A business has different needs, and a business credit card can help meet many of these needs. By the way, we are talking not only about large companies but also about small and medium-sized businesses.
What is a business credit card?
A business credit card is a bank card linked to the current account of your business. By definition, this is a credit card intended for use by a business rather than for an individual’s personal use. When you pay with a business credit card, you use money from the company’s account, therefore, any purchases are immediately displayed on the account statement. Sometimes a separate account is opened for a business credit card, but it is also tied to the company. It is necessary to transfer money to it from the main account of the company.
What can it be used for?
With the help of a business card, you can quickly pay for the company’s daily expenses, as well as bills for rent, electricity, and telecommunications. Also, the card can be linked to a mobile operator and a taxi ordering service. You can pay for advertising and promotion on social networks, not to mention insurance and taxes.
What does a business card give?
The most important difference between a credit card and debit card linked to the company’s account is the limits and possibilities of transactions. Credit cards have much higher limits. This makes it possible to solve issues related to everyday expenses and also to cover larger expenses. In addition, the business credit card allows you to manage not only the company’s funds but also the credit limit provided by the bank.
- Separation of personal and business transactions
If the company has credit cards, then its users and employees do not need to use their own payment means and personal finances for business needs. These cards can be used to pay for fuel, office supplies, and taxi services, pay for online purchases and business lunches.
In turn, this greatly facilitates the reporting of expenses and its categorization both for the company’s accounting department and for the employees themselves. Accountants also do not need to prepare complicated documents or always keep cash on hand.
However, it is important to remember that a business credit card can only be used to cover the costs associated with the company’s activities, and the accounting department must be able to account for them to the regulatory authorities, as well as justify the use of funds.
- Control, trust, and confidence
A business credit card not only helps employees provide everything they need to complete their duties, but it also makes it easier for management to control where the company’s money is spent. At the same time, giving a credit card to employees to cover business-related costs is a matter of mutual trust, and building that trust is extremely important.
You can link several additional cards to your credit card account and set an individual limit for each card on monthly expenses or cash withdrawals from an ATM. Your employees will be more confident if they do not have to worry about how to pay for lunch with a potential client or think about how to report their spendings to receive their personal money back.
- All information in one place
Everyone knows the infamous shoebox in which accountants put monthly receipts for expenses related to business. You can forget about this when paying with a credit card. In addition, when you receive a report on expenses covered by a credit card, all the information will be in one place: it will be convenient for you to view expenses and analyze which of them the company may not need, and where there is an opportunity save money. For example, you may find that the costs of taxi services are so significant that it makes sense to consider entering into a contract with the carrier.
- Contactless payment
Most business credit cards on the market have built-in contactless payment technology. You can pay using a mobile phone and Apple Pay, Google Pay, and Samsung Pay services, so you won’t find yourself in an uncomfortable situation, even if you forgot to take your card with you to a business dinner with clients.
- Business bonuses
Most credit card companies offer a variety of bonuses, and this applies not only to individuals but also to businesses. Discounts may be offered, for example, on the purchase of specific equipment or airline tickets. In addition, a business credit card, like a card issued to private individuals, is the best way to reserve hotels, rental cars and much more.
- Survive a difficult moment
Every business can have a rough time when the business is worse or the cash flow is slightly low. In this case, a credit card can be a lifesaver. Until the moment you get back on your feet, it can pay for urgently needed equipment or goods, as well as pay suppliers, without interrupting your activities and without interrupting the provision of services to your customers.
- Positive credit rating for the company
If your company has a credit card, you use it according to the needs of the business and make regular payments, then this increases the credit rating of your company. This is important, especially if there is a possibility that at some point in the future your business may need support from a bank. Perhaps one day your company will want to buy a car or even its own office space, and for this, it will need a bank loan. The company’s positive credit history makes it attractive to lenders.
The ability to plan and use a company’s finances wisely, as well as pay attention to the payments being made, enhance the company’s image. In addition, the fact that the company can afford and knows how to handle both its own and the finances entrusted to it testifies to the development of the business, which also makes it attractive and interesting in the eyes of potential partners and those interested in investing into the company.
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Author: Charles Lutwidge