How Virtual Cards Help Support Small Business

Whether your business is growing and you’re onboarding new hires, or your nonprofit needs to provide immediate financial assistance after a disaster, it’s common to grab your small business credit card. But there's a more modern way to manage and track your spending: virtual credit cards.

“No matter what industry you’re in, a virtual card tied to your small business credit card can help you keep control over your finances,” said Christopher Savic, vice president and technical sales consultant for commercial payments at City National Bank. “For example, if you’re in the entertainment industry, you can use a virtual card to replace petty cash on sets or at venues, which helps you track and limit how much is spent. You can also generate a new virtual card for every production for greater transparency and control.”

In other industries, such as legal or tech, Savic said virtual cards can cover expenses like subscription services and filing fees. This helps you avoid sharing a physical credit card or reimbursing employees.

“Virtual cards allow businesses and nonprofit organizations to be nimbler and more flexible when managing expenses and spending,” said Kevan Peterson, a senior manager for commercial card strategy and innovation at City National Bank. “Plus, businesses typically want to safeguard their funds from misuse or fraud, which virtual cards can help mitigate by creating single-use or declining-spend cards.”

How Virtual Cards Work

If you have an existing credit card for your small business or nonprofit, you can often expand your options with virtual cards.

“City National has virtual cards available through our Commercial AP platform as well as through a partnership with Extend,” Peterson said.

You can use your small business credit card to enable real-time visibility into your virtual card activity, create budgets and utilize robust expense management tools.

“Each card can be earmarked for a specific purpose, which adds protection and allows business owners and office managers to control spending easily,” Savic said. “For example, if you’re paying for a monthly Netflix subscription that costs $12.99, you can issue a virtual card and set the limit at $12.99. That way if someone tried to use the card for something else, there wouldn’t be any exposure.”

If an unauthorized person gains access to a virtual card number, you can simply block it and reissue a new number right in the app or banking platform, he explained.

“Individual virtual cards can be used to pay vendors or suppliers, and they can even be used for bulk payments,” Savic said. “This reduces the risk of check fraud if you can issue a virtual card instead of mailing a check to a vendor.”

Plus, you can still earn cash back because the virtual card is tied directly to your small business credit card.

“To pay vendors this way, you just have to make sure that they can accept a Visa card payment,” Peterson said.

You can access virtual card software through a user-friendly interface or directly through your bank's platform. It also syncs seamlessly with most accounting systems for easy reconciliation.

“Businesses can upload receipts, code transactions and separate information per user for easier oversight,” Peterson said. “One thing that’s always interesting is that if you put tools in front of clients, they find ways to use them specific to their business.”

Benefits of Virtual Cards

Understanding how to integrate virtual cards into your financial systems can help streamline your operations. A few ways virtual cards can help include:

• Easy access to available credit: You can issue virtual cards instantly as needed without compromising secured information
• Transparency: You can track virtual card use in real time for every user and card number rather than waiting to reconcile statements
• Control: You can cap virtual cards with spending limits and individualized expiration dates tied to a project or client, and close them immediately if you suspect fraud
• Simplicity: You can capture automated expense categories, reports, reimbursements, and workflows through a website or mobile app integrated with your accounting software
• Timesaving: Your team gains efficiency by reducing paperwork and eliminating manual requests for expense approvals and reimbursements
• Fraud protection: Individualized numbers help prevent fraud, and you eliminate the danger of physical cards getting lost in the mail or stolen
• Tied to existing accounts: You still earn any reward points or cash-back rebates associated with your commercial card when using virtual cards
• Compliance: You can embed policies directly into the software for manager review and approval workflows to simplify reporting
  

Best Practices: When Virtual Cards Support Business Needs

A few examples of use cases for virtual cards include:

• Providing emergency credit: After a natural disaster, a nonprofit can instantly issue a virtual card to staff or volunteers with a specific limit, allowing them to see what's being spent in real time without waiting for a plastic card to arrive
• Managing candidate travel: Rather than reimbursing candidates or giving non-employees a company credit card, you can issue a virtual card with a limit and expiration date tied to their specific trip
• Paying for subscriptions: You can immediately issue a virtual credit card for a specific subscription expense to avoid delays and the need for reimbursement
• Equipping temporary workers: You can provide remote freelancers or temporary workers with immediate access to funds without delivery delays or compromising your main credit card
• Relocating your business: You can mitigate the complex logistics and extra expenses of a move by issuing specific virtual cards for relocation costs

For small businesses and nonprofits, having the right banking team helps you build a clear plan for what's next. When your team understands how you work, they can introduce modern tools that simplify how you manage payments.

“Our goal is to make the day-to-day easier for small businesses and nonprofits,” Savic said. “By getting to know your unique needs, we can introduce simple, digital solutions like virtual cards that help keep your cash flowing.”

To discuss your needs and see a customized demonstration of how virtual cards can support your business, visit our commercial cards page.