Although credit cards are often associated with individuals, using credit cards within business is also a viable option. If you have a business, then using commercial credit cards could really help you to keep track of spending and improve your business cash flow. Here are some tips on how to use commercial credit cards in your business.
What are commercial cards?
Commercial cards are much the same as normal cards, except they are used for business purposes. This means a number of people can use the cards, and that you are not personally liable like you would be for a personal credit card. Commercial cards can be in the form of credit cards, charge cards or debit cards.
Different users
One advantage of having a commercial card is that a number of different people will be able to use the card. The cards can be used by a variety of staff, and you can even specify different credit limits for each card. This means you don’t need to be there all the time when large purchases are made for the company.
Monitoring spending
If you are a company that uses cash for minor expenditures like lunches or office equipment, then using a credit card instead will help to improve your budgeting and make it easier to monitor expenditure. With a credit card you can see exactly how much has been spent and what it has been spent on, meaning you can work out areas that expenses can be reduced or areas where more spending can be given.
Interest rates and fees
In general, commercial credit cards will have a higher interest rate than personal credit cards, mainly because the risks are higher and also because the credit limits will usually be larger. However, commercial credit cards often offer a longer interest-free period if the balance is paid in full, sometimes up to 56 days. This means you don’t have to deal with business expenses all at once if you are having a particularly costly month of expenditure.
Charge and debit cards
Although credit cards are the most common commercial cards, there are other cards available. Charge cards for business purposes are similar to regular charge cards, where the balance needs to be paid in full each month. This can be useful if you want to maintain a definite budget each month. However, charge cards usually come with an annual fee and don’t offer the flexibility of credit cards. Debit cards are a good option for small expenses like staff lunches or emergency items. They are usually given free with a business account and the money comes straight out of the account, meaning they are a faster and cheaper method than using cheques. Although there is the risk with all business cards that employees will spend too much, they are a convenient way of budgeting and reducing paperwork as well as stopping you from being personally liable for your business debts.
Peter Kenny is a writer for The Thrifty Scot, please visit us at
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