A business credit card works in exactly the same way as any of the other plastic in your purse or wallet. The only real difference is that rather than it being in your name, it’s in that of the business.
If you are in charge of the finances at your company and are looking at your borrowing options, this quick guide to business credit cards will explain why they are a valuable tool for any company.
Short term funding
If you are unable to obtain the start-up funding you require to get your business idea off the ground, have you considered a credit card? While loans, grants and overdrafts are more traditional sources of cash, business credit cards can also help.
Look at Google; its founders Larry Page and Sergey Brin used plastic to launch one of the world’s biggest companies.
Managing expenses
Some business owners will find that mixing their personal and business finance gets incredibly messy. Everything seems fine until you need to work your way through all those statements and receipts to calculate expenses. Using a credit card can solve that problem without costing the business a penny – as long as balances are repaid in full.
Avoid more paperwork
If you employ staff and ask them to submit expenses reports each month, you’re asking for additional work. With a business credit card, you can have additional cardholders – your employees – and then all the hard work is done for you.
Spending limits are set so there’s no need to worry about losing money and you don’t have think about paying them back.
Improve cash flow
If you have a business credit card you don’t have wait for customers invoices to clear before paying the bills, just put it on plastic. Most credit cards, including the Amex, offer extended interest free periods so your purchases aren’t charged for up to 60 days. This makes managing your cash flow much simpler.
Rewards or air miles
Do you have to travel for business? If you’re a heavy credit card user you could be earning rewards every time you spend. Depending on the reward scheme, instead of points, you might get air miles. These can be exchanged for flights but if you don’t need to travel then you can sign up to a card that offers cash-back or other rewards instead.
These are just some of the top ways you and your business could benefit from a credit card.