With the state of the current economy starting to take on some sense of direction, and the credit crisis of a few years ago starting to fade into the distance, lending institutions and credit card issuers are beginning to cast a brighter light on small businesses again. A diminutive but noticeable flow of business credit card offers and promotions are starting to appear on the near horizon, which is a sorely needed impetus for an economy that still requires all the help it can get, and for the small businesses that are trying to keep their hands on the wheel. Now, with that small but bright spark of credit flexibility, it is the task of these business owners and new entrepreneurs to use this new credit card power wisely, and carefully evaluate the real value-added benefits and rewards of business credit cards.
Leverage the effectiveness of a Business Credit Card
If the savvy business owner administers the payment obligations cleverly and creatively, and keeps a sharp eye on fees and penalties, the business credit card can be one of the best and most versatile mechanisms for managing some of the financial affairs of their company. Effective use of the business credit card can go a long way to help guarantee a smoother flow of operations, help keep the workforce in good spirits and high levels of productivity, and even streamline the bookkeeping tasks in the process.
To spread the benefits of a business credit card out to a point of doing the most good, a business owner can issue a card to a few or more key employees. The cards can be used on a much wider scale in this type of strategy, by allowing them to be utilized for purchasing company-related items and supplies, fuel and transportation expenses, and even travel and lodging costs. This practice also eliminates the need for keeping significant amounts of cash available, as well as tracking the use of signed checks for those instances when an employee needs to purchase a company-related necessity.
Expense Tracking and Accounting Benefits
The use of a business credit card simplifies record-keeping as far as monthly, quarterly, and year-end accounting practices are concerned. This also eliminates the head-aches of tracking down lost receipts, employee reimbursements, and inadequate expense verification when reports are required for the accountant or tax purposes. Other benefits, such as expense reporting, automatically arrange any purchases by category, while some cards have service options for downloading all card activity into accounting software programs like QuickBooks.
The strategic benefits of a business credit card are numerous. It provides a very clear and precise record of legitimate expenses and capital outlays. The unfortunate but sporadic occurrences of falsified receipts or bogus expense reports, or pocketed change from a cash transaction can be a thing of the past. In addition, effective use of a business credit card allows the business owner to establish and maintain the company’s track record of good credit outside of the personal affiliation. In this case, a business owner needs to verify that the credit card company is reporting the card activity to the commercial credit agencies like Dunn and Bradstreet and Experian’s Small Business Services.
Check the Fees and Interest Rates, not just the Rewards
Another benefit of using a business credit card are the reward programs themselves. Before choosing a specific card, check to see whether there are any type of restrictions on earning limits, which type of purchasing categories are available, and if the reward points have a specific expiration period before redeeming them. It is also a good strategy to determine if a particular card has any annual fees applied for their use, as well as what specific rate of interest will be charged. This strategy is also true for all types of reward cards, whether they are for travel, cash-back, or rebate cards. Determining all the costs involved with the card, as well as choosing one that most applies to the company’s particular spending requirements and habits, allows for a more comprehensive value and savings assessment.
It’s good to remember that business credit cards offer some of the most lucrative sign-up incentives, bonuses, and reward programs in the whole credit card industry, with cash back rewards ranging anywhere from 5% on office-related acquisitions, to 2% cash back on any and all business purchases. Whatever business credit card a business owner decides to use, there are no limits to the advantages this type of purchasing power and flexibility has to offer in terms of enhancing the bottom line, and honing a company’s competitive edge.