Benefits of a Business Credit Card
A Great Tool for Your Business or Community Organization
Posted on August 20, 2019
Topic Categories: Credit Cards
By Milton Jones, Collections & Card Services Manager
If you’re running a small business or managing a community organization, a credit card can be a great tool to help you get things done.
Business credit cards can be a convenient way to quickly access financing for short-term needs and can increase your purchasing power. They can be an alternative to a traditional line of credit, but like any source of financing, a business credit card should be used strategically.
Perks with a Business Credit Card
In addition to helping with cash flow, business credit cards can offer the following advantages:
- In-store convenience: make purchases without having to write a check or get petty cash
- Online efficiency: complete transactions with vendors, contractors and suppliers quickly and digitally
- Bookkeeping resources: in addition to a monthly statement, business card holders often have access to online record-keeping tools to help track, categorize and manage expenses
- Rewards: many cards offer rewards such as points toward merchandise prizes or shopping discounts, or cash back incentives
- Security: many cards offer alerts and other programs to protect against fraud or illegal purchases due to card theft
- Credit building: if your business or organization is relatively new, responsibly managing your credit card (by paying the bill on time, paying more than the minimum and not exceeding credit limits) can help to establish a healthy credit record as your business grows
Managing Your Business Credit Card
Having a good system in place makes it easier to keep track of credit card spending, which ultimately affects your bottom line. Here are some strategies to ensure good credit card practices.
- Provide individual cards: the number of cards should be limited to ensure control, but appropriate individuals should have their own cards. This helps eliminate the chance of losing cards while “sharing” with fellow employees and makes it easier to track expenses per individual.
- Set Limits: establish a clear policy explaining which expenses are allowed, how much employees can spend and how often they can use their cards. Put the policy in writing and have every card-carrying employee sign it and keep a copy.
- Create a Reporting System: put a system in place that details how statements will be reviewed and processed, and the paperwork accountability (such as receipts) expected from the individuals with the privilege of card usage.
- Monitor regularly: many accounts allow you to set up activity alerts that arrive as text or email messages. The alerts can notify you each time a transaction takes place to help you track usage in real time. You can also take advantage of online and mobile banking to view up-to-the-minute account activity. Use monthly statements to reconcile reported expenses by employees.
Choosing Your Business Credit Card
Now that you’ve planned how to manage your credit cards, you can begin your search for the best fit for your organization. Consider these factors:
- Rate: Look for a low introductory annual percentage rate (APR) on purchases and balance transfers. Make note of how long the introductory rate lasts, and what your rate will be when it expires.
- Rewards: Many credit cards offer cash back for making purchases in certain categories. Others have point systems that can accrue and be used on merchandise or gift cards. You can choose the option that benefits your organization the most.
- Account management: Review the management tools that come with the credit card. Is the online account easy to access and navigate? What services are offered that will save you time and effort each month?
A Tool to Build Your Organization
When used responsibly, credit cards can be an appropriate option for short-term financing. In addition to the financial resources, credit cards offer a convenient way to track and monitor external expenditures by staff members. Even before applying for a business credit card, it’s important to understand how your organization will use the account, and how you will manage the process. That establishes a strong foundation for effective, strategic credit card use that will help your organization grow.