Non-profit companies need to be able to make purchases to operate smoothly and efficiently. Some non-profits use request and approval processes for purchases that are inconvenient and make it difficult to for timely purchases. Others rely on their employees to purchase items with their own money and to ask for reimbursements with forms that may take time to process.
These outdated expense management methods may lead to errors and waste, and they may also expose the businesses to the risk of non-profit fraud and embezzlement. Non-profit businesses may instead want to consider choosing to use debit cards for non-profits to help to get their expenses under control and to prevent fraud.
What is a non-profit debit card?
Debit cards have greatly increased in popularity over the past decade. According to the Federal Reserve Payment Study, payments made with debit cards grew to $2.56 trillion from $2.1 trillion between 2012 and 2016. Like consumers, non-profit agencies have also been turning to debit cards as their preferred methods of payment. Non-profit debit cards are linked to their financial accounts so that their employees can make purchases when they are needed without having to go through time-consuming purchasing requests or expense reimbursement processes.
How are debit cards related to non-profit credit cards?
Credit and debit cards differ in a few important ways. While debit cards are linked to a deposit account from which funds are withdrawn to pay for the purchases, credit cards for non-profits instead extend credit up to the specified limit of the card for purchases. Non-profit organizations that use credit cards may buy items on credit, but they may be assessed interest on the balances that they carry.
Creditcards.com reports that the average interest rate charged on business credit cards, including cards for non-profits, is 14.59 percent. Debit cards do not have interest charged against them because the money in the accounts to which they is owned by the company. Non-profit debit cards may still be used to make purchases in the same manner that credit cards may be used, however, they add many benefits a credit card doesn’t offer.
Why are non-profit debit cards better than non-profit credit cards?
Non-profits may find that debit cards are better choices for them than non-profit credit cards. Non-profit companies must have their own credit histories to be approved for most credit cards. For businesses that have not had time to build their own credit histories, it may be difficult to obtain credit cards. By contrast, the business debit cards from Bento for Business do not require credit checks. They can be customized with your business’s name and logo. You can also choose to add your employees’ individual names on their own cards to make it easier for them to make purchases for your company. When debit cards are used for all of your company’s expenditures, it will give added transparency to how your money is being spent.
Who is going to benefit most from a non-profit debit card?
Smaller non-profits may derive the most benefit from debit cards for non-profits. They can use the cards to prevent their employees from accessing their funds while still allowing them to be able to make needed purchases for the business. The debit cards from Bento for Business have extensive internal controls.
Non-profit organizations can establish individual limits on each card for how much can be spent each day, week or month. They can also limit each card to specific types of spending. If any unauthorized purchases are attempted, the businesses will be able to see the attempts from their dashboards and deal with the issues accordingly.
The cards have the security that non-profits need, including FDIC insurance up to $250,000 and the highest level of SSL-encryption technology. To learn more about how non-profit debit cards might benefit your non-profit company, call us today at 866.220.8455 or signup for our free 60 day trial.