Business credit cards help small business owners and entrepreneurs keep cash while fulfilling the financial needs of their businesses to keep moving forward. According to a survey, almost 65% of businesses now use credit cards to purchase supplies and equipment or to pay suppliers. And this number continues to increase. Just like personal credit cards, business credit cards should also be used wisely to stay on top of business finances and avoid building debt. Be it a startup, small business, or sole proprietorship, the business benefits of credit cards are myriad.
Below are some ways how business credit cards can help your business run smoothly and grow as well.
Finance purchases and simplify cash flow
Business credit cards come with a line of credit that companies can use to make business-related purchases or pay other bills without using cash. Without having a credit card, you may need cash to buy equipment or materials for your business. This is where having a card with several perks comes into play and helps you finance business purchases without having an impact on cash flow. Even some cards come with interest-free business financing to help small businesses pay for purchases for a given period of time without paying interest.
Separate business and personal expenses
It is easier to use a personal card for business purchases or a business card for personal expenses. But it can have a direct impact on your finances from a bookkeeping point of view. When you have a business card separate from a personal one, it helps you keep proper track of business purchases and payments. As a result, you can prepare tax files effectively without mixing things together. This also keeps your accounts staff from sorting financial transactions out. A business credit card also makes business expense tracking easier than ever before.
Debt consolidation
A balance transfer credit card enables you to move balances of your other cards to a new card with a relatively low or 0% interest rate as an introductory offer. When you do so, you can pay your balance effectively and quickly by paying no money towards interest. Some cards also allow you to consolidate other loans too so you can pay off your debt without paying interest.
However, 0% introductory offers are for a specific period of time. This means you should pay your balance before the given timeframe (usually 6 to 18 months) ends. Know the introductory time period and the interest rate you will be paying after the introductory period expires.
Travel and purchase protection
As it is mentioned above, credit cards come with several benefits and perks for businesses. Travel and purchase protection are two of them. Some business credit cards offer trip cancellation, interruption insurance, and auto rental damage waivers to help businesses save a lot of bucks in terms of trip cancellation or accidents while using rental vehicles. Businesses can also enjoy no foreign transaction fees, cell phone protection, and extended warranties on business credit cards.
Streamline employee expenses
Reimbursing employees for business expenses on their personal cards is a hassle. This is where getting business cards for employees helps you manage and reimburse expenses efficiently. You can authorize employees to use business cards for business payments and expenses. At the end of the month, you will be provided with a summary of transactions made throughout the month. This also helps businesses keep an eye on employee spending to avoid useless and unproductive spending to save business money for productive things.
Account management tools
Business card issuers usually offer their customers yearly or quarterly summaries of transactions made. Some companies also allow users to download and integrate purchase records to accounting apps and software such as Quickbooks or MS Excel. This helps business owners easily track and integrate business payments made through credit cards into business apps and software. As a result, accountants can file tax returns more effectively and easily.
Final Verdict
Getting a business credit card could be a great move for businesses of all types to streamline cash flow and finance business purchases. Hence, a comparison of available options is recommended by experts to choose the best options with the right perks and benefits. After getting the card, business owners should also go through the fine print to understand all important terms, conditions, and fees to avoid building debt.
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