When your business is just getting off the ground, you may have no alternative but to give your employees cash when they need to pay for company expenses. But as your business increases its cash flow, builds a credit history and gains the ability to examine financing options, you may wish to find an alternative to giving employees cash. Consider this list when looking for a cash substitute that allows your employees to pay for business expenses.
Credit cards give businesses with a good credit rating access to a revolving line of credit. This access can instantly increase cash flow while providing a secure payment method that can be distributed to employees throughout the company. Emburse is now able to offer full credit facilities to their customers via physical and virtual credit cards.
Charge cards differ from credit cards in that they need to be repaid in full at the end of every month. There is no option for minimum monthly payments or access to a revolving line of credit. A credit check is still necessary for charge cards and therefore might not be available to those with a poor or limited credit rating.
Debit cards need to be linked to a checking account and therefore may be out of reach for businesses who are just getting off the ground. However, if you’re able to set up a business bank account, debit cards are more secure than cash. However, because they are linked to a bank account, a lost or stolen card can put that account at risk.
Prepaid cards are not linked to a bank account and need to be preloaded with money before they can be used. Prepaid cards are a good alternative for those who don’t qualify for a bank account. Similarly, if a card is lost or stolen there is no connected bank account that can be compromised. A drawback of prepaid cards are the variety of usage fees they can incur.
Gift cards work similar to prepaid cards in that they are not connected to a bank account and need to be loaded with funds before use. However, gift cards that feature a credit card logo are typically not reloadable. The cards are also not personalized making their acceptance somewhat inconsistent.
Online Payment PlatformsOnline payment platforms such as Paypal or Google Wallet are a modern alternative to giving employees cash. They allow funds to be loaded, transferred and accepted online. Drawbacks include the need for online access, merchant acceptance issues and high fees.