Most people are used to making personal purchases with a credit card. It can help with money management and is useful for situations where you haven't got quite enough cash in hand. These are some of the same reasons why business owners should consider having credit cards for their businesses.
A business credit card can speed up the process of doing business. This applies to both online and offline transactions. It's a good way of paying for company purchases or making payments quickly.
Why Have A Business Credit Card?
Business credit card deals may be better than those available for personal credit cards. For example, there may be lower annual percentage rates (APRs), waiver of annual fees, higher credit limits and other incentives. Business credit cards also offer the same incentives as personal credit cards, such as balance transfer deals and 0% interest periods. And if you don't like the deal offered, it's always possible to negotiate.
Expense Tracking
Business credit cards are a good way of tracking expenses. This applies to both company expenses and the expenses incurred by employees on the company's behalf. They are also a good way of improving cash flow as business owners can pay for something today and have a grace period of up to 56 days before having to settle the bill.
Help For Employees
Employees can use business credit cards when travelling on company business to pay for flights and other travel, accommodation, eating out and entertaining. This means employees don't have to worry about finding money and being reimbursed. It also means that businesses can keep track of company expenses through itemised credit card statements. Businesses usually get a monthly statement where all such transactions are listed.
Choosing A Business Credit Card
When choosing a business credit card, it is best to pay attention to:
- The APR
- The credit limit
- The grace period
- Repayment options
- Annual fees
- Application fees
- Cash withdrawal fees
Since companies get monthly statements, they have to spend less time on administration. There's no longer any need to work out and check employees' expense claims, though some businesses may prefer to have that process as a backup.
Other Business Card Options
Business owners can also choose to have a business debit card. This means they can only spend what is in the business account. Another option is a business charge card. There is usually an annual fee for this and the balance has to be settled in full each month. Neither of these options is as flexible as a business credit card.
Some small businesses may start by financing their business with a personal credit card. However, this makes it more difficult to separate personal and business expenses. In addition, you will be personally liable for any spending on the personal credit card. A better option is to get a business bank loan or overdraft. This will offer better interest rates and will not endanger personal finances.
Joe Kenny writes for the Personal Loans Store, allowing visitors to compare loans and also information on business loans in the UK.
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