The declining balance card is unique among commercial card products. Combining aspects of both a purchasing card and a prepaid card, the declining balance card has multiple applications when it comes to managing enterprise spend as part of a commercial card program. Three such applications have already been outlined, such as infrequent employee travel and meeting-related spend, but this article will discuss three particular facets of a declining balance card that make such solutions unique in the commercial card solutions world.
Benefit 1: Absolute Spending Limit
One of the chief benefits of using a declining balance card is the ability to set a hard spending limit on the card. Where prepaid cards allow for the same sort of limit, enterprises are forced to fund a prepaid card upfront (hence the name). With a declining balance card, card program managers can set an allowed spending limit and make payments on the card the same as any other commercial card. The difference here is that payments made on a declining balance card don’t “refresh” the spending limit. Once an employee reaches the spending limit, no matter how long it takes, the card is no longer valid.
Benefit 2: Flexible Expiration Date
Enterprises that use declining balance cards can make the card valid for anywhere from a single day to several years and everywhere in between. This flexibility in expiration date ensures that the declining balance card is only used for its prescribed purpose, and that the enterprise doesn’t have to keep any accounts open longer than strictly necessary.
Benefit 3: Improved Budget Compliance
The very nature of budgets makes compliance important. Using a declining balance card is, for lack of a better phrase, something of a “set-it and forget-it” solution. Expenses that fall outside the spending limit, the expiration date, or any other traditional commercial card limitation, are automatically declined. This allows enterprises to reconcile spend against budget much easier—without all the other ancillary purchases that can happen on a traditional purchasing or commercial card.
This ability to simplify compliance to budgets is tremendously valuable for most every organization. Say there’s an event that has a defined budget; using a declining balance card means that the enterprise doesn’t need to worry about cost overruns—the card will automatically not authorize a purchase if there isn’t enough of a balance left. This is why the declining balance card is a “set-it and forget-it” solution in this case.
Final Thoughts
Declining balance cards can be valuable financial tools to manage spend against budget. Between the flexible expiration date, merchant category controls, and absolute spending limit—not to mention the improved budgetary compliance—it’s easy to see the value-add that can come from adding declining balance cards into a commercial card program.
Check out these related articles for more information:
Why Use a Corporate Travel Card?
Which Commercial Card is Right for You?
What are Virtual Payment Cards?
