How can smaller companies make business travellers’ lives easier, and keep their wallets fuller, whilst still tracking and managing employee expenses accurately? There is a left-field approach that is taking small to medium-sized businesses by storm: the prepaid card. Why is this important to small businesses? Simon England of FairFX explains…
Small businesses aim to be competitive and economical in everything they do. An area which often comes under the spotlight when looking for ways to cut costs is staff travel and expenses. Prepaid cards can help employees as well as the company.
The advantages of prepaid cards
The legacy of prepaid cards can conjure up images of students managing budgets, so it’s not always an obvious choice for SMBs when considering ways to manage their expenses more efficiently. However, prepaid cards and platforms like FairFX have several benefits:
Benefits for employees:
- Staff members will no longer be expected to use personal credit cards and cash to cover expenses and then claim it back later, which ultimately leaves them out of pocket.
- The added security and safety of carrying replaceable cards rather than cash gives business travellers peace of mind.
Benefits for the company:
- Prepaid cards allow for substantial savings on business travel and entertainment expenditure through reduced interest rates and lower transaction fees, and the option to pre-buy currencies at a preferential rate.
- Prepaid cards also allow for better financial control and reduced waste because of the increased need for advanced planning and control.
- Companies have also reported a noticeable reduction in staff expenditure simply due to the prepaid nature of spending. For example, the Group Treasurer at a leading UK High Street fashion retailer noted that “the effect that a prepaid card (rather than a charge card) has on the psychology of the spender has contributed to reduced T&E costs" at their organisation. Prepaying a card for business travel enables the same psychology as prepaying a mobile phone bill; it instils a ‘savings’ mind-set that makes people think twice before making that call, or buying that cappuccino.
- Lastly, businesses can finally find out the true cost of a trip, in advance. If trips are booked and paid for in advance – right down to pre-buying cash for ad-hoc expenses – and the data is collated into one place, then managers can make more informed, future business decisions based on a fuller picture of their spend.
What comes next?
While prepaid cards are a bit of a “best kept secret” in the UK compared with more established charge card and credit card offerings, they are tipped to become the next big thing for SMBs. Prepaid cards can be acquired through a number of providers in the UK, however it is important to ensure that the card is targeted towards corporate customers, as there are many consumer versions in the market that are not suitable for business use. Always look at the usage fees! Many providers charge for loading cards, inactivity fees, and high FX charges. Make sure the card is connected to a suitable management system, which adds value not headaches!
Simon England, Business Development Director, FairFX has many years’ experience with finance, IT and sales, so he knows a thing or two about new payment technologies, and how they can be best utilized in the corporate sector. Get social with FairFX on Twitter LinkedIn or Facebook
Image source: http://www.flickr.com/photos/concurimages/7562639330/