Risks With Using Bank Credit Cards for Business Expenses

Introduction

Many companies still expect employees to use regular bank credit cards for business travel and client meals.   

This approach comes with significant risks. These risks can:  

• Disrupt financial operations, 
• Expose the business to fraud  
• And lead to inefficiencies that ultimately affect the bottom line.  

Let’s explore the risks associated with using traditional bank credit cards for business expenses.  

Skip to the end if you want to know how Mobilexpense can address these challenges effectively.  

7 risks associated with using traditional bank credit cards for business expenses 

Delayed expense reporting  

Transactions often take days to appear in banking apps or weeks to appear on statements, creating a lag in financial reporting.  

Financial accountants must take time to request information from employees about business purchases.The information is necessary for accurate financial reporting. It is important for accountants to stay in control of all business expenses.  

Imagine a scenario where a company executive makes a large purchase on behalf of the business. Due to the delayed reporting, the finance team was unaware of this expense until days later. This made it difficult to account for in the month-to-date budget.  

This delay can lead to budgeting errors and financial discrepancies that are hard to rectify.  

Fraud risk  

Fraud is a significant concern when using traditional bank credit cards.  

Even with a spotless payment history, businesses become vulnerable. These risks include fraudulent transactions that lead to:  

• Blocked bank account and business expense cards,  
• Damaged credit scores,  
• And the burden of rectifying the situation.  

David had been a loyal cardholder of his traditional bank card, "GoldCard," for over 16 years. He charged around £480,000 to the card for business travel expenses.  

Despite his perfect payment record, his card was suddenly blocked due to a fraudulent transaction.  

The process to clear his name was long and frustrating, involving multiple calls to customer service and significant inconvenience. This experience forced David to get a new credit card, update all the company subscription account details, and deal with the hassle.  

Theft risk  

Picture this: you're on a business trip, and your wallet is stolen.  

The business credit card you should use for a client dinner is in the wallet. The first step is to call the number on the back of the card.

But with the card gone, how are you supposed to read the number on the back?!?  

Theft of a traditional business bank credit card, especially during business trips, can be stressful and a major disruption. The cardholder needs to contact the bank and cancel the card. Not to mention, finding a way to continue managing business expenses without the card.  

This scenario is a frustrating and all-too-common experience for many business travellers.  

Inadequate monitoring of employee spending  

After giving out business credit cards, it's important to check how employees are spending. This ensures the employee expense cards are being used properly.  

Without monitoring, there's a risk of out-of-policy or excessive charges.  

While reviewing credit card statements is important, the issue with traditional cards is that statements typically arrive only once a month. This means that by the time you're 'monitoring' employee spending, it could be weeks after the actual transaction, making it too late to address potential issues in real time.   

Real-time reviewing of statements can reveal spending patterns that offer opportunities for cost savings. 

2. You could be double spending on software accounts without knowing it.

One of the common insights we've observed, both in our own company and others, is that employees across different departments often hold individual software licenses e.g., Sales Navigator, Asana or LinkedIn Premium. These could be consolidated into a more cost-effective company-wide license.   

Similarly, spend analysis can reveal patterns such as frequently used hotels, allowing companies to negotiate preferred rates and implement internal policies to drive further savings.  

We've also identified instances where payments were still being made for unused services, simply because spending wasn’t effectively linked to specific users.   

These examples highlight how monitoring and analysing spend can significantly help organisations reduce costs.   

If subscriptions aren't properly monitored, it's difficult to identify opportunities to consolidate them.  

Overlooking fees and costs  

Traditional bank credit cards often come with hidden monthly or annual fees and high rates. This is usually calculated on foreign transactions and business bank accounts.  

Businesses that don’t compare card options properly may end up paying more in fees than necessary.   

Companies managing payments in multiple currencies can see costs add up quickly. Often overlooked, currency mark-up rates typically range from 1.5% to 2%, or even higher, leading to significant hidden expenses over time  

Not paying the credit balance in full  

Carrying a balance on a traditional company credit card can result in significant interest charges. This puts pressure on the company's cash flow and negatively impacts its credit score.  

Losing paper-based documentation  

What if there's a fire or a flood? Large businesses are spending a lot on storing and archiving paper receipts for compliance purposes.  

Business owners need to start exploring how they can go paperless in as many departments as possible. If you're not sure where to start, explore the possibility of paperless employee expenses.  

Relying on paper receipts for expense documentation poses the risk of lost records. Losing these records make audits difficult and increase the likelihood of non-compliance.

The finance team will then have found out about the expense days later due to late reporting. This delay made it difficult to include the expense in the current budget.  

Additionally, many receipts are thermally printed, meaning they fade over time. Businesses often find boxes of completely blank receipts after just a few years, with all the important information lost.  

How using Mobilexpense cards addresses these risks

Real-time expense tracking  

Mobilexpense tracks expenses in real-time, so employees, managers, and finance teams can see all transactions immediately.  

This feature eliminates the delays associated with traditional bank company cards, providing accurate and up-to-date financial records.  

With a streamlined reporting process, Mobilexpense minimises financial discrepancies and makes effective budget management.  

Enhanced security features  

Mobilexpense provides advanced security features that help prevent fraud.  

Businesses can set spending limits, freeze cards instantly, and receive real-time alerts for suspicious activity.  

Additionally, Mobilexpense's private transactions feature ensures that personal purchases are kept separate from business expenses, further safeguarding against fraud.  

Using the same credit card for all your business expenses puts you at risk. In case of fraud, your card may be cancelled—either by the bank or by you—leaving you to go through the hassle of applying for a new one.

With Mobilexpense cards, you can have multiple credit cards, even one for each vendor if needed, all at no extra cost.   

Virtual card solutions  

Mobilexpense offers both physical and virtual cards. Finance teams integrate spending limits and daily allowances in both cards.  

If a card is lost or stolen, it can be blocked immediately. A new virtual card can be issued instantly. This protects the business accounts and ensures that business operations continue.  

This flexibility is valuable for business travellers, who can fall asleep on the plane without worrying if their physical cards will be stolen.  

Real-time visibility and insights  

Mobilexpense cards provide real-time visibility into spending, allowing businesses to monitor expenses as they occur.  

This feature aids in budget management and ensures that spending aligns with the company’s financial goals.  

The platform’s data analytics tools also enable companies to identify trends. This insight helps make informed decisions. One example includes negotiating better deals with frequently used service providers.  

Automated monitoring of employee spending  

Mobilexpense automates the monitoring of employee spending, offering detailed reports and automated alerts for out-of-policy expenses.  

This proactive approach ensures that all spending is within company guidelines. This reduces the risk of unexpected costs and helps maintain financial discipline.  

With Mobilexpense, companies can easily implement spending limits and enforce consistent expense policies.  

Cost-saving opportunities  

Mobilexpense offers 0% FX markup credit cards. These cards eliminate foreign transaction fees and provide significant savings for businesses with international operations.  

This feature is particularly beneficial for companies with global operations, where managing foreign expenses efficiently is crucial.  

Use tracking features that allow businesses to easily identify duplicate subscriptions and consolidate them. This leads to cost savings and more efficient management of resources.  

By optimising subscription management, Mobilexpense helps businesses avoid unnecessary costs and improve their financial oversight.  

Automated payment reminders  

Mobilexpense’s automated expense management system helps businesses stay on top of their payments.  

With real-time tracking and automated reminders, companies ensure that their credit balances are paid in full each month. This helps avoid interest charges and maintain a healthy credit score.  

This automation reduces the risk of late payments and the associated financial penalties.  

Digital documentation  

Mobilexpense digitises the entire expense management process, allowing employees to upload receipts directly into the platform.  

This makes sure that all documents are kept safe and easy to find for audits, lowering the chance of losing records.  

The move to digital documentation also streamlines the audit process, making it more efficient and less prone to errors.  

Conclusion  

While traditional bank credit cards may seem like more convenient, they come risks that can impact financial management and efficiency.  

By adopting a solution like Mobilexpense, businesses can mitigate these risks and gain greater control over their expenses.  

Mobilexpense offers real-time tracking, enhanced security, and comprehensive reporting. These features make it easier to manage business spending, reduce costs, and protect against fraud.  

For businesses looking to streamline their expense management processes, Mobilexpense provides a reliable, cost-effective alternative to traditional bank credit cards.