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With a growing number of startups, India Inc is recognising the challenges that come with handling the finances of new-age ventures. The traditional form of payments — cheques, cash and credit cards just don’t make the cut anymore

With Covid-19 accelerating the need for business digitisation, several homegrown fintechs have launched their own expense management software and company cards to streamline their operations

A clear upgrade over traditional business cards, virtual cards are the go-to fintech product for fast-paced startups. These cards have an easy issue process, help preserve budget, minimise fraud risks, and increase control over expenses, all without sacrificing speed

With a growing number of startups, India Inc is recognising the challenges that come with handling the finances of new-age ventures. The traditional form of payments — cheques, cash and credit cards just don’t make the cut anymore. Cheques consume a lot of time for clearance and have high transaction costs. And cash and physical cards belong to a bygone era, at least in today’s digital India.

The process of getting a physical credit card for your business is a tedious process involving months of struggle and paperwork. Additionally, traditional business cards might not actually be tailored to suit the needs of startup founders. 

This is where virtual cards come to the rescue. These digital cards, exclusively for startups can help businesses solve problems unique to startups. Virtual cards can be broadly categorised into three types:

• A single payment virtual card: Akin to digital gift cards, this card is issued for a specific vendor or a specific amount.
• A virtual card connected to a physical card: This would mean that all the employees in your startup have access to a virtual card that’s connected to a physical company card.
• Virtual cards with a dedicated budget: This would help you, as a founder to assign a card to your team with a specific budget in mind. For example, you could provide a card with a pre-determined budget to your marketing team to utilise on ad spends

With Covid-19 accelerating the need for business digitisation, several homegrown fintechs have launched their own expense management software and company cards to streamline their operations. Y Combinator-backed Karbon Card and Kodo are some of the fintechs offering startup-focused virtual cards that come to mind. 

Virtual Cards: A Great Way To Manage Your Marketing Spend

According to an annual report by Statista, the yearly advertising expenditure of businesses in India for the year 2015 was $4.7 Bn. This number shot up to $9.58 Bn in the year 2021. With 57K startups launched in India till date coupled with a continuously evolving startup ecosystem, the marketing expenses are bound to increase. 

With money playing such a significant role in the success of marketing activities, one would think that finance management for such expenses must be top-notch. Unfortunately, in many companies, the abundance of money makes people less responsible when it comes to managing expenses. Marketing budgets are often prone to inefficient utilisation due to the absence of a proper tracking and controlling system.

Let’s look at some of the common challenges that marketing teams face when it comes to managing their budget. 

Challenges In Marketing Expenses

Low Spending Visibility 

Most businesses use a single company card or the founder’s personal credit card to make marketing expenses online. All these are just recorded as transactions on the card’s statement but there is no way to see all marketing expenses in one consolidated dashboard. 

This makes it tough for the team to keep track of budgets. It often also leads to confusion regarding who is spending on what as all employees are sharing a single card. This can create conflict between employees, delay work, and bring down the team’s productivity. 

Overspending On Subscriptions 

The human tendency to forget can be detrimental when it comes to budget management. This happens quite often — you add a credit card to make a subscription payment for a marketing software tool and forget about it. While it is great to not worry about having to manually pay for a subscription each month if you’re not using a tool anymore, these seemingly small subscription payments can add up to cost a lot over time. 

With expenses constantly being made on the same card, a subscription might keep sipping away money without you even realising whether your marketing team is using that service anymore.

Money Stuck In Refunds Or As Prepaid Balances

Many marketing and advertising tools such as Facebook Ads Manager, give you the ability to load a prepaid balance on the platform to carry out ads seamlessly.

The downside to this convenience is that it becomes tough to recover the balance if you don’t want to spend it on the particular tool anymore. While some marketing tools will take time to refund the money, there will be others that won’t even let you get your funds back.

In either case, it is time and money lost that could have otherwise been used in a more efficient manner.

How Virtual Cards Can Help Streamline Marketing Expenses

Virtual cards essentially function the same way as any other credit card except that they are only usable for online transactions. They exist digitally on a software system provided by various fintech startups under a corporate card program. Let’s look at how virtual cards can help a business manage its marketing expenses in a better way.

Manage All Subscriptions In One Place

As mentioned above, a virtual card exists digitally. So it virtually costs nothing to create and there are no charges associated with issuing and maintaining them. This is what makes it possible for fintech providers to let businesses create unlimited virtual cards within their platform.

Now how does this help manage marketing subscriptions? Instead of having your employees share one card for all expenses, you can literally create as many virtual payment cards as you need for each one of your subscriptions. This way all the virtual cards you create through a platform become a way to track your spending on each marketing subscription.

Real-Time Tracking & Visibility

Virtual cards solve the problem of not knowing who is making what expense. Each virtual card can be assigned to a particular user so that only they can use it. Plus, all the expenses being made through these cards are recorded in real-time under an expense tab, similar to a ledger.

This gives a business owner complete visibility of when, where, and by whom the marketing budget is being utilised. 

Control Spending With Custom Limits & Approval Systems

A common fear of giving employees access to company cards is the risk of overspending or spending on unnecessary things without prior confirmation. Virtual cards can solve this issue as the tech solution you use to create these cards also provide robust control systems such as setting spending limits and enabling approval workflows on each card.

Spending limits help you control the maximum amount of money that can be spent through a card in a particular period. This timeframe, which is usually a month, refreshes and automatically renews itself. 

Approval workflows help you easily monitor each expense before it happens so that no money from the marketing budget is spent without first getting it approved by upper management.

Indian fintech ventures such as Razorpay, Open, MoneyTap and EnKash are some of the companies making new additions to their product suite to help new-age companies manage finance on the go.

The needs of customers are evolving and it is important to have niche products to cater to the startup industry. A clear upgrade over traditional business cards, virtual cards are the go-to fintech product for fast-paced startups. These cards have an easy issue process, help preserve budget, minimise fraud risks, and increase control over expenses, all without sacrificing speed.