Credit cards are not only useful tools for individuals but can also provide invaluable support for both large and small businesses. Benefits may include improving organization, providing financing and providing management solutions. You could be giving up a lot if you are not utilizing the benefits of a credit card in your business.
Let’s start here. A credit card has a built in structure that can in turn help you with managing your business in several ways.
- Ease of tracking expenses. Every transaction is recorded, so there is no ambiguity about how your funds were spent. With widespread acceptance of cards, you can use them to pay for most things from utility bills, suppliers, to petty cash expenses.
- Control Employee spending. Ease of tracking and managing individual spending. Team members assigned cards have unique numbers that can be managed under one main account. It is therefore easy for the person managing the finances to see exactly how funds are being used. This reduces the probability of abuse of funds because it can be so easily scrutinized.
- Tax purposes. As per points 1 and 2, a credit card provides excellent record keeping of expenses that also makes it easy to prove amounts spent and where. So you don’t have to go searching all over for that tax write off!!
Credit cards can provide short term financing for your business and help stop gaps in supply management. NEVER use your credit card for medium or long term financing. If you have to pay interest, it’s a no no! That said, you have up to 55 days interest free on purchases depending on when you spend. As a reminder – you do not get 55 days on all transactions, just the ones done at the very beginning of the billing cycle. That’s right after your statement is made up. So you would need to plan to spend in this period to get the maximum benefit. Of course, always know where the funds will come from to cover the costs, so you don’t get caught in recurring interest payment nightmare.
Look for interest free offers. Banks may lure you with offers of zero interest from three months to a year. Take it, but make you you pay before the end of the interest free period. DO NOT carry over the balances into the period where interest will be applied. So make sure you have a plan BEFORE you spend the money, if you don’t have a plan to maximize the use of and returns on the money, find another means of financing.
Banks expect you to miss your payment date and are counting on earning interest from you, so they are more willing to issue credit cards. Use this as your leverage to negotiate for other lower interest rate loans. Bundle your products. This works both ways. Banks like it because it means you are less likely to leave, too many products to close- but it also works in your favor, because you get better rates overall.
Use credit cards to maximize your efficiency through online purchases or recurring orders. While you can also do this with some debit cards, it just makes sense to get the benefits of a credit card while you do. I wrote a whole article on this! Click here to remind yourself why.
Earn rewards and perks
Don’t leave free money on the table. Ensure you have a rewards card. If you use your card for most things in your business, you will quickly build your rewards bank. Whether you redeem for cash that can help cover business costs or for travel or merchandise, you are cutting your spending in other areas. So great for you! We are in this to win!! They’ll make money from you another way. Not this time !
Check out the options on offer and see which ones you can get. Some cards give you free Airport lounge access, allowing use of business lounges so you can continue to be productive as you wait for flights or just allowing you a comfortable space to wind down as needed.
Other cards may be your key to entrance to seminars and coaching sessions. Given the fierce completion in the market, banks are differentiating themselves by the value they offer their clients. Take advantage as much as possible. Make sure you keep in touch with your banker in person and via social media to learn about opportunities to show case your business or get other value. At the end of the day,choose the card the gives you the most value.
Let me restate, credit cards cannot replace long term financing, but incorporating them in your financing mix is a must if you want to maximize value.
Here’s to you and your business, big or small! Let me know if you can think of a few more tips. I’ll add them so others can also benefit. All the best as you plan for a bumper last quarter!
I almost can’t believe we’re in the second half of the year already, give it all you’ve got!!
P.S. Try to also find some time to enjoy the summer!