As a franchise owner, your employees are likely making purchases on behalf of you and your business, which can conflict with the strong need you have to control expenses and limit risk. The dilemma here is that many franchise owners are uncomfortable handing over a business credit card to their employees.
Your comfort level when it comes to providing spend authority can be managed based on the type of tool selections you select. However, most options on the market for expense management are credit-based. These require a personal credit guarantee by the business owner to accept the responsibility of the debt if your company cannot pay. It's a big decision.
Companies with workers on the road now have a game-changing option: corporate prepaid expense cards. These cards are a relatively new offering. Their functions are similar to a checking account and provide the perfect mix of credit card convenience with an online, real-time control and management system.
Franchisees across a wide variety of industries are implementing prepaid expense cards to streamline their business expenses. Here are four key reasons to consider a corporate prepaid expense card program for franchise businesses.
1. Prepaid expense cards help business owners limit employee spending.
A corporate prepaid expense card program helps business owners limit individual employee expenses by dollar amount and merchant category (fuel, dining, retail, etc.). For example, a franchisee in a home or commercial services industry such as HVAC repair, plumbing, or lawn care, may prefer to limit their drivers' expenses to fuel and maintenance.
With a corporate prepaid debit card program, company administrators can limit purchases to fuel and adjust how much money is on the card in real-time. When unexpected expenses arise, employees must request a card reload prior to spending.
2. Prepaid expense card programs are versatile without relinquishing control.
Franchisees with remote employees can enable them to make small-ticket, everyday transactions, in addition to large emergency purchases without tying up a company credit line. For example, multi-unit restaurant franchisees can provide store managers with a "petty cash" balance for routine supplies, but if an emergency occurs, the CFO or franchise owner can instantly add cash to the manager's card for the one-time purchase of a business critical item (e.g., a refrigerator). With business credit card programs, individual card lines would likely be insufficient to handle emergency situations, potentially leaving the store without a critical resource for what could be an extended period of time.
3. Prepaid expense cards meet the unique needs of multi-unit franchises.
Multi-unit franchisees have unique purchasing needs. For example, maintenance staffs travel between locations and often need to buy supplies or equipment. New store construction requires a mix of spending by employees and subcontractors. Many such franchisees also have new store staff members who require travel and overnight accommodations for training purposes. A prepaid expense card program provides flexibility to increase spending limits for both the company and at the card level, during special events and everyday employee spending.
4. Prepaid expense card programs limit risk.
With standard credit card programs, employees have direct access to the company's line of credit. In a prepaid expense card program, employees can only access funds that the manager has placed on the card. Moreover, the manager can change how much is available - online and instantly.
By streamlining employee spending, progressive franchisees can eliminate the traditional financial burdens of credit management, and better allocate their time, attention, and resources to operations that truly impact the bottom line.
There are four more valid reasons for utilizing a corporate prepaid card. I'll explore those in a subsequent article.
Toffer Grant is the CEO and founder of the PEX Visa Prepaid Card Service, a corporate prepaid card solution used to budget and track employee spending.