The corporate card and the lodged card are two means of payment dedicated to professional expenses. They are particularly appreciated by companies to pay for expenses incurred during business trips.
However, these two cards are radically different... starting with the fact that one is a plastic card and the other is not even physical.
What are the differences between these two payment solutions and how do you choose the one that best suits your company?
To answer these questions, we offer you an overview of the advantages, challenges and uses of each of the two cards.
Advantages and challenges of the lodged card
How does the card work?
The lodged card is a de-materialized card "lodged" within a network of travel agencies.
Your company receives a unique card number, which allows you to spend money with your travel providers: travel agencies, travel suppliers, self-booking tools, etc.
You make your bookings via the travel provider and the travel provider pays the end supplier. Your company is only billed on a deferred basis: you receive a single billing statement that centralizes all expenses incurred over the period, from multiple suppliers.
In short, the lodged card is a centralized payment solution that transforms multiple travel purchases into a single payment to the corporate customer.
The card acceptance network, a major challenge
The advantages of the lodged card:
This operation is extremely advantageous for the client company, on many points: data visibility, organizational simplification, security...1. Optimal visibility on the travel budget thanks to detailed reporting
The embedded card provides fine reporting and data with a very fine level of detail. In addition, this report is automatically integrated into your management tools. This way, you have the keys in hand to optimize your business travel budget.2. The simplification and automation of your management procedures
The lodged card is a payment solution that mainly centralizes your ticketing expenses in one place. This results in numerous organizational simplifications... and indirect savings.
For example, multi-vendor and multi-invoice management is replaced by the management of a single contact person. In addition, the processing and integration of the numerous data is automated, thus putting an end to often time-consuming, unnecessarily complex and value-creating processes. This is particularly the case for:
- Invoice entry
- Invoice - booking reconciliations
- Issuing, processing and validating expense claims
- The identification and integration of recoverable VAT into accounting systems
The use of the lodged card is highly secure, as the card is dematerialised and accepted only within the partner network. In fact, the risk of fraud is virtually zero.
The points of attention for the lodged card:
The use of the lodged card is optimal in a certain number of configurations, but it has challenges outside of these.
The main challenge is that the lodged card is only dedicated to expenses made via your travel provider. It is ideal for services to be booked with travel providers, such as airline tickets or hotel nights. In other words, it is mainly reserved for ticket-type purchases.
The lodged card leaves room for improvisation. It will not be useful to pay for unforeseen or non-reservable expenses on the go, so called 'nomadic' expenses such as those for fuel.
Moreover, the range of services available with the card is limited to the services offered by partner service providers. This should not pose any major problems, as the network of travel service providers is sufficiently broad for business travelers to benefit from it.
Finally, there is a barrier to entry for the implementation of the lodged card. It is mainly reserved for companies that make a significant number of business trips each year. If you only travel occasionally, there are more suitable alternatives, such as the virtual card.
Advantages and challenges of corporate cards
How the corporate card works:
The corporate card is a nominative plastic card. It is backed by a specific account: the company's account or, more often, the employee's personal account. This means that each business traveler has his or her own corporate card to pay for business expenses.
The corporate card is accepted to pay for any expense covered by the associated banking network. In the case of corporate cards issued by AirPlus, this is the Mastercard network.
Like the card itself, the corporate card has its own reporting file that records all expenses incurred with the card. You benefit from a consolidated view that compiles the expenditure made with each corporate card.
The advantages of the corporate card:
Corporate cards have the ability to pay for virtually any expense during a business trip. The corporate card acceptance network is based on the Mastercard network and is extremely wide, covering many countries.
Business travelers use them to incur the following expenses, regardless of their location:
- Catering expenses
- Taxi fares
- Gasoline and fuel
- Parking fees
- Toll fees
As a result, the corporate card offers unprecedented flexibility. It is ideal for both expenses incurred during business trips and for any unforeseen expenses.
From a reporting perspective, the corporate card is the most advantageous physical bank card. The consolidated view offers considerable time savings when centralizing expenses made with each corporate bank card and comparing the expenses of each business traveler.
With the corporate card, your company benefits from organizational advantages thanks to the automatic integration of transaction data into your information systems.
Expense processing is simplified, both for the business traveler and the administrator. This is particularly the case with expense reports, which are issued automatically and processed in a simplified manner.
- Corporate card connected to employee’s account: the number of expense report lines to be completed upon return from the trip is greatly reduced.
- Corporate card connected to company account: the business traveler does not advance any expenses... No expense report to manage!
In France, preference has been shown for linking corporate cards to employee's accounts. However, there are many advantages in favor of corporate accounts.
Challenges of the corporate card:
The corporate card has its advantages, but there are some points to keep in mind.
Its reporting, for example, is better than that offered by a regular bank card, but less accurate than the reporting of the card itself.
-Data level of the corporate card: 1
-Data level of the lodged card: 3
Similarly, it is less secure than a dematerialized card. A plastic card is more exposed to the risk of theft, loss and fraud.
Finally, when the corporate card is backed by the cardholder's personal account, the cardholder has to pay for business expenses incurred while traveling. This is not without its challenges:
- The cash advance is likely to place the employee in a situation of financial discomfort while awaiting the processing of expense claims and their reimbursement.
- The advance of expenses is a source of anxiety for employees who fear that they will not be reimbursed if they inadvertently misplace a receipt or incur an expense that is not in line with the company's cost policy.
- The advance of expenses increases the mental workload of the employee who, in addition to his or her primary objectives, must dedicate time to managing business expenses. Considering the conformity of each expense before paying with the card, making sure to keep the receipts, thinking about the expense report... all tasks that require energy, and distract from primary objectives.
Assessment: distinct but complementary uses
The lodged card and the corporate card are two excellent solutions to pay for business travel expenses.
Each one offers the opportunity to better manage your expenses, integrate reporting into your information system, ensure compliance with travel policy, save time for business travelers, and simplify management procedures...
...but each in their own way!
Even better, these two cards have complementary advantages and challenges:
- You can, of course, pay for ticket-type expenses, such as transport or hotels, with a corporate card. However, the lodged card is much more advantageous for this purpose: the quality of the data is better and you’re given more control and visibility.
- On the other hand, the lodged card does not cover all types of expenses, making the corporate card the best option for on-the-go expenses and unexpected costs. Even though the coverage of the lodged card has continually expanded over the years, some expenses are impossible to book through a travel provider.
Each card has advantages for specific uses. They can only be used optimally under the right conditions. Rather than choosing between them, it’s likely ideal to opt for a mix of payment solutions.
Since business trips are made up of several types of expenses:
- use the lodged card for ticketing and pre-trip reservations
- use the corporate card to stay flexible during the trip and pay for expenses that arise
Even better, back the corporate card with the company account for even more optimization!