By and large, one of the biggest problems for the modern enterprise is managing expenses. Enterprises that manage expenses well find cost savings and return money to the organization’s coffers. Those that manage expenses poorly end up spending more capital than is advisable. One of the most efficient ways to manage an enterprise’s budget is through ensuring tight control over as many expense categories as possible.
Declining balance cards, sometimes called “controlled value cards,” can be tremendously valuable when it comes to managing enterprise spend across various categories. In fact, in terms of expense control, the declining balance card is perhaps one of the best commercial card options going. The key benefit to using a declining balance card, as opposed to, say, a purchasing card or a corporate travel card, is the tight control that a declining balance card provides over the raw amount of money spent.
While p-cards and corporate cards also allow for control over spend, declining balance cards are different because their very nature allows expense management professionals to pre-set the absolute spending limit allowable on the card. This is distinct from p-cards and corporate cards which, while allowing for per-transaction and per-month spending limits, refresh their spending cap when payments are made. This doesn’t happen with declining balance cards, and so enterprises are able to use these cards for situations with set budgets in an almost “set it and forget it” fashion. To illustrate this, below are three example situations where declining balance cards apply.
Use-Case #1: Infrequent Employee Travel
If an enterprise has a field sales force or multiple offices, chances are the relevant employees that spend extensive time traveling have a corporate card that’s used specifically for business travel. But what about operations staff, such as office managers or financial managers, that don’t travel consistently as part of their jobs?
This is a situation where implementing a declining balance card can help tremendously. Card program managers can assign an appropriate spending limit to the declining balance card, and the employee can then use it for all the relevant expense needs accumulated during that particular occurrence. The card can then be set to expire immediately once the trip is concluded.
Use-Case #2: Corporate Meeting Expenses
Major corporate meetings or events, such as user conferences or shareholder meetings (for public companies), often have specific budgets set aside. It can be difficult to adhere to those budget numbers when using a standard purchasing card, simply because meeting-related spend may not be closely tracked and/or related directly to the budget for the meeting.
Using a declining balance card, enterprises can match the spending limit to the meeting’s budget. Then, when merchant category restrictions are put into place, the enterprise can be assured that the meeting won’t go over budget without having to tightly monitor the spend on a p-card.
Use-Case #3: Project-Related Spend
Major projects run into similar problems as meetings/events when it comes to budget adherence. Without tight controls and oversight, major projects like a renovation or a significant product launch can easily run over budget.
When using a declining balance card, enterprises are able to set the spending limit and the expiration date in tight accordance with the project guidelines. Essentially, the declining balance card allows for an almost “set-it and forget-it” solution to pay for major projects. Assign the card to the project lead, and the project team is able to spend budgeted capital without worrying so much about cost overruns.
Final Thoughts
Declining balance cards offer significant value when implemented in concert with other commercial card solutions. The three use-cases mentioned above are only some examples of situation where a declining balance card is appropriate and allows for tighter control over enterprise spend. The only limit is what makes sense for any individual enterprise.
Check out these related articles for more information:
Five Important Advantages of Purchasing Cards
3 Unique Benefits of a Declining Balance Card
Which Commercial Card is Right for You?
