If you are an entrepreneur, cash flow and the liquidity of funds are the two main aspects that run whole your setup and provide you financial freedom. Having a personal credit card for funding as well as managing expenses is not enough. Sometimes a personal credit card creates trouble for you. Moreover, the credit history of the business is also important to be built just like your personal credit score. Reward points and travel perks offered by the credit cards are also of great benefit for the companies. You need to be aware of the basics of using a business credit card and form a habit to make payments and repayments on time.
Builds A Credit History
New businesses and even the old one face problem in generating funds for their business. When you wish to expand the business or upgrade the infrastructure you need a business loan and when you will approach various financial institutions they will check the credit history of the business as a credit score of the individual will not facilitate larger loan amounts. The terms of repayment of the business loans are also simple and the interest rate is also low. One of the best ways to build a credit history is to use business credit cards. Use of credit card to a threshold limit and repayment on time improves credit history and the credit cards can also be upgraded based on it.
Limit Expenses Of Employees
Business houses and companies send their employees on official visits and the expense of all the official work is bear by the company. It has been observed that the employees usually spend a lot while on official duty and in some cases they even submit the fake bills to the company for the reimbursement. The best way to limit the expenses of the employees and prevent any possibility of fake bills, the best way is to provide the employees with a credit card. The company can vary the limit of the credit card and also block the card any time they wish. Ask the employee to make cashless payments using the credit card and report the monthly expenses.
It is one of the reasons why business credit cards must be used. Just like personal credit cards the business credit card also provides you reward points and cashback which will ease your expenses as well as provide you special discount and offers. These reward points can be availed to book travel tickets, business dinner, and other services. Some companies offer special rewards on the add-on cards which can be shared with the employees and the rewards can be doubled.
Business credit cards come with a lot of travel perks that facilitate business trips. First prime benefit is discounted air tickets and tube tickets. Credit card companies even provide the facility of the free pick up and drop from accommodation to the airport irrespective of the country or state to which you are traveling. When going to a foreign country the hotel rooms burn a hole in the pocket as their daily charge is very high. Credit card companies provide discounted hotel rooms and added benefits without any extra expense.
Another benefit of managing your trip through credit cards is all your travel services including the air ticket are insured. In case the flight is delayed or canceled you will get full refund amount and the alternate tickets which are indeed required in business trips. No matter which air ticket you purchase to send your employees or you travel on your own you will have the access to airport lounge which is otherwise only available on first class flight tickets. The rented vehicles booked through credit cards are also insured against the third party accidental insurance and will save you dollars and sufficient time.
Increased Available Credit
In business, sometimes you encounter a certain situation where you need to put all your available credit to use. The business credit cards increase the credit limit available for a period to a large extent. While on a business trip to foreign countries the expense of goods or services to be purchased sometimes is more than expected and this will spoil the business deal. If you have a credit card you can ask the supplier to deduct the payment through it or withdraw cash from the ATM machines using the credit cards.
Some suppliers offer an occasional discount on the raw material or other goods but the payment is expected in advance by them. Getting a bank loan takes time to be issued and all other credit sources may charge a higher interest rate. The use of credit card at such situations will ease the business deal and you can avail the benefit by increasing the available credit limit using the credit cards. You can do the business by having more cash flow than having the more assets which may have higher market value but time is needed to value them.
The Bottom Line
The use of credit card for business purpose is also recommended in order to increase the available credit. Instead of using the personal credit card, the use of a business credit card is recommended as this will create a fine line between the personal and the business expenses. Share the add-on cards with the employees and put a limit to their expenses. The credit points and rewards available from the use of credit cards are of great benefit. All you need to do is form a habit of using the credit card for the expenses and make sure to repay the bills within the time period.