The Problem Millennials Have With Business-Related Purchases

Most millennials are not equipped by their companies to make business purchases.

This leads to tired, inefficient, and impractical practices for them and the companies they work for.

Extend, a digital credit card platform for banks, fintechs, and their customers, conducted a survey to understand how millennials pay for business purchases. It also aimed to grasp the challenges associated with current practices. The survey was conducted online across 200 employees between the ages of 18 and 44 who were based in the U.S.. The population was comprised of 50% men and 50% women.

The Problem

Making business-related purchases is a common task, but the process is riddled with complications.

32% of millennials reported a negative impact on their work experience as a result of not having the right payment solution.

In the U.S. workforce, approximately:

70% of millennials are required to make business purchases that are ultimately paid by their employers. While close to 60% of the responders indicated that they were making business purchases between three times a week to a couple times a year, 10% claimed to make business purchases at least once a day.

Types of Business Purchases

As expected, many of the business purchases made by working millennials are related to travel and entertainment (e.g. 44% for plane/lodging, 55% paid for car services or food).

Surprisingly, a majority of these individuals also made other types of business purchases: 56% paid for business supplies or online services, and 24% paid for invoice payments.

Spending Habits

Business-related purchases were varied across type, and a significant amount of survey respondents (39%) reported spending more than $500 a month.

Most companies avoid providing corporate credit cards to every employee to protect against financial risks, liabilities, and operational complexity. Consequently, only 15% of our survey respondents have a permanent employer-provided corporate card.

As a result, among all survey respondents,

92% reported borrowing another employee’s corporate credit card to make purchases or have had to use their personal credit or debit cards.

Security

Anecdotally, at a company where corporate cards are often shared, an executive explained that these cards had to be cancelled and replaced every month as a result of unknown transactions appearing on the card statement.

Sharing cards within the office is definitely not a best practice. Not only is it tedious to send out credit card information and billing addresses, but it exposes the company to potential fraud and employee misuse (i.e. purchases that are not approved). Openly sharing a corporate credit card also results in a lack of visibility into purchases which can be costly for the cardholder.

Reimbursement

Waiting to be reimbursed after having made a business purchase with a personal card can be difficult and stressful for employees. This is especially true for large purchases or if the individual doesn’t have a credit card (32%).

A recent graduate may not have $1,000 available to fly across the country for a conference, and a company would be wasting resources just to manage the reimbursement of a $9 in-flight internet purchase.

More than half of the respondents reported waiting longer than 2 weeks to be reimbursed, with 17% having to wait more than 2 months.

Loss of rewards

With such a high percentage of business purchases flowing through personal cards, companies, who ultimately pay for the purchase, are missing out on a significant amount of credit card rewards.

For example, a company that reimburses $250,000 every month and receives 2% cash-back on their corporate card, is missing out on $60,000 dollars of cash-back annually.

The Solution: Extend

Extend enables cardholders to safely and instantly distribute controlled credit card with employees, freelancers, and contractors.

Management can easily send virtual credit cards to any employee, while employees can request cards in an instant. Cardholders retain full control over spend without ever disclosing their actual card number, providing improved security for card transactions.

To see how Extend works, watch the video below.

Contact info@paywithextend.com or visit https://paywithextend.com/ to learn more.