Having a business credit card can be very beneficial to a business. It helps a business establish credit and is a source of capital for new businesses that may need financing for purchasing goods and services. Once good business credit has been established, a business will have greater power to negotiate for needed money to manage and grow the business.
A free credit report is given quarterly (sometimes annually) with business credit cards, which helps a business analyze their credit status and aids in managing finances easily. The structure and performance of a business can build an excellent credit profile with businesst card, allowing the potential to receive loans as well as lines of credit that are not available to individuals.
Before business credit cards we available, a business had to rely on the owner’s credits and personal savings. Today, companies who issue this type of credit are able to assist new entrepreneurs. Business credit cards are designed differently than personal credit cards but do have some of the same features, including cash back, rebates, airline rewards and low introductory rates. Perks can be earned for both a business owner and the employees. Expenses made on the charge card can earn cash back up to 1.5% on purchases. Often times there is no cap on the amount of rewards earned and can be redeemed on travel expenses.
Business credit cards have higher credit limits with lower interest rates. Lower interest rates are typically given because of the fact that businesses will use credit cards more often than other customers. Businesses tend to use credit cards when making larger purchases and with the credit cards having lower interest rates, the business will spend more at one time and spend more frequently.
Other benefits of a business credit card include:
1. The time spent tracking and reconciling expenses is reduced
2. Streamline cash advances
3. Operation expenses is reduced
4. Cash flow is maximized
5. Builds credibility
6. Convenient
7. Protection is given on purchases
8. Relationships with vendors are more manageable
9. Customer service provided 24 hours a day
10. Employee spending can be monitored
With the use of a business credit card, transactions can be kept up with along with the amount being spent. This is a big benefit when it comes to solving any kinds of tax problems that may occur. Most credit card companies also provide an annual report showing expenses for a business.
There are some particular things that must be done before applying for a business credit card. Anyone’s personal credit and the business’s credit have to be separated. When applying for this type of credit, it is important to make sure that the business credit will be reported to the business credit reporting agencies and is not connected to anyone personally.
Today, business credit cards can be applied for online; with the process being simpler than it was in the past. The application is processed automatically and acceptance or rejection of the credit card is given right away. It does take some time to build a business’s credit. For a history of good credit to be established, regular payments must be made and a good relationship must be created with creditors.
