Corporate cards vs. spend management platforms: Do you need both?

The founder is often the first person at a startup to get a company credit card. Then, perhaps, comes a card for an operations lead, a virtual card for software subscriptions, and a few employee cards for meals and travel. Before long, company spend could be happening across teams and vendors.

At some point, your team’s spending decisions may shift from deciding who needs a card to a more complex mix of questions, including these: Who can spend how much? Which purchases require approval? Which budget does this come out of? Who’s tracking all of this spending? Issuing corporate cards (aka team cards) and setting up a spend management platform can help companies manage business spending in different ways. Corporate cards give employees a way to spend, whereas a spend management platform gives the business a system for deciding, controlling, and understanding how that money gets spent.

For a very small startup, cards alone may be enough. As spending becomes more distributed, however, bringing cards into a broader spend management system can give employees more autonomy and help founders or finance teams manage spending more efficiently.

Team cards — sometimes also called corporate cards or employee cards — give authorized employees a direct way to make business purchases. Instead of asking a single card holder (like the founder or a team lead) to make every purchase or having to personally pay and file for reimbursement, you can give employees a physical card to cover business expenses (such as travel and meals) or a virtual card (such as one that can be used for a specific software vendor).

Modern business cards may also include controls, such as individual spending limits and spending restrictions based on the merchant or category. Combined with the option to issue virtual cards, manage freezing or cancelling cards, and track spending via real-time transactions and employee-level transaction records, these features make these cards much more useful and secure than relying on a shared company credit card that gets passed around the office.

For an early-stage business with a handful of employees and relatively straightforward expenses, issuing these sorts of corporate cards may be all the infrastructure you need. If the founder still has a good mental picture of what’s being purchased and employees know when to ask before spending, building a complicated system too early could create an unnecessary process and limited value.

A spend management platform is a software solution that helps businesses manage the broader process surrounding company spending, including everything from how purchases are requested, approved, and paid for to how they’re documented, categorized, and reviewed. These platforms can include tools for handling reimbursements, vendor payments, bills, budgets, and reporting, as well as issuing and managing corporate cards.

Think of a corporate card as one point in the spend management process. To guide company spending, your team has probably established a budget and an approval system. After an employee taps their card to make a purchase, they’ll likely need to collect and file a receipt. Your team will then categorize the expense and update the company’s accounting records, helping managers to keep track of how much of their team’s budget remains, for instance. A business spend management platform can help connect these steps.

When you issue a corporate card, you can set up guardrails to manage the employee’s spending, such as:

• Grant access. When you issue a card, whether it’s a physical or virtual card, you’re establishing how the employee can pay for purchases. Plus, it can remove the bottlenecks that can happen when only one or very few people have spending power.
• Set spending limits and restrictions. You can control how much they can charge to the card and where the card can be used.

With a spend management platform, you can issue corporate cards and set up the above guardrails, as well as handle other aspects of company spending, including:

• Enforce spending policies. You can set up rules and automations based on your company’s policies.
• Route requests to the approver. You can set up a spend management platform to automatically send purchase requests to a designated approver, such as a manager in charge of a department’s budget.
• Handle documentation. Automations can make it easier to track whether employees have submitted receipts for their purchases.
• Forecast spend. Compare actual spend with the forecast
• Streamline company-wide spending. Giving 10 employees cards, for example, may solve the problem of spending access. But if your other systems are scattered (such as if your staff send approval requests through Slack and receipts via email or if finance reconciles everything in a spreadsheet), your company hasn’t necessarily solved spend management. Spend management platforms can help connect disparate systems like these.

Not every startup needs a full spend management system on day one. Standalone or lightly managed team cards can and often do work well when:

• Only a few employees at your company make purchases.
• Most spending happens in predictable categories.
• Founders still approve large purchases directly.
• There aren’t complicated department budgets.
• The volume of receipts and transactions is manageable.
• Vendor and SaaS spending is still easy to track.

At this stage, speed and simplicity may matter more than having sophisticated workflows. For instance, a founder shouldn’t need to build an approval matrix for three people booking the occasional flight or paying for a software subscription.

When spending starts to get more complex, relying only on corporate cards, rather than a full spend management system, can start to fail. For example, imagine that your marketing lead is buying advertising and event software, engineering is adding cloud tools and developer subscriptions, sales is traveling more often, and operations is bringing on new vendors. But managers aren’t clear whether they’re staying on budget. In this case, the challenge is how to enable employees to make the purchases they need while also controlling the company budget.

There are common signs that the your company may be ready to graduate from using cards along to setting up a spend management platform:

• Employees aren’t sure which purchases need approval.
• Finance spends significant time chasing receipts.
• Finance lacks company-wide spend visibility.
• Approvals happen inconsistently across Slack, email, and in meetings.

In these cases, the cards are working, but the informal process isn’t. Setting up a centralized system can help finance see spending across cards, vendors, subscriptions, and teams in real time, while there’s still time to respond to any issues that might arise.

With an effective spend management system, you can wrap your company’s spending policies into the purchasing process itself with these tools.

Spending limits and controls

Businesses can set limits based on employees, departments, budgets, vendors, or purchasing categories.

Approval workflows

Instead of relying on staff members to remember which purchases need signoff, you can set up approval rules to route requests to the appropriate owner.

Policy enforcement

By setting up spend limits that align with budgets, for example, you can bake your company’s spending policies into the purchasing process itself. This can help prevent off-policy purchases, rather than identifying them only after the fact.

Receipt collection and accounting workflows

Automated documentation, categorization, and accounting integrations can reduce the manual work that’s required after each transaction.

Reporting and visibility

Leaders can monitor spending across teams, categories, and budgets, instead of piecing together information from multiple systems.

SaaS spend tracking

Managing software spend comes with its own unique set of challenges, like staying on top of renewal dates and curbing tool sprawl. As teams grow, subscriptions can accumulate quickly. As seats get added, employees leave, and teams accidentally adopt overlapping products, spending can spiral out of control. A SaaS spend management platform and a good spend management strategy can help you keep track of who owns each subscription, when it renews, whether the contract was approved, and how that expense fits into your company’s overall software budget.

In many cases, companies treat cards as one part of an overall spend management platform. Consider these three common startup stages.

A five-person company with founder-led spending

Team cards with sensible limits may be plenty for a startup at this stage, since the founder can still see most major purchases and address exceptions directly.

A 30-person company distributing budgets

Cards remain useful at this stage, but the business may now benefit from establishing formal approval workflows and department budgets, as well as setting up receipt automation tools and a centralized reporting system.

A 100-person company with multiple teams and recurring vendors

At this stage, managing cards separately from approvals, budgets, software, and reporting can create substantial administrative work. A broader platform can help connect those processes.

When evaluating whether investing in better spend infrastructure is worth it, consider both direct savings (such as the ways that spend management platforms can make it easier to spot overlapping subscriptions and, therefore, reduce unnecessary subscriptions) and indirect benefits (such as spending fewer hours reconciling transactions).

Team cards can be an excellent starting point for building spending infrastructure. But as your company grows, the decisions on how to use those cards and related spending workflows start to matter just as much as the transactions. By connecting budgets, approvals, policies, cards, documentation, and reporting in one place, spend management platforms help employees know what they can spend and keep finance up to date on company-wide spending.

Ready to get started? Mercury Spend Management brings cards, budgets, expense controls, reimbursements, and financial workflows together, helping growing teams distribute purchasing power while keeping company spend visible and organized.