Improve IT Budget Management with Virtual Cards
IT teams, whether internal or working in managed IT service companies, frequently handle expensive software subscriptions - yearly hosting payments, ongoing SaaS subscriptions, and sometimes one-time software payments. Those spendings range from high to low, and are paid with a variety of methods, including out-of-pocket expenses, invoices from suppliers, and credit card payments, making it challenging to save money. Additionally, managing software licenses effectively is crucial for maintaining a well-structured IT budget. A fragmented IT budget and expense management means that the IT team cannot access funds on time which can result in delays to day-to-day business operations. In the meantime, the finance department is under pressure from manual work associated with bank contracts when issuing cards, approving expense reimbursement forms, chasing invoices, and reconciling.
Virtual corporate cards can be an effective tool for managing IT budgets since they give instant access to company funds, speed up business operations and allow for control over spending by preventing unnecessary costs, and offering options for cost reduction.
In this article, we will explore both the financial benefits and the other operational costs benefits of virtual cards for the IT teams and provide some actionable tips on how the technology departments can lower down their hosting and subscription bills using virtual cards.
Understanding IT Budgeting: Key components of the IT budget
Key Components of an IT Budget
An IT budget typically consists of several key components, including:
By breaking down these components, organizations can gain a clearer understanding of their IT expenses and ensure that their IT and budgeting process is comprehensive and well-structured.
Freeing up the IT budget
The most appealing benefit of using virtual cards for managing IT expenses is lowering the cost of expenses, SaaS subscriptions and big purchases like hosting, and effectively improving your bottom line as a result. Virtual cards frequently come with zero transaction fees, meaning you will not be charged for paying online. In addition, you may be eligible for a cash rebate - which means you receive money back each time you spend. For bigger purchases like AWS, Shopify, Cloudfare and similar, which are usually done once a year, it may be smart to use virtual cards rather than the traditional transfer route in order to eliminate transaction costs and, secondly, lower your costs by receiving money back.
Example:
If a hosting subscription costs $60,000 per year and it’s paid annually, and the rebate is 0.03% that means $1,800 cash back on the subscription, which effectively brings the bill down to $58,200 per year.
Furthermore, paying with a card is much faster - payments are settled almost immediately, and the sooner a payment is settled, the better relationships you can maintain with your supplier.
This can lead to better payment terms or payment discounts over time, which is great for working capital and business growth. Last but not least, virtual cards can be issued in multiple currencies, so you can make online purchases in USD, GBP and EUR, for example. Paying in the merchant's currency further saves money on transfers and FX fees.
Streamlined financial management of IT budgets
Traditionally, IT teams were facing multiple hurdles when managing their budgets or paying for software or tools. The budget first needed to be approved for a specific project, and even then, each invoice from a supplier, including those for hardware and software systems and licenses, had to go through an individual approval process and be paid out by the company’s financial department. Smaller purchases, on the other hand, are often paid out of the employees’ own pocket and reimbursed.
These old ways often delayed the start of projects, especially when the implementation of specific software was required. Virtual cards eliminate all the above problems by giving IT teams access to pre-approved budgets and cards tailored to the specific needs of the team or project. Moreover, since the most common way to pay for cloud software is via card and not invoice, virtual cards give the IT teams the ability to check out easily without waiting for the financial department to complete the purchase.
Finally, virtual cards offer unparalleled flexibility when it comes to management and financial planning. Using a remote dashboard, finance teams can issue and manage cards without engaging in lengthy conversations with banks. The cards can be issued on the spot, and recurring top-ups ensure that funds are always available so that the team does not lose access to the software if a payment is missed - all plans are automatically renewed without interruption.
Better control of allocated funds
A virtual card’s unique flexibility enables IT teams or even specific projects to have their own cards with assigned budgets and tailored to their needs and requirements - such as recurring top-ups, or specific limits and merchant restrictions. With that, transactions over the limit or from unknown merchants can be blocked, giving the finance team peace of mind that the company funds are spent appropriately.
As mentioned, virtual cards also eliminate the need for out-of-pocket expenses and expense reimbursement forms. By requesting supporting documentation along with every card transaction, finance managers can reduce the amount of time they spend chasing invoices and reconciling accounts and devote their time to other, more valuable tasks.
Furthermore, the management dashboard provides an overview of all expenses across all projects and budgets. By doing so, it’s easier to identify overspending areas, including those costs related to software licenses, and act in a proactive manner. In order to prevent overspending, IT teams can use single-use cards for trials of new software. Due to the expiration of the card after first use, the trial will not automatically renew, preventing unnecessary subscriptions.
How Fyorin’s cards can help you free up the IT budget and gain better control over spending
Fyorin provides IT teams with flexible virtual cards connected to multi-currency accounts. You can issue unlimited virtual cards and tailor them to your IT budget needs.
Interested in requesting your IT virtual card? Get in touch with us at sales@fyorin.com
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