Credit cards can make people nervous with high interest rates, the fear of racking up a balance you cannot pay off, or having your information stolen. You may be used to handling your personal finances in cash and unsure of using a credit card for your business expenses. It is easy to misuse a credit card, but they can also be an excellent asset for your business.
Here are some tips to make a credit card a great asset for your business!
1.Open a Business Credit Card at the Same Bank
If you open a business credit card at the same bank where you do your business banking, you may be able to make the management of your credit card account much easier with tools such as automatic payments and balance transfers. Hopefully you researched your business banking well and they have good card options for your business.
2.Make Sure Your Business Credit Doesn’t Report to Your Personal Credit
Set your business credit card up so that it does not lump your business credit with your personal credit. While you may pay all of your bills in full each month on your personal cards, a business may often have to carry a credit card balance for a period of time which may negatively impact your personal score. Keeping them separate offers you extra protection and flexibility with the need to carry a balance. You may not plan to carry a balance, but a growing business may have to spend a lot in a short period, a piece of expensive equipment could break and need replacing, or you may have a lean period in a seasonal business.
3.Use Your Credit Card
Only 17% of small business owners regularly use their business credit cards, but a business card can help your business grow its credit as well as provide your business with cash back or other rewards. Some business credit cards offer automatic cash back as a percentage of your spending or for paying your balance early. Take advantage of these offers as they can lead to significant savings in the long run.
4.Have Safeguards in Place
You may be worried about the fraud aspect of using a credit card, but credit card companies are well-equipped to handle the possibility of stolen credit card information. Be careful how you use your credit card, but regularly monitor your transactions on both your online account and paper statements and report any fraudulent ones immediately to your credit card company. You are actually protected at a higher level by your credit card company than you are when using a bank debit card or check. Your credit card company gives you longer to dispute a transaction while a debit account is only required to give you a few days to dispute a charge.
You can also set specific spending limits on certain cards, preventing a dishonest employee from making inappropriate charges using a company credit card. Monitor employee cards in combination with spending limits to keep your business safe.