Tightening financial controls can help you rein in spending and identify savings opportunities. This financial discipline can also clear a path to profitability and demonstrate sound judgment to investors.
Fast-growth businesses are finding that moving spending to business credit cards helps them achieve this discipline. Read these six tactics to learn how they make the best use of their business credit cards.
1. Track employee spending precisely
Giving your team company credit cards doesn’t mean you have to give up control. Cards let you set individual limits based on job roles, transaction sizes, vendor types and other criteria. Using virtual card numbers (VCNs) — limited-use, randomly generated numbers that are authorized for specific transactions — can give you even more control. VCN transactions must match pre-set criteria, and they can be implemented with approval routings that suit your workflow.
2. Simplify T&E expense monitoring
Letting your sales team book travel with a company card provides convenience, and it can help you ensure that travel policies are being adhered to. By using cards along with expense management apps, transaction data can easily be captured, categorized and submitted, which simplifies the expense review process. A more streamlined process for capturing and submitting expenses also saves employees time.
3. Consolidate to save
Centralizing spending on a single commercial card can help you uncover opportunities to consolidate purchasing. For example, when you tap reporting tools to examine a spending category, such as online advertising, you might find ways to unify that spending company-wide. Increasing your spend with a single supplier lets you negotiate a deeper discount.
4. Tap more early pay discounts
Using cards to make vendor payments means you can take advantage of early payment discounts without actually disbursing funds. This helps to protect your cash flow, and it can add up to considerable savings if done consistently. Talk with your suppliers about accepting card payments — although they will incur processing fees, quicker receipt of payments may help offset this cost.
5. Improve visibility into payables
When you use a credit card or VCN to pay invoices, transaction data can flow easily into your accounting or ERP system. This reduces the risk for error that can come with manual entry, and it helps you quickly identify where budgets are being exceeded. The ability to make fast adjustments allows you to head off excessive or out-of-policy spending before it becomes a more serious issue.
6. Earn cash rewards
As you move more spending to your commercial card, earned cash-back rebates based on a percentage of that spending increase. Over time, those rebates can provide another revenue stream for your business. These funds can help offset expenses or pay for workplace perks that build team culture and morale.
Your SVB advisor can help develop your payment strategy by analyzing your master vendor file to identify who takes credit cards and review existing payment terms. This will help you choose your best opportunities to move check payments to a card and gain more efficiency in your end-to-end payment process.
Check out our series on how you can optimize your company's payments tools and processes on SVB's Payments Trends & Insights page.
This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. You should obtain relevant and specific professional advice before making any investment or other decision. Silicon Valley Bank is not responsible for any cost, claim or loss associated with your use of this material.