How to Use Business Debit Cards and Business Bank Cards

One of the most basic banking needs that small businesses have is a bank card, also known as a debit card or payment card. It comes with your business bank account, so you can pay regular business expenses straight from your account. Every bank comes with a card, and when businesses first launch, paying their expenses is a straightforward process. In the beginning, there aren’t many expenses, and there’s usually only one person charging the card.

But as the business grows, the operations (and expenses) become more complicated. Some small business owners choose to pay primarily through credit cards. But the cash back and rewards can be swallowed by rogue spending and interest. If your business is starting out, or if you’re looking to get better control of spending, the best place to start is to build a strategy around your bank cards. There are tremendous benefits in building a strategy to pay many of your regular expenses with bank cards, and we’ll cover them below.

The Goals of Using Business Bank Cards

Goal #1: Control your spending with limits

There is a very thin line between improving spending habits with business bank cards and allowing spending to get out of control. Without a strategy, distributing cards can lead to poor spending habits. Cardholders can exceed budget, charge items that stress your cash flow, and lose track of automatic bill payments. This is the most important goal in managing business cards, because it is very easy to lose control.

Luckily, there are ways to offset the risk.

The best way is to establish limits on spending. If managers in your company need to spend on projects, they should budget regularly. This could be monthly, quarterly, annually, project-based—whatever makes sense for your business. Budgeting will help you distribute cards and establish limits. Department managers might receive a card for their entire budget, or cards might be based solely on a category of expenses (more on this later).

Remember, not all employees are equal when it comes to spending. A sales executive that travels and treats customers might have higher limits than other employees. But even in that case, establish limits for each category of travel expenses, and require approvals for special circumstances. We’ll cover more specific use cases for cards and limits below.

Finally, it should go without saying that no personal expenses are allowed on business cards.

Goal #2: Empower Your Team

Every small business owner, department leader, and hiring manager wants to empower their team members. Hopefully, you hired these people in part because you trust them to make good decisions. But leaving them to their own devices (especially when it comes to spending) is a scary thought for many small business owners.

Giving employees power to purchase the things they need to be successful has a tangible benefit to the business. It’s far more efficient than requiring multiple levels of approval. Employees are more productive when they can operate without impediments. It also has an intangible benefit: employees are happier, and they’re far more likely to trust an employer that trusts them.

Once you’ve created a budgeting process and established spending limits, this goal becomes much easier to achieve. You can issue limited spend cards per project, supplier, or vendor. You could issue debit cards (with limits) per account manager if they’re visiting customers.

One of our customers at Viably contracts projects to build specialized medical devices. The founder’s primary goal is to enable project managers to buy the supplies they need without friction.

“I want the team to buy what they need for the job—I trust them and they don’t need to ask me for anything,” said KC Armstrong, Founder and CEO of Nocturnal Product Development. “But seeing everything we spend will help me plan, make decisions, and continue to grow a successful business.”

As you issue cards for different employees or to pay for different expenses, just be sure that the data is automatically reporting back to one source. Even with parameters and limits on cards, small business owners should maintain visibility. The easiest way to do this is to distribute cards from one bank account. If you organize your expenses from multiple accounts, use an app that categorizes every expense and flags unusual spending from any source. This will provide the peace of mind required to let your employees work efficiently. And it will provide the data you need to forecast cash flow and budget ahead.

Goal #3: Drive Accountability to Budget and Business Goals

Every dollar a business spends should contribute to success. You knew this already, but how can business cards help you drive this home?

Well, let’s revisit the first two goals. Once you have a strategy to control spending and you’ve given employees the power to buy what they need, the last part should be easy. Work with your team on commitments to what that spending will help the business achieve.

This is an important step of your budgeting process. You don’t distribute a card to pay for an expense unless it is tied to a business goal. You want to spend money on Facebook ads? Great. How many leads or conversions will it generate? What is the cost per conversion?

You want a new piece of equipment to use for on-site projects? Sounds good, but how much faster will the projects be completed?

Ultimately, all (or most) of your goals can be tied to income, expenses, and/or profit for the business. Planning all of this up front will justify spending before the purchase, rather than trying to justify the expense once it’s already complete. Most importantly, it forces team members to think about what they can deliver, and spend accordingly. This is the accountability that will help them grow, expand their business knowledge, and think about how their spending contributes to the business as a whole.

Use Cases: How Can You Use Business Bank/Debit Cards?

According to the Small Business Administration, there are almost 32 million small businesses in the United States. They’re all different, and it would be impossible to cover every use case for business cards across every industry. But there are some expenses that most small businesses have in common.

They all need to pay for basic operations, and invest in their products or services. They all need to find customers and sell to them. Most need efficient ways to plan, interpret data, and manage work loads. We’ve broken this section down by departments that apply to many small businesses. And truthfully, a lot of the examples here come from our own spending at Viably.

Operations

Operating your small business comes with a number of expenses that need to be paid. Some of them are invoiced and drawn from your account (like rent), but others will be paid from your business debit card.

Maybe you manage all of these expenses as the business owner. Maybe it’s a staff member from human resources or an accountant. Whoever it is should have a bank card to pay the following:

Utilities
Internet
Cell Phones
Insurance
Legal contractors
Accounting services

These are all basic business expenses. If you pay them automatically, using your card will help you stay ahead of any changes or outliers within those charges. Depending on the nature of your business, you might also have unique operational expenses like:

Inventory
Suppliers
Shipping contracts
Specialized equipment purchases or leases

Some of these might be invoiced, but some will be single purchases to complete unique projects for your business. Any day-to-day operational expenses can be budgeted for among the team and paid through business cards.

Sales and Customer Service

Sales expenses vary dramatically from one business to another. Regardless of how your company sells products or services, bank cards can help you track, manage, and keep it under control.

For many small businesses, expenses for customer experience can provide a big return. Maybe customer acquisition and retention for your business requires some white glove treatment. Common sales expenses include:

Entertainment (dinners, tickets, etc.)
Gifts
Travel
Shipping/delivery
Sales technology (like a CRM platform)
Customer support technology (live chat or call centers)
Commissions or bonuses for sales staff

These are all common ways to thank customers, reward employees, and represent your company in front of your target audience. They’re also necessary sales expenses that can be easily managed with business cards. You can set spending limits, track employee spending, and stay on top of your budget.

Marketing

Marketing can often be an afterthought in your small business budgeting. It’s something that you spend toward often only if you have the extra funds to do so. Small business marketing spend is something that should be closely watched to ensure that you are getting the most out of the budget you are putting toward advertising or building awareness around your business. It’s helpful to have specific virtual cards dedicated to specific advertising channels or marketing activities so that you can easily categorize your marketing spend. You can have virtual debit cards allocated to:

Paid search (your Google and Bing advertising)
Paid social (your Facebook, Twitter, LinkedIn and more)
Ongoing vendor relationships
Freelancers / contractors
Collateral
Swag

Many of these are nice-to-haves as you build out your budget, but ensuring that you can keep track of the spend efficiently makes it significantly easier to build these activities into your small business budget. Marketing spend can be a lot to manage, but organizing the expenses with business cards makes it easier. The ability to put specific cards to specific activities, then categorizing those activities on each card, ensures that you will have the opportunity to market your business on a larger scale in the future.

Human Resources / People

Not all small businesses have HR departments, but most have expenses to build culture, employee well-being, and career development. Like anything else, expenses to nurture your work environment can add up quickly. Use a specific budget and card to pay for the following:

Events
Parties / Team-building
HR/Payroll software
Workshops
Training programs
Office equipment
Food, snacks, coffee

Some of these items are necessities, especially for in-office workplaces. But you’ll still want a way to track spending and identify any outliers from month-to-month.

Technology

There’s almost no way to avoid it: most small businesses rely heavily on technology. Laptops, industry-specific software subscriptions, inventory tracking systems, collaboration tools—the list goes on. Not only is the list extensive, but it’s always changing. One employee needs a Microsoft Office license. Another needs one for Adobe Creative Cloud. The new hire needs access to your inventory management system. One of the laptops just drowned in a coffee spill.

You need special attention in this category of spending because it includes so many variables. It’s easy to lose track of licenses, repairs, leases, and all the other expenses that show up one month but not the next. Here are just a few of the regular technology expenses that small business owners pay:

New laptops
IT infrastructure
Upgrades and repairs
Collaboration software
Business suite subscriptions
Project management software

Like any other business spending, technology needs budgets and limits. The best way to enforce them is by assigning cards or accounts specifically for technology, and limiting the spend. Entering a high limit credit card for every pop-up technology need is a great way to light money on fire.

Getting Started With Business Cards

Okay, you’re almost ready to start distributing cards to your team. You have tangible goals and use cases in mind. So, where do you start? Here are three steps to put bank cards into your small business.

Bucket Your Current Expenses

You’re probably tracking your business expenses through some means, even if everything is in spreadsheets today. If not, document everything your business spends for the next month. Once you have a clear picture, start categorizing in whatever way makes sense for your business goals.

Technology can help by categorizing your expenses automatically, which will give you a clear picture for the next step: budgeting.

Set Goals and Budgets

We covered goals from a high level earlier: control spending, empower your team, drive accountability, and build business credit. Now it’s time to zero in on the targets.

Bucketing expenses should provide a clearer picture of how much you’re spending by category, and what each expense is contributing to the business. This will help you create a budget for every department or category of business expenses. The key here is that you’re not making up numbers—you’re tying each budget to business goals. Marketing spend should result in a target for leads. Sales budget comes with revenue or account renewal targets. It may not be possible to attach measurable goals to every expense, but add as many as you can.

The goals and targets will help you drive accountability throughout your team, and it will help you adjust your budget along the way. Now, when you distribute cards, the freedom to spend comes with a limit and a deliverable.

Train Your Team

Keep in mind that it may be the first time your team members have ever been issued a business bank, debit, or spend card. You could issue virtual cards that you can control as an admin. That would provide flexibility to the employee and also an added level of oversight.

However you decide to distribute cards, show them how to use it and how to monitor it. Group training sessions can be helpful—you could even hire a financial professional to lead a session for employees.

The Bottom Line: Business Bank and Debit Cards

As a small business owner, you have a lot of options to pay your bills. While credit card rewards can be enticing, in many cases, the simple option is the best option.

Business bank cards, debit cards, and limited spend cards are an excellent way to monitor spending across the business. They can also contribute to much larger business goals. They can help you and your team members budget, stay accountable to their goals, and track your expenses.

The key is to start with a plan. Open a business bank account, and ask yourself the following questions. Where do you need better visibility into your business spending? Which employees can you empower with business cards? How is your budget contributing to business goals? Once you know what you’re trying to achieve, business bank cards can be an excellent tool to help you get there.

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