For business owners, using the right tools for the business is as important as correct management.
What about business credit cards? Are they really necessary in running a business? As an entrepreneur, how can business credit cards be useful for you?
1. Have your own business account. Some entrepreneurs prefer to use their personal credit cards to support their businesses. However, combining your business expenses with your personal spending can be confusing especially as the company grows.
Keeping track of your business costs can become more difficult without a separate account. Applying for a business credit card is an easy way to monitor your business finances and make financial decisions more efficiently.
2. Bookkeeping made easier. Monthly statements of account can be invaluable references when doing bookkeeping tasks. These statements are itemized and categorized so you can clearly see what type of purchase was made, when the item was bought, where it was purchased, etc. Aside from the monthly statements, quarterly or yearly account summaries are also provided.
3. Build up a solid business credit history. Have you already registered with a business credit bureau? Do you already have a D & B number? If yes, then it’s to build up your business credit. Using a business credit card, you can easily build a strong and solid foundation for your business. The key to an excellent credit history is staying within your credit limit and paying off your balances on time.
4. Enjoying rewards and incentives. There are credit cards for business that offer varying rewards programs that are designed to match your business’s needs and spending. For instance, if you have multiple vehicles that you use for delivering your products, why not get a business credit card with gas rewards? By distributing supplementary cards to your driver employees, you can easily collect gas rebates and enjoy savings on your transportation budget.
5. Stretch your cash flow. By using a business credit card, you can utilize your available cash more effectively. In cases of emergencies or unexpected expenses, you can charge some of your costs to your business credit card and pay them at a later time. For instance, if one of your computers crash during the operation, you can immediately have it repaired or replaced- if necessary. This way, business operations won’t have to be interrupted just because you don’t have sufficient cash on hand.
6. Monitor your employee’s spending. Is it safe to give out supplementary credit cards to employees? Since all charges are reflected on your monthly statement, you can easily keep track of their spending. Remember, you can avoid unnecessary spending by regularly examining your statement of account.
7. Build Your Business Credit. If getting a business loan is difficult especially for newly established businesses, applying for a business credit card is easy and can help you build up your business credit.
These are the benefits that you can enjoy from getting a business credit card. Nevertheless, bear in mind that credit cards are only tools to make your management tasks easier and more convenient. Business credit cards are not meant to be a replacement for traditional business financing methods such as business loans or bank loans.