Being a startup is a critical phase for any business. How efficiently entrepreneurs manage their expenses will decide the sustainability of the company. Since most of these companies are either bootstrapped or funded by venture capitalists, business owners must be prudent in financial management. One potent strategy to manage expenses efficiently is by using a corporate credit card for startups. It is not just a convenient way to make purchases but also helps in keeping an eye on your expenditures. It solves a major problem for business owners by enabling careful planning and budgeting.
In this blog post, we will discuss the role of a corporate credit card for startups and the best practices that help you maximize its benefits.
Corporate credit card for startups – Brief introduction
When you use cash for business transactions, all the expenses get lost in paper-based receipts and documents. It will be difficult to track and assess how much money you are burning for your operations. And all of a sudden, you will realize that your cash flow is unstable. Using a corporate credit card for startups gives you several benefits like monitoring and tracking expenses, recording transactions for audits, and generating reports to analyze spending. Instead of using cash in your bank account, you can leverage short-term credit access to handle corporate expenses.
Overall, corporate cards give you better control over your spending and expense management through automated processes. You can also integrate it with your accounting software and ERP systems to streamline payments.
Best practices of corporate credit cards for startups
Using corporate credit cards can be tricky. As you are spending the credit amount and not your account balance, cardholders could go overboard with spending. And before they realize it, they will have an exorbitant bill to pay. This can be avoided by using credit cards with discipline. Below we discuss best practices to follow when using a corporate credit card for startups.
Set spending limits and restrictions
One of the first things that you must do once you acquire a business credit card is set spending limits and restrictions to keep expenses within the budget. Overspending is one of the issues that cardholders struggle with. But by configuring spending rules that align with your expense policy, you can enforce disciplined credit card usage. Some corporate credit cards for startups allow you to set unique spending guidelines based on roles so that you can have hierarchy-based restrictions or allowances.
Monitor transactions to control usage
Identifying budget overruns or violations of spending restrictions after they happen is of little help. Companies must be able to stop such irregularities proactively. For that, you must monitor and track every credit card transaction to identify potential issues and irregularities. Additionally, managers and finance leaders must review the list of transactions on a weekly or monthly basis to detect if employees are using it to make unauthorized expenses. Having an alert mechanism to notify leaders when a spending restriction is violated or a suspicious transaction is identified can be of great value.
Integrate cards with expense management software
Card issuers offer a dashboard to track expenses that happen through a credit card for startups. However, these portals don’t provide advanced insights into your expense management. For that, you must use expense management software that provides automated reports so that you can readily generate insights and improve your expenditure strategy. You can further categorize your spending and evaluate how the credit card is being used across categories and departments. Corporate credit cards for startups coupled with expense management software help you identify your spending patterns, and make data-driven decisions.
Maximize credit card benefits with Zaggle corporate cards
Most corporate credit cards for startups are actually designed for enterprises. Seeing the gap in the market for credit card needs of small and medium-sized businesses, Zaggle launched YES BANK Zaggle Corporate card. The card is made to help startup owners streamline their expense management through advanced capabilities across monitoring, reporting, and automated workflows. Additionally, the Zaggle credit card for startups comes with an out of box integration with the spend analytics tool, ZatiX. It gives you comprehensive visibility into your spending and insights to improve your spending management.