As a business owner, you have a lot to keep track of. Your expenses are arguably the most important thing to track, but it can be tedious and time-consuming as your business grows. One of the best ways to simplify, track, and control spending for businesses at any stage is to use debit cards for business transactions. In this blog post, we will discuss the benefits of using business debit cards for your company’s spending, and we will provide some tips on how to use them effectively.
Categorize and Create a Budget
Whatever form of payment you use for business expenses, spending will get out of control if you don’t have a budget. Get started with a step-by-step guide (and templates) on small business budgets.
If this is your first true business budget, here are the basics. Take inventory of your current spending, and bucket your current expenses by category. This exercise may help trim the fat, but regardless, it will organize your strategy for how to pay and monitor each category.
For example, if you sell products on Amazon, you’ve likely set a budget for ad spending. That’s a category. Other marketing spend (social media ads, paid search, etc.) can be a category. Production or supply chain costs could be another category. Operating expenses such as internet, cell phone bills, or insurance costs could be another.
Break it up according to how you would like to organize your budget. If you have team members responsible for their own department’s budget, bucket your expenses accordingly.
Once you’ve categorized and organized your expenses, you’re prepared to distribute or assign business debit cards to each category or manager.
Distribute and Assign Business Debit Cards
If you don’t have a business bank account, start there. It’s a necessity for tax records, credit building, and a number of other reasons. But it’s also a requirement for this step.
Small business owners (especially solopreneurs) often use only one business debit or bank card connected to their account. If you’re running the entire business, you only need one card, right? Well, not necessarily.
In reality, it’s often easier to manage multiple cards assigned to different categories of expenses, especially with the rise of virtual bank cards. You’ve already categorized and bucketed expenses, now assign business debit cards to each category with spending limits.
The easiest way to set controls and monitor the results of your investment is to build consistency into your process. If you have $500 budgeted for ads, and a card with $500 to pay for those ads, you’ll get exactly what you purchased and you can measure the results. It will also help prevent unforeseen price increases with vendors or suppliers. If a bill increases without your knowledge, you’ll have safeguards in place to avoid overspending.
One of the biggest advantages of using business debit or bank cards as opposed to credit cards is in the level of control you have. If you’d like to issue a new virtual debit card, it can be as simple as logging in and assigning it to a user. No trip to the branch. No waiting on hold for a representative. Just assign the card, set the spending parameters, and start paying for what you need. You can also adjust spending limits or lock specific cards with a few clicks.
Take Control and Save Time
Back to the biggest problems business owners face with expenses: it’s difficult to track and it’s tedious.
That’s why so many small business owners turn to virtual bank cards to manage expenses. It’s very easy to distribute them and adjust spending limits. They will all report back to one source. And you can easily manage different categories of spending to identify the source of any outliers.
If your business grows, this model will scale with new team members. You can create users with specific permissions, and assign cards with limits. The ability to manage everything digitally is especially important for transactions that occur digitally. This includes marketing spend, inventory purchases, monthly vendor contracts, etc. It will allow you to make changes while the expense is top of mind, rather than waiting for a bank to send a new physical card or approve a new cardholder.
If you’re interested in more specific use cases for business cards and a step-by-step process to implement them in your business, check out our complete guide on How to Use Business Debit Cards.