Small business owners need to stay on top of business finances as well as find new ways to monitor cash flow to make business successful, especially in the very first year. Getting a business credit card can be a great way to streamline cash flow and to keep proper track of day to day business overhead. Beyond being a great payment tool, a credit card could be a great addition to your finances department. When used smartly, a business credit card could help you run your business operations smoothly while enjoying added benefits like purchase protection and rewards.
Since there are both benefits and drawbacks of getting a credit card for business use, you must consider both before making a final decision. In this blog post, we have listed 5 ways credit cards can help grow your business effectively and without giving away equity to investors.
1. Finance Business Purchases And Streamline Cash Flow
From raw materials and equipment to supplies, you can purchase anything you need to keep your business running. Business credit cards come with a line of credit that allows you to make any type of corporate payments. The line of credit provided by the bank or financial institution gives you the ability to make payments even without having cash in your wallet and balance in your bank account. As there are companies that offer interest-free credit cards, it can help you meet the financial needs of your business without incurring interest. Even most of them also provide a balance transfer option so you can top-up your accounts conveniently.
2. Build Your Business Credit
When you apply for a business credit card, the company looks at your personal credit history and monthly income before approving your application. When approved, the provided line of credit is separate from your personal credit and helps you build a positive credit score for your business. When you utilize lower than the credit limit and make payments on time, it builds strong credit history and credit score for your business. As a result, it opens new doors to business loans, better interest rates, and increased credit limits, etc. In this way, you are better able to use business finances smartly and save business money for other productive things.
3. Earn Rewards
Most of the business credit cards come with reward programs that help you earn points, rewards, or cash backs whenever you swipe the card. All the transactions made through such cards earn rewards for your business that you can redeem in a variety of ways. You can buy gift cards, get free merchandise, book cheap air tickets, and get statement credits by using those rewards. Moreover, you can also use those rewards or points to reward your employees.
Some credit cards offer you cash backs whenever you make payments by swiping your card. Hence, you should do your research before applying for reward credit cards to make sure you are making informed and productive decisions. Some credit card companies also offer a welcome bonus. When you get a new business credit card, you may find you can get a giant bonus amount if you spend a certain amount within the given period of time after getting a new card.
4. Better Account Management And Report Making
Business credit cards provide you with quarterly or year-end account summaries. Furthermore, you can also download transaction history and integrate it into your account software like QuickBooks. In this way, you can conveniently track business spending and simplify account transactions when there is a need to file a tax return. It also makes record keeping easier than ever for your business.
5. Monitor Your Employees
Loyal employees are one of the valuable assets of any business. Trusted employees always make wise and productive spending habits to make the business grow and prosper effectively. Setting credit limits is also a great way to prevent financial frauds and mishaps. Business credit cards allow companies to set limits on where the card can be used and what your employees can do with the credit card.
Moreover, you can also set alerts for unauthorized swipes and get summary reports at the end of a set period of time to monitor your employees. As a result, the credit card is only used for business transactions and payments.
