Company or company credit cards can be invaluable to your business, simplify your accounting, improve your cash flow, and make it easier to buy what you need.
Read on for everything you need to know about business credit cards and learn how to choose the best business credit cards for you and your business.
Why use a business credit card?
Business credit cards can be a useful way to track your company’s expenses, pay for expenses, and access additional credit when needed.
Just like you would a personal credit card, business credit cards allow you to pay off the money you spend, while using the bank balance to pay for more urgent expenses.
The available credit limit amount is based on company status and accounts.
Benefits of a business credit card
If you pay your credit card bill in full, you can expect up to 56 days of interest-free credit on your expenses, which can help spread the cost of your business expenses and improve cash flow.
If you know you can pay off the credit in a month or so, paying for items on credit can keep your company’s bank balance safe for emergencies or expenses that require immediate payment.
Many business credit cards have high spending limits, or in some cases no limits at all – which can increase your business’s purchasing power, but it’s important to only spend what you know you can repay.
However, new businesses will usually only see large amounts of money pouring into the business over time.
By spreading your repayments over several months, you can ensure that the money you take in doesn’t flow right back to cover the start-up costs you had to pay.
Plus, using a business credit card makes it easier to buy what you need online or over the phone.
A business card is also a real asset if you or your employees have to go abroad for business or have external meetings with customers.
This means that payments are limited to the company’s credit card, rather than your employees having to collect and submit the receipts to be billed.
Some cards are not only a convenient way to pay for business expenses while traveling, but also offer advantageous exchange rates, free worldwide travel and medical insurance, and even other benefits such as hotel discounts, upgrades and concierge services.
If your corporate credit card has some of these benefits, then in theory, if you’ve spent enough throughout the year, you can reward your staff with a weekend getaway, or something else paid for by the credit card’s rewards schedule.
Other benefits of a corporate credit card
Essentially, using a business credit card can help you simplify your business finances. A monthly statement means you can track expenses and see them all in one place.
It can also reduce the need for change – you can get additional credit cards for your employees, making it easier to manage staffing costs.
On your statement you can see who spent what and when and you can set personal spending limits for each additional card.
You may be able to collect air miles or Avios with a business credit card so that you can reward your staff in the future
Corporate credit cards also provide fraud protection. If there is fraud on your card, you are not liable as long as you report the fraud within a certain period of time.
Some card issuers even offer cardholder abuse insurance to protect you in the event that an employee misuses their credit card.
A number of business credit cards offer discount and reward schemes. Your credit card can entitle you to discounts on everything from flights to office suppliers, depending on the card provider.
Some cards also allow you to earn reward points, such as AirMiles or Nectar points, meaning you can earn enough to treat some of your staff without spending more than you normally would.
Ultimately, finding the best business credit cards comes down to you and the needs of your business.
Some businesses prefer to have an expense system or just pay for things with the cash they bring in, but a business credit card, if used wisely, can be a real financial benefit.
Things to consider with corporate credit cards
Think about how you plan to use the credit card – knowing what you want to do with it makes it easier to pick the right deal. There are a few important criteria to consider when choosing the right credit card for you:
Are you planning to borrow with your business credit card? If you plan to borrow after the interest-free period, the APR is critical. Introductory rates may look attractive, but check whether the standard APR is also competitive, or look for a credit card with a low standard APR.
Do you pay the balance in full every month? If you’re going to pay your balance in full each month, discounts and reward packages may be more important to you than the APR. Look for a business credit card that offers the discounts or rewards that are most valuable to your business.
Do you need additional business credit cards? If you want to give your employees additional cards, take a look at the additional services of the various providers. For example, is there a charge for additional cards or a limit on how many you can have, and can you impose your own credit limit on each card?
How much can you afford to borrow? Think about how much you can realistically afford to pay back and the maximum amount your business is likely to need in a month. Even if you are offered a higher credit line, don’t be tempted to accept it as you may be in debt for a long period of time.
Always compare business credit cards and check out the different offers available to make sure you get the right deal for your business.