Credit cards have gotten a bad reputation due to what is considered high interest rates.
However, it is really in how the credit card is used that makes it good or bad. In the case of a business, a business credit card can make having instant credit easy. If you're in a pinch, you have somewhere to turn.
Reasons to Have a Business Credit Card
There are a number of reasons to have a business credit card. Those reasons include:
- The fear of overspending is eliminated by having access to available credit on business credit cards.
- You are able to keep track of business expenses. You can always refer back to purchases by referencing the credit card statements.
- Credit cards can be given to authorized users within the business and their spending can be easily tracked.
- If you choose a business credit card that has a rewards program tied to it, you can benefit further. Travel rewards can save your business a lot of money if you require employees to travel for business.
- Credit history is also very important to a business. A positive credit history means being able to obtain other forms of credit in the future if doing so is necessary.
- A business credit card can provide higher spending limits than traditional credit cards.
- You are able to set spending limits on specific cards. This can prevent employees authorized to have a card from spending beyond their limit.
- Credit cards eliminate the need for cash and checks, especially when traveling. Cash and checks can be lost and used by others. Business credit cards can be reported as lost and this can prevent unauthorized use.
- You will be able to make purchases online that will be fast and easy. This can ensure the fast shipment of items that you need in order to make money as fast as possible.
These are amongst the most common reasons to have a business credit card. Some reasons may be specific to your business.
Managing a Business Credit Card
When managing business credit cards, there are some rules to keep in mind. The first is to avoid mixing business with personal expenses. This could cause tax issues and issues with money management.
The second way to manage your business credit card is to use your monthly credit card statement to compare expenses. This can help you to identify unnecessary spending and prevent it from happening again in the future.
You should also be careful who within your business receives credit cards. Luckily, authorizing specific users can reduce fraud, but you also want to ensure they are trustworthy individuals so that you don't have to worry about any unauthorized purchases getting past you.
Lastly, don't use your card unless it is necessary. You want to keep your available credit as wide open as you can. The reason is because you want to always have the peace of mind that there is available money when times are tight. Sometimes it takes money to make money. If you don't have any available money, then you may lose an opportunity.