to understand what the employee needs as well as examine the purchase details. Moreover, the stakeholders can quickly approve or reject the requests from the dedicated platform.

Administrators add customized approval flows to enforce internal policies. They create trigger-based approval workflows based on the expense amount, category, and department to accommodate intricate hierarchies.

For instance, they have the option to create separate workflows for expenses below $5000 and those exceeding a certain budget. Similarly, they can add specific stakeholders to the custom workflows for minimum friction and delay. 

2. Purchase Order

Purchase order

While the vendor evaluation, selection, and negotiation happen on dedicated ERPs, the procure-to-pay process enables you to bring all this information on a consolidated platform. You maintain a synced and consistent database to make purchases faster and more secure.

Pluto integrates with your ERPs and allows you to maintain a centralized vendor database. You can add the vendor directly to the platform and systematically record information. You can add a field in your approval workflow to determine whether the employees are purchasing from a vendor list or a new vendor.

A systematic list helps you consolidate expenses and optimize costs. Moreover, ordering becomes more accessible with a unified platform for raising and approving purchase requests and maintaining an ERP-synced vendor database.

3, Invoice Management

Invoice Management

Traditionally, vendors send invoices to a dedicated email or an address. The employees send them for approval and payment. It takes days to clear the expenses. Additionally, the accounting team spends considerable time and energy on maintaining records.

The procure-to-pay strategy reduces this effort and streamlines the procedure. It captures and extracts the invoice from the emails and attaches to a dedicated purchase request and order. This helps the teams match the purchase order, invoice and goods received note (GRN) without juggling multiple platforms.

It pulls all the information with optical character recognition (OCR) technology, reducing manual data entry. Since this platform syncs with the accounting system, the accounting team spends minimal time on data entry.

4. Payment Processing

Payment Processing

Processing payments becomes a task when the finance team has to chase employees for invoices and wait for approvals and verification. The procure-to-pay technique centralizes the entire process, giving real-time visibility and helping finance teams make timely payments. 

Moreover, with Pluto, you can integrate your procurement software with the payment gateways to ease the payment process further. Also, you get better Forex rates than banks, helping you save more money. Overall, with the approvals and invoices streamlined, payment processing becomes easy.

5. Reconciliation

Reconciliation

Reconciliation is the hardest part, even when you perform the data entry and data sync monthly. You risk losing documentation and creating gaps in the records.

The procure-to-pay process consolidates the entire procurement cycle to bring all the critical information on a single platform. There are minimal gaps; records are up-to-date due to real-time tracking and recording.

With Pluto, you can integrate with platforms like MS Dynamics, Oracle Netsuite, QuickBooks, etc. So, with your ERPs and accounting software synced, you can easily record all the transactions digitally and securely.

Pluto further enables you to lock the transactions to avoid fraud once approved. Moreover, you can create view-only access for your records to simplify auditing for external parties.

Improve Your Bottom Line With the Right Procure-To-Pay Solution

Overall, the procure-to-pay process helps you automate your procurement process without changing your approach too much. You just need to find the right solution that assists your procurement process. 

We discussed more about this in our procure-to-pay solutions post, where you will find what procure-to-pay software does and how to pick the right one.

5
All
Spend Management
November 14, 2022

Vlad Falin

What is Spend Management? Importance, Benefits & Process

In the realm of business operations, effective spend management is crucial for maintaining a healthy financial bottom line. Businesses grappling with inefficient spending control face risks that can substantially impact their financial stability. 

For example, poor invoicing practices that cause a delay in payment can lead to contract management issues or, even worse, a lost client for your business. It also might cause issues with some of your preferred suppliers if they feel they’re not being paid on time. 

Making a slip-up that disrupts a subscription can mean your company lacks access to critical software or tools until the issue is fixed.

A poor expense report system means charges incurred on your business trip might result in many follow-up questions, so your accounts payable team is on the same page with purchase orders. A system without real-time visibility for spending data is not ideal for any organization and does not make it easy to reduce spend.

Intelligent spend management helps prevent these issues. A business uses spend management to comprehensively track and review organizational-wide spending and purchase orders down to the last dirham. 

In this post we will deep dive into spend management and discuss the best ways to properly manage it. 

What is spend management?

Spend management refers to the systematic process of tracking, analyzing, and controlling an organization's total expenditure. It encompasses all aspects of business spending, including invoicing, contract management, subscription services, and expense reporting. 

The goal of spend management is to enhance financial stability by providing real-time visibility into all financial transactions and purchase orders. This comprehensive approach enables businesses to identify inefficiencies, reduce unnecessary expenses, and maintain strong relationships with suppliers and clients.

The Importance Of Spend Management

Effective spend management is crucial for a company's financial health and operational efficiency. Neglecting careful expenditure tracking or allowing excessive indirect spending can lead to significant revenue loss, risking even the most well-planned business strategies. Managing costs and enhancing efficiency becomes challenging when financial processes are time-intensive and complex.

A report by McKinsey highlights the critical nature of this issue, noting that external spending on suppliers typically represents 40-80% of a company's total expenses. This statistic underscores the vital importance of meticulous spending control. Furthermore, the process of reviewing and optimizing expenditures can have a substantial impact on employee workloads, indicating the far-reaching effects of spend management.

Adopting robust spend management practices enables companies to achieve greater financial stability and avert potential crises. Implementing a system that tracks and monitors all financial transactions ensures that expenditures are fully accounted for, reducing the likelihood of wastage. In summary, efficient spend management is not just about cost control; it is a strategic approach that influences every aspect of a company's operations and contributes significantly to its long-term success.

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Advantages Of Digital Spend Management

In this day and age, using an online tool to keep track of your expenses should be a no-brainer. Let’s have a look at some of the main advantages.

1. Insight Into Everyday Expenditures 

Where is every dirham your company makes going? If you don’t know, digital spend management will dramatically strengthen financial accountability, budgeting, and expenses. In addition, reporting on where company funds are flowing makes it much simpler to see how different department heads oversee budgets. Read more on how to improve internal control over financial reporting.

2. Stronger Financial Controls 

Spend management tools like Pluto, allow you to not only monitor your spending in real-time but also set the limits on the go. In addition to that you can issue cards for departments or individuals, and even focus them on a particular type of usage, such as specific vendors only. 

spend management

3. Budget optimization 

Effective spend management is a great solution to ensure a better-looking budget. Analyzing and managing spending makes it simple to find and cancel unneeded services, negotiate lower prices with new supplier contracts, and never have to pay a late fee again. It will also significantly help your board of directors as they’ll have a simplified, streamlined budget to review and discuss at the start of the year. 

Common Spend Management Challenges 

It’s easy to pursue spend management practices that hurt your business’s bottom line if you’re not careful. Many ‘traditional’ best practices might not fit companies with remote-first work policies, engage in cutting-edge industries, or have an unorthodox structure.

If your company has a dynamic structure, spend management becomes all the more important to help you keep up with the competition and get the most value out of every dirham spent. 

Keep these potential challenges in mind as you pursue spend management practices. 

1. Relying On Old Spending Data

Be wary of relying on old budgets or financial data when managing more spend. It’s challenging for leadership to identify problem areas with cash inflows or outflows, when they only have outdated information.

2. Over reliance On Manual Mapping 

Having to go back at the end of the month to match spending to budgets manually can take an inordinate amount of hours and opens the door to errors and mistakes that can throw off a spend management policy. 

Pluto helps to automatically match spend to budgets in real-time, ensuring accounting and finance teams have accurate updates. 

3. Harnessing Too Much Technology

Modern financial software can dramatically help your company’s day-to-day operational flow. However, if these solutions do not work together, chaos can ensue which leads to data migration and processing errors. Pluto integrates with your accounting tools, cutting the data flow time significantly. 

4. Outdated Processes

The post-COVID world of remote and digital work means your employees might be scattered across the globe and in different time zones. Having to arrange shared corporate cards manually or coordinate team spending with employees in different locations can be tricky. Pluto offers unlimited virtual cards, which allow you to provide a payment channel for any employee anywhere in the world. 

spend management challenges

How To Improve Your Spend Management Process

Optimizing your spend management process might seem tricky at first glance. Fortunately, small and large businesses often rely on the same core strategies to optimize spending. 

1. Rely On Spend Management Software: Pluto can help automatically track expenses, keep abreast of budgeting, and help manage strategic sourcing. CEOs and CFOs then have relevant, real-time data at their fingertips to see where their company is financially. 

2. Focus On A Few Payment Methods: Do you have too many company cards in your pocket? It might be time to streamline purchasing methods to help simplify your spend management strategy. For example, your business can dramatically improve expense tracking by asking employees to only use company cards for business expenses instead of asking for their personal cards to be reimbursed. 

3. Have An Organized Approval Process: You can clarify your spending process (you might want to check our post on how to create a corporate card policy)  by ensuring employees have a clear hierarchy of how and by whom purchases need to be approved. If your team is unclear, they might complicate the payment process by not filing the right reports, which means your financial team could be left in the dark about purchases. 

6 Efficient Spend Management Strategy Tips

Your company needs to optimize its spend management strategy to ensure the final results lead to reduced procurement costs, improved efficiency, and streamlined workflows. 

Spend management best practices also help improve vendor relationships and communication, procure the optimal goods and services your business needs, and even help you earn volume and early payment discounts due to more effective and simplified financial practices. 

Keep the following steps in mind for the best results regardless of your organization’s industry or size. 

1. Calculate Expenses

Do you know exactly where employees spend company funds? If not, you’ll need to build a comprehensive list of company expenses, suppliers, and entities where funds are going. 

This might quickly become a challenge if you’re in charge of a large business. If so, look to designate specific team members to review employee salaries, utilities, marketing, training, and all other day-to-day expenses to have the most detailed list. 

You can’t improve what you do not measure. You can use Pluto to get a firm grip on your expenses. Pluto allows you to monitor and control your expenses so you clearly see how much was spent in which category. 

2. Confirm Data

You’ll want to ensure all accrued expense data is accurate and can be cross-checked with receipts and inventory records. Ensuring transaction data is precise, and expense lists are free of duplicates, spelling mistakes, and other mistakes makes the entire spend management process more efficient. 

Take this step extremely seriously if your company spend practices have relied on more manual processing methods. Standardization ensures that multiple currencies, formatting differences, and other nuances are accounted for when looking at spend analysis data. 

(Goes without saying that when using Pluto this is all pre-done for you!)

3. Categorize Information

While optimal spend management brings all expenditures under a single umbrella to review, your team will still want to categorize expenses into various groups to make reviewing and making adjustments across different departments simpler. 

It’s usually best to categorize expenses in multiple ways to understand where money is going. Pluto allows you to categorize expenses both through specialized cards or just by tagging, so everything is nicely grouped together when it is review time. 

spend management strategy

4. Review Expenses

A well-thought-out process of calculating, verifying, and categorizing spending information will simplify your entire review process when you’re looking at spend data. 

You should immediately be able to spot expenses that are anomalies or recurring spending that might be able to be cut out from the start. 

Pluto’s dashboard can give you a high level but also a detailed view, so you can clearly identify trends and separate expenses.

5. Devise A Strategy

You’ll want to move decisively once you’ve identified potential changes to spending habits and department budgeting approaches. 

It might seem difficult at first glance to start reducing budgets, cutting out vendors, or make other dramatic changes to your company’s budget and expense habits. Rely on good change management practices and your leadership team to cultivate employee and stakeholder buy-in to any adjustments.

6. Practice Good Data Forecasting

Keep updating your expense data as you make a budget and spending adjustments. Doing so keeps your team on top of where funds are going and can help forecast different spending scenarios and how they might impact your business’s bottom line. 

Keeping data and information updated becomes particularly important if your expenses grow to ensure financial operations run smoothly. Don’t forget to cultivate supplier relationships if you work with different vendors for optimal inventory management.

Should You Rely On Spend Management Software? 

Manually processing expense claims, keeping up with petty cash, and tracking company credit cards can quickly turn inefficient, hinder your company’s financial management, and inhibit the overall procurement process.

In contrast, the right spend analysis solution can aid real-time expense tracking, provide easy-to-read charts and graphs of high-level expenses, and capture and store financial-related documents, so your finance team members are not scrambling to find a receipt or report. 

Pluto has a multitude of features including procurement software and account payable that will help you with spend management and make spend control much easier.

1. Flexibility

Pluto allows you to create cards for various purposes, edit spending limits on the go and monitor your expenses in real time. This allows you to scale up or down depending on what your business needs at any given moment.

2. Powerful Analytics

With Pluto, you will be able to track spending patterns and areas of high expenditure and get real-time insights into your business finances. The powerful analytics will help you make better decisions about where to allocate your resources.

3. Ease Of Use

The main bottleneck of many spend management platforms is that the employees do not use them - as it is just too time-consuming. Not with Pluto!  The sleek and user-friendly interface makes expense management a breeze.

4. Simplified Reimbursements

Receipt upload and reimbursements can be quite a burden for the team. Pluto allows you to take pictures of receipts with your phone and just add them to your reimbursements list. With the use of categories and tags, you will be able to both submit and review them in record time!

Key Takeaways For Company Spending

Spend management remains an essential component of all organizations regardless of size. Accountability for every dirham flowing in and out ensures your company maximizes revenue and remains growth-focused, no matter the budget.

You can take the first step today by relying on Pluto and processes to establish control over budgets, track spending, manage payments, cut costs, and boost your financial team’s day-to-day operations and processes.

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January 3, 2024

Mohammed Ridwan

How to Write a Petty Cash Policy in Four Easy Steps (With Template)

Here’s the difference between a vague and a specific petty cash policy:

Vague: Petty cash can be used for any business-related expenses as needed upon approval.

Specific: Petty cash is used for small, incidental business expenses, such as office supplies, minor equipment purchases (up to $100), business-related meals and entertainment (up to $25 per occurrence), and travel expenses (e.g., tolls, parking fees).

Companies often set vague policies or leave them to employee understanding; after all, having petty cash is about flexibility and saving time. The entire petty cash system sits on the foundation of trust, where a missed receipt isn’t considered a big deal. 

However, as the business grows, these missing documents, owing to a lack of structure, cause monetary setbacks and disrupt operations. The finance team pursues the employees for receipts, and the employees struggle to get them submitted on time and the budget goes off the charts. 

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What is a Petty Cash Policy?

A petty cash policy is a set of guidelines that govern the management and usage of small amounts of cash for nominal business expenses. It outlines the purpose, authorized expenses, and recordkeeping and replenishment procedures for the petty cash fund.

Suppose an employee wants to purchase office supplies. With proper documentation and approval, a policy in place can restrict the use of cash for office supplies and minor expenses up to $50 only. After all, petty cash should be used only when absolutely necessary, for all other larger purchases it is better to use corporate purchasing cards.

Hence, structured petty cash policies and procedures help the business track and control all expenses with proper recordkeeping, enhancing accountability and petty cash management.

4-Step Process to Set Petty Cash Policy and Procedures

Before you set up policies and procedures, assess the need for petty cash and the types of expenses you will cover. This study will become the foundation for your guidelines and provide an estimated figure for petty cash funds.

For example, a transport business’s petty cash expenses include fuel for vehicles, tolls, minor vehicle repairs, and possibly small office supplies for administrative needs. However, a property investment company’s petty cash expenses include office stationery, postage, property maintenance supplies, and likely local travel expenses for property visits or inspections.

Hence, the nature of petty cash expenses will vary based on your business’s specific needs and operations.

Once these fundamentals are clear, you can set your petty cash policies and procedures by following the steps mentioned below.

1. Get Inputs From the Finance Team

Collaborate with the finance team to discuss current processes and challenges. Understand the gaps in existing systems and get feedback for potential improvements and best practices.

For instance, if the finance team struggles with frequent delays in providing employees with adequate cash on time for urgent expenses, you can establish guidelines that they can follow for such instances. 

Another common instance is that the finance team struggles with frequent delays in employee reimbursement due to unclear approval processes. You can establish a streamlined approval hierarchy in the policy. It involves specifying designated approvers and setting clear timelines for reimbursement requests, ensuring timely resolution.

petty cash workflow

Additionally, discuss compliance requirements to create a framework that ensures legal and regulatory standards adherence. This can include provisions such as documenting receipts and carefully reporting cash transactions above a certain threshold to comply with company reporting & auditability requirements. 

2. Define Procedures

Create a comprehensive document outlining the workflow of petty cash transactions, including authorizations and documentation.

Define the approval process, specifying who needs to approve different transaction amounts. For instance, your approval policy could look like this:

The routine office supplies purchases under $20 require immediate department supervisor approval, larger expenditures for equipment up to $100 need approval from the finance manager, and any expenses exceeding $100 require executive-level authorization.

Similarly, create a standardized process and template for documenting each transaction, including separate fields for date, amount, purpose, and signatures. Additionally, you could add guidelines, such as submission of a receipt within a week. These measures further help you strengthen the structure and avoid any hassle.

3. Specify Controls

Once all the fundamental procedures are defined, you set the rules for operating your petty cash system to ensure proper control. Here are some examples:

“If the petty cash fund balance falls below 20% of the initial amount, the designated custodian is responsible for submitting a replenishment request to the finance department. The replenishment should be completed within two business days to ensure the continuous availability of the petty cash fund for essential business needs.”

“Authorized petty cash transactions for office supplies are limited to $25 per occurrence, while minor miscellaneous expenses are limited to $15. Any transactions exceeding these limits require prior approval as per the designated approval process outlined in this policy.”

“To ensure transparency and accountability in the management of petty cash funds, a policy of custodian rotation will be implemented. Every quarter, a new employee will be assigned the responsibility of a petty cash custodian. The outgoing person must provide a comprehensive handover to the incoming custodian to maintain continuity and accuracy in fund management.”

4. Communicate and Review 

Share the new petty cash policy with relevant stakeholders and conduct training sessions for employees involved in petty cash transactions. 

To assess the effectiveness, establish a monthly audit schedule, in addition to petty cash reconciliation, where the designated team member will verify the log, review the completeness and accuracy of documentation, confirm that the approval process has been followed, etc. 

The audit will help you identify potential loopholes, allowing you to modify the policy and procedure for effective petty cash management. 

In addition to these audits, implement a tracking system, such as a spreadsheet or an expense management platform, to monitor expenses. While the spreadsheet is a cost-effective solution, a dedicated automation platform will make tracking petty cash in real time easier with complete visibility. Moreover, you will have many more controls and features to oversee your petty cash without spending hours maintaining logs and Excel spreadsheets.

Template for Setting Petty Cash Guidelines

Modify this template and include specific petty cash guidelines to suit your business needs:

Petty Cash Policy and Procedures

1. Purpose

The purpose of this document is to provide clear guidelines for the establishment, management, and usage of the petty cash fund within [Company Name]. The petty cash fund is intended for minor, day-to-day business expenses, facilitating the quick and efficient processing of small transactions.

2. Custodian

The finance department will manage the petty cash fund, with [Designated Employee] serving as the petty cash custodian. The custodian is responsible for secure cash handling, accurate record-keeping, and compliance with company policies.

3. Petty Cash Fund Amount

The initial petty cash fund is set at [Enter Amount], subject to review annually or as business needs dictate. Any adjustments to the fund require approval from [Finance Manager/Authorized Approver].

4. Replenishment

When the petty cash fund balance drops to [Enter Minimum Amount], the custodian must submit a replenishment request to [Finance Manager/Authorized Approver]. These requests should include original receipts and a summary of expenditures.

5. Authorized Petty Cash Expenses

The following types of expenses are authorized for petty cash disbursement:

  • Office supplies (e.g., pens, notepads)
  • Small equipment purchases (under [Enter Amount])
  • Minor business-related meals and entertainment
  • Travel expenses (e.g., tolls, parking fees) 

6. Unauthorized Expenses

Petty cash funds should not be used for personal expenses, cash advances, or any expenditures unrelated to official business activities. Any unauthorized expenses must be reimbursed by the individual responsible.

7. Recordkeeping

The custodian will maintain a dedicated petty cash log. Each entry should include:

  • Date of transaction
  • Vendor or payee
  • Description of the expense
  • Amount
  • Receipt verification

8. Receipts

Original receipts for all petty cash transactions must be submitted promptly. Receipts should be attached to the petty cash log and clearly show the date, amount, and nature of the expense.

9. Auditing

The finance department will periodically conduct surprise audits on the petty cash fund to ensure compliance. The custodian is responsible for facilitating the audit process and addressing any discrepancies.

10. Reporting

A monthly summary of petty cash transactions, including the remaining balance and any discrepancies, will be provided to the finance manager. Any significant issues or concerns should be reported immediately.

11. Policy Review

This policy will be reviewed annually by [Finance Manager/Authorized Approver] to assess its effectiveness and relevance. The petty cash custodian can recommend adjustments or issue an official request.

Approval:

[Signature] [Date]

[Name, Title]

[Finance Manager or Authorized Approver]

[Company Name] 

Implementing a Foolproof Petty Cash System

To establish a dependable petty cash system, collaborate and automate. Stay in close connection with the finance team to gather feedback and insights. Use solutions like spend management software to automate the petty cash system and get real-time visibility. They provide more structure to your petty cash management and simplify workflows for employees.

In one of our posts, we have covered more about petty cash management and how you can automate it. It will help you understand the nuances and efficiently manage your petty cash.