Small businesses need to move fast. Given the convenience of business credit cards – not to mention the flexibility that comes with briefly delaying expenses – it’s easy to see why business owners often reach for their cards. In one Federal Reserve study, more than half of smaller companies reported using business credit cards regularly.
But as with any financial tool, you’ll need to make sure you’re managing your card carefully. This helps you minimize financial risks – such as interest on unpaid balances and liability for unpaid debt – while maximizing your card’s potential benefits, such as increased productivity, financial control and affordable growth opportunities.
5 Business Credit Card Best Practices
Here are some ways to get the most out of your card.
- Manage Cash Flow (While Minding Interest)
Uneven cash flow was a top concern for 54% of small businesses surveyed by the Federal Reserve. If revenue dips from time to time, your card can be a valuable tool for managing cash flow. Cards can provide extra breathing room in your budget by giving you up to 51 days to pay back purchases interest-free, so you can time your credit card payments to better align with incoming cash flows. - Use Built-In Benefits
Choose a card that offers competitive rewards or cash back for the purchases you rely on, such as office or travel expenses. If certain expense categories come with enhanced rewards, be sure to use your card for these. Also, explore any card-related features to help you save. For example, Amegy’s business credit cards include access to money-saving offers through the Visa SavingsEdge® program. - Capitalize on Intro Offers
In the market for a new card? If you’re planning business purchases, look for a card that offers an introductory bonus for spending a given amount in the first few months – then put that bonus back into your business. Alternatively, you could look for a credit card with a 0% introductory rate offer for purchases, so you can pay down balances over several months without accruing interest, softening the financial impact. - Prioritize Expense Tracking
Track your financial statements to monitor cash flow and look for opportunities to cut costs. Also, check with your banker to learn about tools and options that can add efficiency to your spending. For example, adding employee cards for trusted staff can help you offload responsibilities to them, and online spending controls for each card can help reduce risk for your business. - Don’t Mix Business and Personal
Avoid commingling personal and business purchases. Confining business expenses to specific credit cards and financial statements saves you time and extra paperwork, and helps you accurately calculate business expenses when tax time rolls around, avoiding headaches for you or your bookkeeper.
Which Purchases Bring the Most Value?
Some credit card uses can be especially valuable, both now and later. These include:
Big Purchases
Ready to invest in new computers or other equipment – but want to avoid the financial impact of paying for them all at once? A business credit card can provide a simple way to spread out this expense over multiple monthly payments. Make sure you plan for the total cost of these purchases, including any interest that will accumulate if you choose to carry a balance.
Recurring Expenses
If you have fixed monthly expenses like internet bills, software subscriptions or monthly spending for digital advertising, putting these on your card can help you rack up rewards faster, while keeping your monthly credit card use relatively consistent and predictable, which can help with planning.
Team-Friendly Investments
Investing in purchases for your team can really pay off. If you have remote staff, for instance, purchasing company computers and related hardware, sit-stand desks, ergonomic chairs and other equipment for their home offices can help increase your team’s comfort and productivity. Credit card rewards can also be a great way to fund employee parties and awards. This can bring a major boost to both their morale and performance.
Travel
Heading out of town for a client meeting or industry event? A competitive business credit card can help you earn significant rewards on travel expenses like airfare, lodging and rental cars while simplifying the process of booking trips and monitoring your (or your employee’s) expenses. It’s also a safer alternative to carrying cash.
Startup Expenses
Business credit cards typically have less strenuous application requirements compared to other business financing options. This makes them a good option for smaller start-up expenses – such as technology or furniture for your new workspace – especially if you may not qualify for other funding sources. For busy entrepreneurs, the convenience of credit cards is also a big plus. So is the opportunity to start building a credit history for their business, which can open more financing options down the road.
Keep Your Business Moving
Amegy’s suite of business credit cards can provide the flexibility and business-centric perks you want. Try our card comparison tool to find yours.