While the two martini lunch is a thing of the past in most industries, there are still lots of positions where spending company money is part of doing your job. Obviously business travel is a big one, but there are other things like buying materials, attending events, and still – taking clients to lunch.
Processing expense reports can be a full time job – reconciling receipts and making sure all purchases follow corporate policy can be labor intensive. Many companies use corporate credit cards so that they have access to transaction records and can limit overall employee spending. An interesting alternative to traditional corporate credit cards is the prepaid Visa card from PEX Card.
It works more like a debit card than a gift card, and has online management tools that let you control the “what” in addition to the “how much” being spent. There is no cash access from ATMs or anywhere else (like getting cash back at the register with a regular debit card) so all spending is tracked just like a credit card statement.
We asked Toffer Grant, CEO and Founder of PEX Card, to give us the full scoop.
How does the PEX card, managed online, save time with employee reimbursement?
Business owners save time with employee reimbursements because PEX Card is an alternative to making employees pay out of pocket. Companies use PEX Card to cover expenses at the time of purchase instead. In some industries this is the norm, but for others the lack of credit availability is pushing them in this direction. Floating purchases off on employees or the credit card companies is more difficult to do now and PEX Card’s tools make handling cash-based spending easy to manage and there are no high interest rates or maxed credit lines.
How does it help control and/or better manage employee spending?
Features of PEX Card enable businesses to issue cards that start with a zero balance and fund as needed. Imagine an employee at Home Depot ready to purchase $300 worth of supplies for a job – he can call his boss and relay the total. The employer can log in to our site and fund the card with the exact amount and – boom – the transaction will go through right then and there. Logging in, funding and logging out takes less than thirty seconds to complete.
Businesses that don’t want to manage every single spend that way can set up card automatic reload features, or budgets, that top up card balances on a schedule or when a card is spent down to a bottom-end amount set by the owner.
Spend rules limit where cards can be used and can cap an employee’s daily spending. Owners can activate or deactivate spending in any of nine categories that are based off of Visa’s merchant category code system (i.e. can make travel purchases, but not restaurant/bar purchases).
Because employees cannot spend more than the balance given – the system keeps them on budget and the spend rules prevent misuse.
Does it really cut down on paperwork?
PEX Card cuts down on paper work because everything can be done online. Transactions post to the admin and cardholder sites as they occur, statements appear online.
Can PEX cards also cut down on employee theft or overall misuse of funds?
Yes, spend rules prevent employees from using cards at unauthorized locations and daily limits regulate how quickly money goes out the door. Most small business credit cards, for example, offer the ability to adjust an employee’s credit limit, but nothing prevents the employee from spending zero to $X whenever they want. Also, because each PEX Card has an individual balance that can be adjusted quickly, at any time, owners can micro manage funds as closely as they wish.
Owners can also toggle a card block feature to freeze spending during off hours or vacations.
How does it work?
When first getting started, we ask businesses think about simple process for managing their program – i.e. taking card fund requests from employees, how frequently to move money from their business checking accounts to their account with us and reconciling/tracking purchases. Then they determine which employees will get cards and how much money to place on deposit in their PEX Account – the main business account where funds are stored.
Admins register employee name and address detail to create cards which arrive in 7-10 business days via USPS.
Funds in the PEX Account appear as a line item for the business and each card balance starts at zero. To fund a card the admin types in a desired amount into a “Quick Fund” field and clicks Submit. The business balance debits by the entered amount and the card balance is adjusted instantly.
To view card transactions, the admin clicks the name of the employee and the screen expands to show all the funding credits and spending. To see additional detail about a transaction, they click the transaction for a deeper view, i.e. time, location, etc.
As funds are spent, the business will have to add more funds to the program. Deposit requests can be made through our site or money can be wired into their account. When a funding request is made through the site we turn an electronic ACH request around to their bank, they respond with funds and we post the money for the business – it takes about four business days to complete. Wire transfers can be completed in one/same day, but their bank may charge a fee. Once funds post to their account, the business can add funds to cards, which is an instant transfer.
Spend rules can be set by adding/removing check marks on the spend category grid and daily spending is as simple as defining an amount and clicking a submit button. The system automatically declines unauthorized spending attempts or when limits have been reached to prevent loss for the business.
Transactions post as they occur, so card and overall business balances are accurate up-to-the minute for accurate cash position. There is a dashboard page providing a summary of funds, card count, and how much has gone out the door for that day.
What are the costs?
There is a one-time application fee of $49.95 for the business and monthly subscription fees per card that are tiered based on the number of cards issued:
1-10 cards = $19.95 per card per month
11-50 cards = $9.95 per card per month
The first two months are a trial period free of monthly service charges, which starts the first of the month following sign up – i.e. submit an application in July, you won’t be charged monthly fees until October 1. We debit fees out of the PEX Account, not card accounts.
There are some ancillary costs charged per event, such as card replacements ($5), over night card shipping, moving funds back to a checking account, and some others.
Customers can move money within the system an unlimited number of times, no fees for transactions, no fees for depositing money, no fees for customer support, no fees for spend rules or any of the other features in the system, so all they have to budget for is the monthly fee.
If a business spends in excess of $50,000 in a month, the fees for the following month are waived.