Workflow Integration Gives Virtual Cards New Life

Editor's note:Thejo Kote is the founder and CEO of the spend management software companyAirbase. The views expressed in this article are solely those of the author.

When I founded Airbase in 2016, virtual or digital corporate cards had been around for over a decade, but adoption was low. Financial institutions issuing virtual cards were just beginning to open their interfaces to fintech companies seeking to integrate cards into software workflows. This practice of deeply embedding cards into software workflows gave virtual cards new life.

The core capability of these software-driven virtual cards lies in their ability to automatically pull transaction data into workflows. As a result, virtual cards have the following characteristics:

• Built-in approval workflows;
• Direct synchronization of purchase data to the general ledger;
• Support for attaching receipts to transaction records.

Although these improvements already help companies better manage corporate card spending, my goal was more ambitious. I wanted to seamlessly integrate the Airbase virtual card into a comprehensive system covering bill payments and expense reimbursements—transforming an excellent innovation into a revolutionary solution. We call this complete solution "spend management." It automates workflows for all non-payroll expenses while maintaining flexibility, allowing companies to also use its corporate card, bill payment, or expense reimbursement products individually.

For a long time, corporate cards have been a pain point for back-office departments, often involving significant manual work and lacking visibility and control. When multiple department members accumulate expenses on the same shared card, the situation becomes even more chaotic. Finance teams spend a great deal of time chasing receipts and reconciling statements, which reduces efficiency when they have more important work to do. As one of our customers, JD Higginbotham of Ridecell, recalled: "In the past, we had to download all transactions into the general ledger each month, and then the accounting manager would spend nearly an entire day going through them line by line to ensure they were allocated to the correct accounts and departments. Now with Airbase cards, this process is no longer needed."

Instead of facing the above chaos, consider the process corresponding to workflow-driven virtual cards:

• Employees submit purchase requests;
• Requests are automatically routed to the appropriate approvers based on the company's expense policy;
• Approvers receive notifications in Slack and/or email;
• After approval, a virtual card is created with preset limits and control rules, and the employee immediately gains access to the card;
• Employees provide card information such as the card number, security code, and expiration date to the supplier;
• After payment is completed, transaction details can be automatically synchronized to the general ledger.

Of course, these are just the basic processes, and the way companies spend is by no means "basic." The differences in virtual card programs are reflected in their level of customization. Here are a few examples:

• Different types of cards.If needed, cards can be set up for recurring expenses, as well as for specific purposes such as travel allowances.
• Different approval processes.Certain types of purchases may require specialized approval paths, such as software purchases requiring IT department approval.
• Creating approval groups.By establishing approval groups, expense approvals no longer depend on specific individuals.
• Receipt reminders.Automatic reminders reduce the occurrence of transactions without receipts, avoiding the hassle of accounting teams chasing documents.
• Automatic categorization.Automatically categorize card expenses based on historical transactions.
• Automatic employee provisioning.When cards are integrated with the company's HR system, access is automatically enabled upon employee onboarding and disabled upon departure, ensuring that only active employees can use them.

Virtual cards are also a more secure payment method, as accounting teams do not need to handle card cancellations or updating card numbers with suppliers. Our customers generally report that using virtual cards saves a significant amount of time. For example, Michael Zheng of Affinity told us: "Without Airbase cards, we might spend three to five hours a week manually reconciling transactions across different cards. Now, I can set coding rules when approving expenses, which automatically reconcile with the general ledger. This system allows one person to do the manual work that previously required three people."

Many of the above approval processes and controls also apply to non-card expenses, including paying invoices via check, ACH, or supplier credit, as well as reimbursing employees for purchases made with personal funds. For this reason, I have always believed that virtual cards deliver the greatest value only when integrated with all other expenses on the same unified platform. This integrated approach brings many tangible benefits:

• Real-time reporting of all non-payroll expenses;
• Consistent approval processes for all company expenses;
• One system handles all payments, whether by check, ACH, supplier credit, corporate card, or foreign currency wire transfer;
• Easy transition from inefficient payment methods (such as checks or ACH) to efficient ones (such as corporate cards), thereby earning cashback.

Another customer of ours, Heap, highly values the benefits of a single system: "We have an all-in-one platform covering everything related to spending. We use virtual cards, physical cards, expense reimbursements, purchase orders, and bill payments. Each module works perfectly and syncs directly to our ERP system, NetSuite. This saves us a lot of time. Our employees love the virtual card feature and the ease of approvals."

The adoption of virtual cards is fast and is expected to accelerate further. Ultimately, virtual cards will become the mainstream method for corporate card payments, especially as large traditional corporate card providers begin seeking to incorporate this technology into their programs. Airbase recently partnered withAMEXandSilicon Valley Bankto integrate their cards into the Airbase virtual card system. Nevertheless, in the foreseeable future, physical cards will still be preferred or even required in certain scenarios, so programs offering both types of cards are ideal.

In essence, a virtual card is a software product. This means that choosing the right program for a company is not just about finding the issuer with the fastest card issuance, lowest fees, and highest cashback, but rather about obtaining the most powerful and comprehensive software solution—ideally one with no fees and the highest lifetime cashback.