We are in a whole new era of virtual cards. They are not just for invoice payments by accounts payable anymore. The next generation of virtual card payments have inherent advantages over physical plastic or even traditional ghost accounts in numerous situations. Travel is one. With business travel slowly returning, organizations should be taking a critical look at how travel expenses are paid for. To gain greater insight into the spend, as well as greater efficiencies and control, employees’ usage of personal cards should not be an option. Before you default to a typical corporate travel card program, keep reading to see how virtual cards could play a vital role for your organization.
The Problem with Personal Cards
Far too many organizations still allow employees to use personal cards and get reimbursed. Past survey results from AP Now have revealed only 40–45% of card-using organizations mandate commercial card usage for business travel. Further, a 2022 survey by the Professional Development Group (PDG) of their higher education audience show that nearly 70% of respondents’ institutions allow the usage of personal cards for travel expenses.
The drawbacks of allowing personal cards include:
Lack of visibility into expenses, which can cause headaches in a variety of situations
More than one-quarter of respondents to PDG’s survey reported that they are still trying to manage and resolve travel credits resulting from cancelled trips when the pandemic first hit. Among them, three-quarters also report that employees may use personal cards for travel, which certainly has complicated the process.
Increased fraud risk due to games employees might play; for example, cancelling a trip and pocketing the reimbursed airfare expense, submitting the same expense more than once, or altering receipts to receive a higher reimbursement amount
Tedious reimbursement processes
Lost revenue share (rebate), if applicable, by not using a commercial card
Virtual Card Advantages Over Plastic
Even if your organization mandates physical commercial cards for business travel expenses, virtual cards can help address common pain points. No need to get a plastic card into the hands of travelers, which is especially convenient if they are working remotely. Also consider infrequent travelers, temporary employees, and others who do not really warrant the issuance of a plastic corporate card. Needless to say, cash advances are not a good idea either. Virtual cards can fill the gap, offering the type of controls many organizations have appreciated about declining balance cards, but with added benefits.
As Jonasz Bala, Business Development Manager, Conferma Pay, explains, “Virtual cards offer granular spend management through elements like spending caps and time limits for usage that are critical in today’s environment, but, ultimately, you just don’t get with traditional plastic or cash.” He adds, “With the pandemic, there has been a new push for a touchless travel experience as businesses recognize their Duty of Care requirements to provide employees with ‘safe’ travel in the new age of business travel—enter virtual cards.”
Traditional Ghost Accounts vs. Virtual Cards
For airfare and/or hotel reservations, an organization might provide a traditional ghost/lodged account—one that functions like a p-card—to its travel management company (TMC). This type of card account might work fine for this purpose because it offers visibility into expenses, but it might require some work to see which employee each expense is tied to. Virtual cards are often a better choice. For example, Jonasz points out that, when used in conjunction with an expense management app, business travel expenses can be automatically reconciled, and the total trip cost is captured in one place.
Then there is the issue of some hotels wanting a photo of the front and back of the card—the one used for the reservation—before charging it. Yes, this still happens, unfortunately, so I asked Jonasz about it and learned it is another area for which the combination of virtual cards and an expense management app may help. A secure mobile app might enable the display of the unique 16-digit PAN (primary account number), so a traveler can show the card details at the point of check-in and also resend the necessary authorization forms if required.
Conclusion
Make 2022 the year in which all business travel expenses are captured via commercial cards. As for virtual cards in particular, Jonasz nicely sums up the benefits, noting, “Settlements need to happen fast, automated reconciliation is important, exerting spending control is critical and rich data capture is essential in this now more complicated world of work, and all are better enabled by virtual cards.”
What to Do
Identify current challenges and missed opportunities associated with business travel expenses.
Contact your card issuer and/or your TMC about the options, including virtual cards.
Outline what processes could look like by taking advantage of commercial cards, as well as the potential savings.
Pursue the desired options.
Update your travel policy to reflect the changes.
Train employees accordingly. Remind them that, even by not using personal cards, they are still earning other rewards at a personal level (e.g., mileage, hotel points). If your organization prohibits these personal rewards, reconsider your stance. Business travel is not glamorous and it takes employees away from their homes and families.
Finally, don’t forget to assess the outcomes of your changes and ensure compliance with the revised policy.
Related Resources
Available Products & Services from Recharged Education
Submit a contact form to request a quote for what your organization needs.
Subscribe to the Blog
Receive notice of new blog posts.
About the Author
Blog post author Lynn Larson, CPCP, launched Recharged Education in 2014. With 20 years of commercial card experience, her mission is to make industry education readily accessible to all. Learn more…