It is the time to learn the 6 steps to effective small business credit card management since the growing popularity of small business credit cards and ever changing interest rates.
For small business we’ve entered into a new age of credit. New opportunities apply but credit debt still needs to be approached with caution. Over 2/3 of small businesses use a credit card for expenses with only 40% using a business credit card exclusively, as indicated by a Tower Group report. Use a small business credit card over a personal card is necessary or not?
Your small business credit card can provide many benefits including with prudent use and management:
Small Business Credit Cards’ Features
- Avoid Co-mingling: Create potential tax and money management problems by mixing your business and personal transactions. You will let the IRS and anyone else know you are serious about your business by using a small business credit card.
- Easy Itemization: For small business owners tracking your business expenditures at year-end can be a nightmare. Many credit card companies will provide you with a year-end statement summary with your transactions itemized and categorized. Why worry about a shoebox full of receipts? With a small business credit card you can organize your bookkeeping process.
- Build Business Credit: A newly established business the opportunity provided by a small business credit card can build business credit. As your business grows and you need capital in the form of credit lines or loans you will find this will be useful.
- Special Rewards: The development of reward and discount programs for small business credit card users was developed by the competitive credit card and business market. Discounts and rewards range from office supplies and travel to software and phone services. Lower your expenses by Taking advantage of using the credit card.
- Manage Employee Spending: The ability to provide cards for your employees with preset limits is another plus to small business credit cards. On the received separate statements you can monitor your spending.
As most financial instruments, a small business credit card is responsible use of credit can help your business - misuse of your business credit makes you personally liable in most cases and has the potential to destroy your business and dreams. Manage your credit by using these small business credit card tips effectively.
Effective Small Business Credit Card Management by 6 steps
1. Apply at Home: Apply for your small business credit card at your existing financial institution. Your banking relationship can aid with the approval process. You need to have a relationship established with your lender helping with credit applications over $100,000 not using automated scoring systems then you able to apply a line of credit or loan.
2. Limit Card Hopping: you will get a negative impact on your credit rating and make managing your cards more difficult if you sign up for multiple cards to take advantage of deals.
3. Use Grace: before you have to make payment on your purchases the majority of small business credit cards could offer a 21-day grace period. Since the new Check 21 act creates quicker clearing of checks you can improve your cash flow by using a credit card instead of checks.
4. Pay Online: Pay your small business credit card online versus paying by teller at your local branch or mailing in your payment to save time and extra costs.
5. No Cash Advance:
Do not use the cash advance feature on your card to reduce credit card fees and interest costs. Cash advances incur more fees and costs. When you need immediate funds, use your business account debit.
6. Avoid Late Payments: it will erode the merits of using your small business credit card quickly with late fees and high interest rates. Pay off your business credit each month as responsibility.
You can avoid the disastrous effect of credit card mismanagement by treating your business credit card ownership as a privilege. You can also enjoy many more years of profitable business growth by applying the same level of responsibility as the rest of your business.