How to choose an expense card for contract employees
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Many businesses give expense cards to their employees to stay on top of every purchase and set spending limits. While these cards have been a staple for full-time employees, more business owners are hiring contract employees.
Contract employees are currently in higher demand than full-time workers. Almost 40% of companies are actively hiring for contract positions despite recent layoffs. If you need contract employees to make purchases on your company’s behalf, you will have to give them expense cards.
You can choose from many company expense cards for your business, but some are better than others. This guide will explore how to choose the best expense card for contract employees.
What is an expense card for contract employees
An expense card allows employees to make purchases using your company’s funds. These cards can help contract employees buy materials, office supplies, and other essentials without as many hurdles.
Giving out expense cards to your staff can increase efficiency, and you can monitor business expenses from each card. That way, you can deactivate any company expense card that isn’t being used responsibly.
How expense cards for contract employees work
Expense cards are similar to prepaid debit cards. You can establish a spending limit for each card and replenish them if necessary.
Business owners can set different limits for each employee based on their occupations and how much money they need to spend. An employee who books frequent business trips will likely have a higher spending limit than an employee who is buying supplies for a small office.
These cards streamline tracking business expenses. You will receive auto-generated reports that contain the transactions for each expense card. Companies also receive breakdowns by spending category and receive a report that lists all of the transactions for each card in one place.
Types of expense cards for contract employees
Business owners can choose from several types of expense cards. These are some of the available choices.
Corporate cards
Corporate credit cards offer credit lines for your contract employees. You can accrue balances on corporate cards without paying any interest. Businesses can track spending and receive perks like cashback on every purchase.
However, these aren’t like credit cards since balances do not carry over into the following month. You must pay back a corporate card’s balance by the end of the billing cycle.
Fuel cards
Fuel cards are optimal for trucking businesses that frequently buy fuel. These cards offer discounts each time a driver fills up their truck. Profit margins are narrow in the trucking industry, and any fuel discounts can make a big difference.
Some fuel cards offer additional flexibility for other purchases related to commercial vehicles, such as repairs. It’s also common for fuel cards to automatically generate reports that comply with International Fuel Tax Association (IFTA) standards.
Travel cards
Travel cards are expense cards that are ideal for businesses with high travel expenses. You can get much better rewards if you exclusively use this card for travel-related costs. However, it’s not practical for other business expenses due to lower rewards in non-travel categories.
Prepaid cards
Business owners can prepay an expense card before giving it to a contractor. These prepaid cards can minimize misuse since a cardholder cannot exceed the prepaid amount.
These cards typically don’t have many perks. Furthermore, your business credit score won’t go up with prepaid cards. You can still limit someone’s spending power with other types of expense cards. However, a key benefit of prepaid cards is that they don’t require credit checks and are available for companies that don’t have the best credit.
Virtual cards
Virtual business cards are more convenient than physical cards. A contractor can access one of these cards from any device, and they are especially useful if you hire remote workers. Many issuers that offer expense cards have virtual options enabled. For instance, you can get virtual fuel cards or corporate cards.
What to consider when choosing an expense card provider
Business owners can choose from many expense cards. These are some of the details to keep in mind when deciding on the right card for your business.
Rewards and other perks
Some expense cards offer unlimited cashback for every purchase. These cards have simpler reward structures since you don’t have to worry about some categories being more valuable than others.
However, other cards offer higher rewards for certain categories. You’ll get the most rewards from travel costs with a travel expense card. Fleets will benefit more from fuel cards that let them save money each time they refuel their trucks.
Spending controls
Many expense cards let you set limits on how much money contract employees can spend. They also restrict spending for certain vendors and categories. Businesses should outline expense policies to ensure contract employees know how they can use their company cards.
It’s also common for providers to let you track business expenses in real time through an online dashboard. This level of oversight can help business owners detect suspicious activity and make immediate changes if necessary. It’s possible to open and deactivate expense cards with a few clicks.
Reports
Most expense card providers auto-generate reports that let you monitor business expenses across each card. Reviewing transactions can help you reduce business expenses and improve your bottom line.
These reports can also save you considerable time when you have to file business taxes. Some providers also let you integrate with popular taxing software like Quickbooks to increase efficiency.
Costs and fees
Some expense cards have high interest rates and annual fees. Others have fewer costs and strengthen your profit margins due to discounts and rewards. You should also check if your provider has additional costs, such as late payment fees.
Manage your business expenses with the Ramp card
The Ramp corporate card has everything you need to stay on top of business spending and grow your company. You can issue an unlimited amount of virtual cards to your employees. Ramp doesn’t have preset spending limits, which leads to more capital than traditional business credit cards. You can view auto-generated reports to see where your money is going and make updates on spending controls at any time. You’ll also enjoy 1.5% cashback on purchases.
You can give Ramp a try to discover if it is a good fit for your business.