Author: Ruslan Nikolaev

It’s no secret that difficulty accessing corporate funds is a common challenge for many startups in Canada. Whether you can’t seem to get enough funds for your growing team or are unable to get approved for credit, it’s not as daunting as it seems. We’ve lined up 3 Common Misconceptions About Corporate Cards for Startups in this article to set the record straight with the answers you need.

The Truth Behind Corporate Cards for Startups

Myth #1: All Corporate Cards Are Created Equal

Think again! Corporate cards come in all shapes and sizes, each with its own set of perks and drawbacks.

• Purchase rates vary widely
• Card limits can be generous or restrictive
• Annual fees? Some have ’em, some don’t

Here’s the truth: while traditional banks might take weeks to approve your application (and slap you with high fees), modern fintech solutions are changing the game. Take Float, for example. They offer:

• Quick 3-day approval process
• No purchase rate or annual fee
• 1% cashback on all purchases
• Automated spend management software

So, next time someone tells you all corporate cards are the same, you’ll know better!

Myth #2: Startups Can’t Get Corporate Cards

Rubbish! While it’s true that traditional banks often give startups the cold shoulder, times are changing.

Many startups struggle with:

• Lack of credit history
• Limited collateral
• Perceived high risk

But here’s the good news: prepaid corporate cards are swooping in to save the day. These cards:

• Don’t require personal guarantees
• Have simpler application processes
• Allow you to issue multiple cards quickly

Pro tip: Look for providers that only require an active business bank account. You’ll be surprised how quickly you can get your team spending responsibly!

Myth #3: Personal Credit Cards Make Good Alternatives for Early Stage Startups

Hold your horses! Using personal cards for business is a recipe for disaster.

Why it’s a bad idea:

• Blurs the line between personal and business expenses
• Increases fraud risk
• Complicates expense management
• Doesn’t build business credit

Instead, consider a dedicated business card. It’ll keep your accountant happy and your finances crystal clear.

FAQs About Corporate Cards

Q: Can startups really get corporate cards? A: Absolutely! While traditional banks might be hesitant, many fintech companies offer corporate cards tailored for startups.

Q: Are prepaid corporate cards the same as credit cards? A: Not quite. Prepaid cards use your own funds, while credit cards involve borrowing. Both have their place in business finance.

Q: Do corporate cards help build business credit? A: Some do, some don’t. Traditional corporate credit cards often report to credit bureaus, while prepaid cards typically don’t. Check with your provider to be sure.

Q: How quickly can I get a corporate card? A: It varies. Traditional banks might take weeks, but modern providers like Float can get you set up in just a few days.

The Bottom Line: Corporate Cards for Startups Demystified

Corporate cards aren’t one-size-fits-all. There are indeed tailored built products for Canadian Startups, like Float. Thousands of Canadian Startups like Knix, Neo, and Clutch have replaced their old cards with Float’s solution. See our customer stories and hear what our customers have to say about Float for yourself!

Ready to get a corporate card that let you scale? Book a demo with Float today to learn how we can make this process easier for you as you grow and scale.

Virtual credit cards represent an innovative evolution in the realm of financial technology, offering a digital alternative to traditional plastic cards while retaining all the functionality and benefits of their physical counterparts. These intangible financial instruments operate on the same fundamental principles as conventional credit cards, allowing users to make purchases and conduct transactions both online and in physical stores that accept card payments.

The key distinguishing feature of virtual credit cards lies in their lack of a tangible, physical form. Unlike traditional credit cards, which are typically manufactured from plastic and embossed with relevant information, virtual cards exist solely in the digital domain. This unique characteristic brings with it a multitude of advantages, chief among them being the immediacy of access.

Benefits of Virtual Cards

• When a customer issues a virtual credit card, they receive their card details instantaneously. This includes the card number, expiration date, and security code – all the essential information required to make purchases. This immediate availability stands in stark contrast to the process associated with physical cards, where approved applicants often face a waiting period of several days to weeks for their card to be produced, shipped, and delivered via postal services.
• The digital nature of virtual credit cards also introduces an unprecedented level of flexibility and control over one’s financial resources. Users have the capability to generate multiple virtual card numbers, each linked to their primary account but operating independently. This feature allows for the creation of numerous cards, each with its own predetermined spending limit. Such granular control empowers consumers to better manage their expenses by allocating specific amounts to different virtual cards for various purposes or categories of spending.
• Moreover, the ability to create multiple virtual cards significantly enhances security measures. By using different virtual card numbers for different merchants or types of transactions, users can effectively compartmentalize their spending. This strategy minimizes the risk associated with potential security breaches or unauthorized uses of card information. In the event that a virtual card number is compromised, the user can simply deactivate that particular number without affecting their primary account or other virtual cards.

This approach stands in stark contrast to the use of a single physical credit card, where every transaction potentially exposes the user’s entire credit limit to risk. With virtual cards, users can limit their exposure by assigning only the necessary funds to each virtual card, thereby safeguarding the majority of their credit limit from potential threats.

Drawbacks of Virtual Cards

• Virtual cards are intended to protect your identity and information online and are not designed to be used in person at stores. Depending on your use case, virtual cards may not act exactly the same as the physical credit cards you are used to.
• Getting your hands on Virtual cards in Canada can be difficult, most of the banks in Canada do not offer virtual cards.
• Finally, you cannot make ATM withdrawals using a virtual card. Most virtual cards cannot be used to withdraw cash from ATMs, limiting access to physical currency when needed.

Virtual Cards for Business

Virtual cards are very useful for businesses who need to let employees use company money. The business can an unlimited number of virtual cards to employees with limits and expiry dates to manage their spending. This not only makes it easier for employees to spend company money and not spend out of pocket, it also ensures that the company credit card info stays safe. Furthermore, during these times of working from home, virtual cards are 2 meter apart compliant!

So if you’re looking to upgrade your business spending practices, try the virtual cards and spend management software Float.

Working from Home 🏘️ – the new reality

The transition to the work-from-home environment hasn’t been easy for anyone. With teams becoming distributed overnight, many businesses didn’t have a chance to adjust their internal processes to the new reality. One such process is managing and sharing corporate cards.

What most companies do right now

Today, many of the companies share their cards online via slack or other messengers without thinking about the repercussions… Is this a familiar sight?

Why is this bad?

• This is not secure – recent reports show that an average credit card credentials are sold on the black market for as little as $8.50
• Once you share the credentials, you can’t un-share them
• If an employee leaves, what do you do? Cancelling the card sounds like a horrible idea.
• You probably don’t even know who made a purchase on your card!

Solution – password managers

Some companies have created a process around card credentials sharing with password managers like 1Password or LastPass. However, this approach doesn’t guarantee that your employees won’t overspend or keep the password credentials after they are done with the purchase! Do you often go over budget on credit card spend? This might be the reason why!

In addition, it’s still a pain to reconcile expenses when you don’t know who is making transactions on your cards and who has the receipts to them.

A better solution – Approval workflows with Virtual cards 💳

Have you heard about Virtual cards?

Virtual Cards are like Visa credit cards that you have in your wallet but they only exist online. The merchant doesn’t know this, they think it’s just a credit card. What’s the benefit, you might ask?

1. Every time you create a new virtual card, Visa generates unique new card number for it
2. You can create unlimited virtual cards and don’t have to wait for them to be shipped – you can spend instantly!
3. You can set independent limits on each virtual card
4. Virtual cards can be issued and cancelled in seconds – without having to deal with a bank

Moreover, when paired with a smart approval process, you can essentially eliminate personal reimbursements in your company. Instead of your employees paying out of pocket just to be reimbursed later – create a one time virtual cards with a limit and let them spend from that card. Employees will never overspend and you won’t have to deal with reimbursement paperwork!

Where to get virtual cards?

Hmm… this might be the million dollar question. This must be your lucky day though, because Float has them!

Float virtual cards come with:

• Robust access controls for each card
• Smart, fully digital approval workflows
• Accounting integrations to help you keep track of all your expenses
• Reporting to get real-time visibility into your expenses

With Float you can eliminate out of pocket expenses in your company, saving time and money.

Let’s look at some facts:

• Digital marketing spend is increasing and is going to reach US $640B by 2027, growing at CAGR of 10.3%
• During COVID digital marketing is the main lead generation channel (source)

This means that the companies must get better at tracking the impact of their marketing spend and empowering their marketing teams with the right tools/workflows. So what are the problems marketing teams are facing today?

Problem 1: How much do I have left to spend?

With many finance workflows happening at the end of the month, teams usually don’t have real-time reporting on their spending. This means that your marketing team most likely does the following:

What makes this worse is that, from interviews with marketing specialists, the marketing teams are forced to assign one of their colleagues on expense tracking duty. This usually takes up a lot of their time and clearly isn’t the most exciting activity of their day.

Problem 2: Reconciling expenses with T&E expense workflows

One job that a marketing specialist should not do, is reconcile expenses – that’s the role of the finance team. Yet, some marketing teams are forced to use T&E-like workflows from Concur, Intact, etc. which were designed to capture diverse expenses that occur on a sales trip.

Current workflow:

• Create an expense report
• Write out charges as line items for each campaign
• Attach invoices
• Categorize transactions
• Match expense to transaction from the bank statement

This workflow is extremely inefficient and clearly wasn’t designed for marketing expenses. Oh and by the way, online advertising platforms charge you on daily basis, so you have to do this EVERY DAY just to keep up with your spending. Not great… 😢

Possible solutions

Excel sheet

Marketing needs to keep their own books: an excel sheet that you need to update every day with daily campaign spend from all accounts across the entire team. This will require someone to spend hours every day collecting spend from all accounts and will cost a fortune in inefficient use of labour. Excel sheet is more like a flex tape.

Virtual cards 🌈

A much better approach is to use technology that was designed to solve this problem. Virtual cards have been built for the trucking industry to get visibility over trucker’s cashflows. Similarly, in marketing virtual cards can offer a lot of benefits:

• Real-time spend visibility – you are always in the know how much you’ve spent
• Set and forget – label a virtual card with accounting tags once and all transactions will be automatically tagged for you
• Spend control – assign cards with limits to employees, campaigns or channels to always be aware of where the money is going
• and more… flexible limits, easy receipt capture, secure payments, easy card sharing

So the virtual cards can automate all of the accounting for your marketing team and relief the pressure off the finance team’s reporting function!