Who likes dealing with petty cash on business trips? I know I don’t.
Every time I travel for business, which is often, I come back with a stack of annoying little receipts (the ones I don’t misplace), which my CFO then has to pester me about organizing and passing on to her so she can enter them into our system and expense them. Using credit cards is often easier, but that isn’t an option for smaller purchases.
If you have employees who travel a lot or simply spend most of their day on the road, such as sales staff or service people, keeping track of their petty cash and expenses is a huge pain for everyone involved. Receipts to collect, scan and record—who needs it?
Business credit cards can simplify the problem of paying for your employees’ expenses on the road, but there are some downsides to these, too. Interest rates can be high, and accidentally missing a payment can push them even higher. Plus, having to keep a high limit on the cards in case of travel, even when employees don’t need it all the time, might make you nervous.
Do you really want your employees walking around with all that spending power in their wallets? When you don’t know what they might spend it on, it’s hard to predict expenses.
Staying on Top of Employee Expenses
Recently, I was on yet another business trip when a colleague told me about PEX business prepaid debit cards, a pretty cool solution to the problem of managing employee expenses. Have you ever given your child a prepaid credit card for school expenses? PEX business prepaid debit cards are kind of the same idea. They function similarly to a credit card, with some important differences:
- You don’t need credit approval.
- You don’t have to worry about high interest rates because the card is prepaid from your business bank account via ACH transfer.
What I like about PEX cards is their flexibility. You can give every employee his or her own personal card; you can also give each of them a different debit limit. If one employee regularly travels overseas, while another only drives within your local area, they can get limits commensurate with their needs. And if that employee on a business trip suddenly needs more money to, say, change a flight or cover dinner when that client she’s entertaining shows up with six colleagues in tow, she can contact you and you can immediately add more funds to her card.
The other nice aspect of the cards is control. Most small business owners are control freaks, at least about their money, so you know what I’m talking about. PEX business prepaid debit cards let you set daily limits on employee spending. If an employee won’t be traveling for a while and you know they have no reason to need to buy anything for business, you can take their limit down to zero and not worry about it. And if someone doesn’t need their card anymore, or leaves the company, the money left on the card can simply be transferred back to your business bank account with no problem.
When PEX did their Mid-Year Survey Report of small business owners in June, they found one of the top four issues keeping small business owners awake at night was “expenses eating into profits” (pictured above). They also found that for the second half of 2013, more than half of small business owners want to either keep their spending levels, on everything from fuel to materials, the same or cut back.
Tracking your cash flow is crucial for small businesses to stay on top of expenses. A tool like the PEX business prepaid debit card can clearly help. In addition to breaking out individual employees’ use of the cards, you can also view aggregated data for the whole company. You can export reports to Quickbooks (the company is working on features that would allow transactions to easily integrate with Quickbooks, which would make it even better).
It didn’t surprise me to learn that PEX is an entrepreneurial company. Founder and CEO, Toffer Grant, started the business when he saw that banks and large credit card issuers weren’t filling the niche for small and midsized businesses to obtain prepaid debit cards. Toffler grew up in a family business and knew from an early age what matters to small business owners.
Don’t you love it when you can solve a business problem with a cool tool created by another small business owner?
Image: Pex Mid Year Survey