Compare: Business Prepaid Cards Versus Checks

By April 25, 2017Business Prepaid Cards
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Can Business Prepaid Cards Surpass The Conveniences Of Giving Employees Checks?

We’ve already compared business prepaid cards to employee credit cards and cash. In both cases, business prepaid cards were victorious in control, convenience, and liability. This week, we are going to compare the conveniences of using checks to control and manage employee purchases.  Does this stalwart payment method have a chance?  Let’s start comparing and see…

The Pro’s Of Using Checks – Write it, Cash It, Spend It, Repeat

We’ve all been writing checks since we learned how to balance a checkbook as a kid.  Now, you use this in your business because you can offload writing checks to your office manager.  It’s simple, free and you get tracking in your bank account for each check. Here’s why many businesses still use checks in their business to fund employee purchases:

  • Can be used to control the exact amount given to employees
  • Cashed checks result in cash which can be used everywhere
  • Can write checks to only specific merchants and service providers
  • Admins can write checks, freeing business owners of this duty
  • Expenses are tracked via check # in bank statement for accounting

The Cons Of Using Checks – Poor Reporting, No Controls & Employee Theft

While checks appear to be an immediate way to empower your employees to buy the supplies they need to do their jobs, checks still need to be cashed which is an extra step.  Also, you can’t control how the funds are spent or what happens when supplies are returned.  We’ve heard about employees over-buying supplies with cash from checks, then returning the supplies and keeping the cash. Yikes!  No one thinks their employees are stealing, but forgetting to turn in all returned funds is just too easy and employee theft can exist right beneath your nose.  Here are a few reasons why checks may not be as great as you think:

  • Checks used for cash can’t control where the funds are spent
  • No reporting on where funds were used if checks are cached
  • Overdrawn fees
  • Reconciling check purchases can be cumbersome for accountant – no mobile app, receipt capture, tagging transactions, accounting software integrations, etc.
  • Like cash, it can be time-consuming to manage – shoeboxes of receipts
  • Lacks innovative features – legacy solution without updated features 
  • Returns are delivered in cash, which employees can keep (i.e. employee theft)

How Business Prepaid Cards (BPC) Improve Upon Checks

Business prepaid cards can deliver the same convenience of checks, but free admins and business owners from having to physically be present. Only BPC’s offer:

  • The ability to give each employee a card with spending limits by employee, day, week or month
  • Control where the cards are used through spending categories
  • Visibility – purchases are accounted for in real-time
  • Reporting – all purchases are recorded in real-time and can be exported to (.csv) QuickBooks
  • Returned funds are delivered back to the main account or card; not cash to employees
  • Capture receipts via mobile app at the POS eliminates accounting gaps
  • Offered by upstart FinTech companies that deliver innovative features monthly, such as Tags, Notes, sub-accounts, administrators, accounting software integrations, custom merchant category code (MCC) controls via API

Conclusion:

Checks have served you well for years.  But it’s time to get with the times.  If you think that tethering yourself or your employees to a piece of paper (i.e. check) and requiring them to go to the bank to get the funds they need to do their job, then you are doing them, yourself and the success of your business a disservice.  Take a few minutes to educate yourself about the power, control, convenience and benefits of using prepaid cards for business and you’ll never go back to using checks again. Start comparing business prepaid card features and see why business prepaid cards are quickly becoming the preferred payment method for SMBs, nonprofits, and organizations.

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