June 9, 2021

Why startup finance leaders should give every employee a corporate card


The dopamine hit of securing funding can fade fast if a startup can't get a handle on its outgoings. With consumer demand dropping and VC investments dipping, some 40% of startups across the world have three months or less of remaining capital, according to Startup Genome's State of the Global Startup Economy. 😬

Given these challenges, it’s surprising that many startups don't know where their money's going. And as a startup grows, it becomes even harder to see where and what employees are spending on. The founder’s credit card can only be used for so long, given that it’s typically guaranteed off the back of the head honcho’s personal finances. 

The startups that identify this problem often turn next to corporate cards for senior personnel and employee reimbursements for out-of-pocket spending. But really this is just swapping one problem for another. Because spend on these cards still goes unmanaged—think software subscriptions, computers and desktops, and even lunches.

To truly empower your employees, the solution is to give all of them corporate cards—ones that come with fine-tuned controls and insights for your finance teams  

Limit the risk of expense fraud

You may worry that giving all of your employees the ability to spend corporate funds opens the floodgate to inappropriate spending or fraud. But actually modern corporate cards are specially designed to reduce any sharp practices, with features like auto-locking, category controls, and transaction limits. This is key for all startups because they face a greater threat of fraud than larger businesses.

  • Check and payment tampering is 4x more likely in smaller organizations than in large ones, according to the Association of Certified Fraud Examiners (ACFE). 
  • Expense reimbursements are the third most common kind of occupational fraud in the United States and Canada, behind corruption and billing. 
  • ACFE estimates organizations lose 5% of revenue to fraud every year.

People submitting old receipts, people spending on the weekends, people submitting the same expense report again and again—these are very common tricks that cannot be caught by traditional expense management software. But a modern corporate card can fix these loopholes.

Create a culture of spend control

Fraud prevention aside, it’s simply sound financial management to foster a culture of spend control early in your startup’s life. Create this financial culture with the following best practices:

  • Empower junior employees by departing from the old model of cards as “perks” for only a few senior staff members. By giving everyone a card, employees no longer have to shell out on personal cards and wait for reimbursement—which is effectively a form of lending to their employer.
  • Make monthly close predictable. Cards can be set up to be refused at the point-of-sale, instead of finance team members having to chase up employees over suspect cash or traditional credit card transactions, after the fact.
  • Stop operational bottlenecks. Improve efficiency by giving everyone a card. Your staff won’t have to run requests up the ladder and wait for approvals before getting started on projects.
  • Centralize company expenses. Most corporate cards come with powerful dashboards that keep everything in one place, rather than scattered across personal cards, invoices, or receipts.
  • Add financial guardrails across the organization. Goodwill may suffice in the lean days, but as headcount grows startups need peace of mind by deploying cards with pre-set limits for employee spending. Many issuers also let you implement a corporate credit card policy and ensure it's accessible to all your employees to further prevent out-of-policy spend.

Not all corporate cards are created equal

Startups now have an increasing number of options for providing their staff with corporate cards, but not all employee corporate cards are the same.

Some business credit cards for startups are designed with complex rewards programs that encourage employees to spend more. Think of the programs that incentivize travel at 8x points, dining at 7x points, buying technology products at 4x points. Seasoned finance leaders know this is counterintuitive to a culture of spend management.

As a startup, you should give greater consideration to physical and virtual card programs that incentivize savings across the business, whether that’s in digital advertising spend or SaaS subscriptions. This new breed of corporate cards can help you to: 

  • Stop unapproved spending before it happens, with category and spend controls to help you manage employee expenses as the business scales up.
Ramp card controls

  • Close books promptly, with time-saving accounting integrations and proper coding to help you identify who merchants are and what transactions are for, right in the general ledger. 
Ramp real-time reporting

Ramp spend forecasting

There’s a great degree of customizability with the new corporate cards. You can get down to the granular level of preventing all spend in certain merchant categories (think bars or gambling venues). But it may be enough for some startups to set spending limits by day, week, or any duration to get a predictable monthly cycle of employee expenses. Ideally, everything should be controllable within a simple dashboard.

A new kind of financial discipline

For years, traditional businesses hoped that financial discipline would follow if they limited corporate spending to a select few. Top-down hierarchies like this don’t work in the 2020s. Modern financial leaders know they need to empower everyone to build a healthy organization. One way to do that is by giving employees their own corporate cards with sensible controls to drive critical projects. This fosters an important culture of saving and embeds financial discipline into a startup’s DNA. Founders and finance leaders who create this kind of culture are more likely to survive and thrive than those who leave spend management to chance.

As a startup founder, drafting a mission statement is one of the most impactful exercises you can complete early on in your journey. To help, we created a mission statement generator to inspire your own.

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Streamline approvals.
Review requests, pre-approve expenses, and issue general expense cards in a few clicks – or directly in Slack. Delegate approvals and empower your team leads to spend on the things they need and control their team’s expenses.
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Issue instant cards.
Unlimited virtual and physical cards with built-in spend limits, instantly available for everyone in your team. Define spend rules and let your smart cards enforce your policies automatically. No more surprises or under-the-radar spending.
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See spend as it happens.
Stop waiting on monthly statements or manual spreadsheets. Find, browse, and download real-time transactions from any employee, department, or merchant – on any device.
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Close your books 5x faster.
An accounting experience by finance teams, built for speed and efficiency. Automate manual processes and start enjoying instant reconciliation – Ramp does all the heavy lifting.
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Trim wasteful spend.
Ramp analyses every transaction and identifies hundreds of actionable ways your company can cut expenses and alerts your team via email, SMS, or Slack. It’s like having a second finance team, laser-focused on cutting costs.
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Consolidate reimbursements.
Ramp makes it easy to reimburse your employees for any incidental out-of-pocket expenses. Review, approve, and pay employees back for anything that didn’t make it onto a card with the rest of your Ramp transactions.
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