Business credit cards can bring many benefits to your company, which can include perks, tracking spending and more making financial transactions easier.
Here, we’ll take a look at some reasons a business credit card may be the right choice for your company.
- Financial flexibility & cash flow management: cash flow can be an issue for many businesses, no matter their size. A business credit card can make it easier to manage your company’s cash flow while monitoring and tracking business expenses. For example, when you need to make a purchase and you don’t have the cash on hand, a business credit card gives you the ability to buy now and pay later. Just be aware that the interest charged can be expensive, so make sure to pay the balance off before the interest-free period ends. You may also opt for an “Interest free credit card” which offers a longer interest-free period to help improve your business’s cash flow, however, this is not recommended as a solution for a business struggling to meet its payments as a result of any other reason but a cash flow problem.
In addition, a business credit card is easier to get than a line of credit or a traditional loan. Credit cards make it easier to buy business supplies, equipment and even inventory.
- Easier to get loans: business loans are not easy to get, especially if you don’t have the collateral needed. However, having a business credit card and using it responsibly can be an alternative to a business loan.
- Separate business and personal finances: when running a small business, it can be easy to mix personal and business expenses. However, these should be kept separate for tax and accounting purposes. It’s also important to have a separate business credit card in order to track business expenses, manage the company’s finances, etc.
- Build the company’s credit score: if you have a business credit card and regularly pay off the balance on time, it can help build your company’s credit rating. The company’s credit score, if good, can be helpful to obtain loans in the future, which can be used to expand and grow your business.
On the other hand, if you don’t pay your bills or business credit card on time, it could hurt both your credit history and credit score.
- Track and control employee spending: if your company has employees who make purchases, travel, etc., then a business credit card can be an excellent way to track their spending, while also tracking company expenses. It’s also possible to set spending limits on each employee credit card.
- Business perks & rewards: many business credit cards offer rewards and other perks for cardholders. Some cards offer cash-back on purchases, while others offer travel rewards points and miles. There are also cards that offer points for purchasing fuel at gas stations, office supply purchases, and more. You can even find credit cards that offer discounts on shipping and business travel.
With this type of business credit card, you can benefit from the rewards and perks offered, while also enjoying the savings you get from making purchases.
- Purchase Protection and insurance: with a business credit card, you may also benefit from cards that offer insurance and purchase protection services. Purchase protection is for items that you buy using the card; the protection period lasts for a specific time (check the card’s terms and conditions for information).
This type of protection will save your company money if purchases are damaged or not working correctly. The card will also protect you against fraudulent purchases or may protect your purchases if they are stolen during the specified period mentioned above.
As you can see, business credit cards can be a huge benefit for your business. Before choosing a card, do your research to find the best credit card to fit your circumstances, then read through all the terms and conditions so you’ll understand how to use the card, have knowledge of fees, etc.