Why Corporate Card Management can be a Nightmare in a Growing Startup

As a startup founder your main focus is to develop your business. During the first stage, often called pre product/market fit, you want to iterate as fast as possible: on the product, on the acquisition channels, on your pricing model. The objective is to learn as much as possible from your customers. When you get your product/market fit, you want to focus on growing your team and your business. To achieve that, velocity is the key metric-but paperwork and administrative burden can slow you down.

This is the exact same thing for your team. You want people to be independent on their scope, test new ideas all the time, and move your business forward. You want your process to be lean, your communication to be effective across your team, and to make sure that everybody gets the proper tools to get their job done. You can effectively manage to do that for most of your company process and workflows… but not for payment!

How can you make sure your teams don’t get stuck when they need to buy something?

When your team is small, this not an issue. You share your corporate card number with everyone and put a simple process to ensure that all invoices are correctly forwarded to a common email address. This is the process we had at Wozaik. We were a team of six, and everyone was very trusted. We had a corporate card on my desk that everyone used when they needed. At the end of the month, I gathered all the emails from our shared email box and sent them to our accountant. Paperwork, checked!

Where is my corporate card?

Growing your team goes hand in hand with facing more issues concerning your corporate card.

The first issue is trust. As the number of transactions increases on your card with the growth of your business, you ask your bank to increase the limits of the card. I remember having a card with an €80k limit to pay all our online ads. I was feeling less and less secure to leave the card on my desk with new comers in the company I did not know well. So I start securing it and asking people to ask me when they needed to pay something.

The second issue is paperwork. As the number of members on your team increases, so do the number of transactions. At the end of the month you spend more and more time with invoice/payment reconciliation, where you start seeing missing invoices and can’t recall whose payments they were in the first place.

I remember when I was COO, our finance manager spending more than one day a month sitting next to every employee with her excel spreadsheet. She was trying to review all payments with invoice missing to find the person who could potentially have it…

So you start to centralize payments in your company. You tell everyone that now the financial manager will handle all payments. When someone needs to buy something for the company, he asks the financial manager, who makes the purchase. That is the moment you start creating your own purchasing department.

The third issue is control. When everyone has access to your card, you lose control of your budgets. You have to wait until the end of the month to receive your card statement to see how much was spent during the month. When someone asks you for a purchase approval, you do not have a clear vision on your budgets. You pile up spreadsheets in each department for each manager to control the budget and it spirals out of control.

In the end, you start building a process that kills your team’s productivity and velocity.

At the early stage of your company, employees just had to take the card on your desk to make a payment. By the end, they need to go through a painful process. First, they ask their direct manager who then must log the request. Then, they go to the financial manager who checks with the employee manager to see if the request is approved, makes the payment, and finally sends the invoice to the accounting team.

As your team grows, this process becomes even worse…and what took you 3 minutes at an early stage takes now 30 minutes for one payment and distracts numerous people from their actual job.

As the COO, I ended up with centralizing all the significant amounts to the finance department and asking employees to expense on their own card all the other amounts. We ended up handling expenses report for every employee. People were quite unhappy to have to pay in advance for the company! Plus the fact they had to spend time at the end of the month filing paperwork to get reimbursed.

This kind of disorganization can be the difference between an efficient and lean process and a costly and time consuming one.

To make this payment process much more effective, what do we need?

Well, we need a tool smart enough to:
• handle all the approval flow
• log payments in real time
• ease the reconciliation process

We should be able to give a corporate card to each member to ensure their autonomy but with the good level of control. An employee should not have to pay with his own card for his company.

This is why I decided to launch Spendesk. We decided to handle this pain providing employees with virtual and plastic cards CFOs and managers can control. We work with companies such as Deezer or Kantox to help them deal with their corporate card payments processes.

We would love to hear from the Barcinno community about how you handle these processes. This is high time we, as managers, deal with it for the sake of our employees.

 

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Author Bio:

Rodolphe Ardant

My name is Rodolphe and I am the CEO of Spendesk, we help companies control their company spending. I wanted to share with you my experience as CEO and COO of two growing startups and how the pain of card management brought me to launch Spendesk.

Just a quick introduction. I am French, 34 years old, a happy father, and have always been an entrepreneur. Just after graduating as an engineer I started my first company, Wozaik, which was acquired by Solocal Group, the French Yellow Pages. Having seen the “start” part of start-up after iterating over three projects and finally build and sold an awesome lead acquisition machine, I wanted to have a look at the “up” phase and joined a fast-growing startup as COO for one year.