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Corporate card reconciliation: A complete guide with best practices for finance teams
It is the last working day of the month, with a pile of unmatched credit card transactions, a stack of receipts still pending review, and constant messages popping up in your chat asking if that receipt from Starbucks from three weeks ago needs to be uploaded. Does this ring a bell? Well, you're not the only one sailing on this boat.
In today's fast-paced world, cards have become a default mode of payment globally. According to this Nilson report, the overall number of card transactions made to purchase goods and services will reach 1.109 trillion worldwide in 2029. Close to 79% of US small businesses have started using credit cards to make their payments.
Corporate cards are a boon to modern finance teams. All employee spending, including T&E, subscriptions, license costs, and vendor payments, can be made from a single card. This increases visibility, yields faster approvals, and lends to fewer reimbursement requests. Corporate cards also help maintain compliance, prevent fraud, and reduce accounting errors.
What are corporate cards?
Corporate cards are company-issued credit or debit cards given to employees to initiate business-related payments. They help finance teams streamline spending, enhance visibility, and get control over spending. Corporate cards can significantly improve financial efficiency and compliance with predefined policies and limits to make accounting expenses more efficient when paired with a robust reconciliation process.
To learn more about how corporate cards can benefit your business, check out our blog post, Five Essential Benefits of Using Corporate Card Programs.
What is corporate card reconciliation?
Corporate card reconciliation verifies all transactions using company-issued cards with relevant purchase receipts and accounting entries. Inaccurate or delayed reconciliation can lead to compliance issues, budget overruns, and audit complications. With this increasing trend of corporate cards for T&E, subscription license costs, and vendor payments, finance teams must adopt a robust reconciliation process.
Bank reconciliation vs Card reconciliation
Credit card reconciliation involves expenses initiated by employees from their corporate or credit cards. These expenses are primarily related to vendor payments and T&E spending, such as flights, hotels, food, and cab ride expenses.
Bank reconciliation involves matching bank statements with the company's internal accounting records for all inflow and outflow transactions to ensure compliance and audit readiness.
Challenges faced by finance teams with corporate cards
Even though most companies are equipped with ERP and accounting solutions, they still reconcile their credit statements manually with purchase receipts submitted by their employees. Statements are sometimes even received after a week from the purchase date, making it more complex for the teams to reconcile and close accounts. This leads to a huge loss in labor hours and makes the company vulnerable to human error.
Key challenges faced by finance teams
Never-ending time-consuming process
Matching each transaction with a corresponding receipt requires enormous manual efforts and labor hours, making it a nightmare for finance teams, especially during the travel-heavy season.
Open to high error rates
With a manual process, the probability of incorrect data, duplicate entries, and missed transactions are relatively higher, directly impacting the company's profitability.
Lack of real-time visibility
With a manual or legacy system, finance teams will not be able to view spending patterns or enhance guidelines or policies to further curb spends.
Compliance and audits
An inconsistent reconciliation process and inaccurate reporting invite opportunities for policy violation and regulatory compliance.
Three-step procedure for finance teams for an easy reconciliation process
Implementing a centralized expense and corporate card management solution
The first step is to select a single system that allows you to integrate all your existing corporate cards and also provides a way for employees to store or match their receipts.
Policy compliance check
Once the card statements and receipts are brought under one roof, the next step for employees is to match receipts with the transactions and submit them. Enforcing an organization-wide spending policy through automated checks and alerts ensures all expenses are compliant with the company's spending policy and flags discrepancies.
Seamless data sync and real-time insights
Integrating the expense system with an accounting and ERP solution for real-time transaction syncing enhances reporting accuracy and provides timely insights for decision-makers.
Manage your corporate card reconciliation effectively with Zoho Expense
A card-based expense management solution can help connect corporate cards and match them with the corresponding receipts in real time.
With Zoho Expense, finance teams can connect all their existing corporate cards to the system. Whether using Visa, Mastercard, Amex, or any other card company, Zoho Expense lets you integrate your existing setup. With real-time feeds, transactions are instantly fetched into the system; employees can reconcile instantly by just clicking a photo of their receipts and automatically matching them to the corresponding transactions made on the cards.
Corporate cards have become a new norm; finance teams can reduce errors, save time, and maintain a clean financial record by adopting a robust reconciliation process with an automated expense management system and enforcing clear policies.
Neil VarshineyA focussed marketer and seasoned Fintech writer helping finance professionals and business owners to find and help them evaluate the right tech stack to run their operations effectively.