As a small business owner, it’s possible that you’ve received several applications and offers to obtain a small business credit card. A credit card can be an excellent way of increasing your business’s purchasing power. With a business credit card, you have access to a line of credit to enable you to withdraw cash and make purchases.
1. Use Cashback Rewards to Invest in the Company
Cashback rewards on credit cards are bonuses given to credit card customers when purchasing goods or services using their credit card. The rewards can be in points or dollars, with points being usually redeemable on an online shop managed by the card issuer. When the rewards are paid in dollars, you can receive a check, credit on your monthly statement, or a prepaid debit card from the credit card company. In addition, you can reinvest the cashback reward in your business.
2. Build Credit
If your business is new, you have no business credit with your bank. A business credit card helps build your business credit over the years, depending on your bill payments and spending habits. If you have good business credit, you can use this to obtain a loan to grow your business.
To have good business credit, you should use the credit card responsibly by timely bill payment, exceeding the minimum due while paying and staying within the credit limit to avoid an over-limit fee.
3. Bookkeeping Assistance
Besides the monthly statement received from the credit card company, most cards provide business card holders with virtual record-keeping tools to help manage their accounts. This may include a year-end account summary to help a bookkeeper manage, categorize, and track expenses. It makes bookkeeping more manageable, helps outside professionals when auditing and paying taxes and provides a simple way to monitor employee spending.
4. Financial Cushion
A business credit card provides revolving credit, meaning that you can buy products until you attain your credit limit. This gives the business owner a financial cushion when sales are slow or account receivable are late, and the business requires cash. When you settle your monthly credit card payment, you can continue to make purchases as you wait for your debtors to pay their debts or make more sales.
5. Access to Easy Financing
It is essential to have access to easy cash while you operate a small business. Smaller businesses and startups need access to finance to make additional purchases that may be required daily. Different types of equipment, supplies and other assets need a steady flow of cash which is simplified if you have a credit card.
A credit card is an effective way to start or grow a small business. Although there are many benefits of owning a credit card, you should use it responsibly. Ensure that you pay your monthly bill on time and do not exceed the credit card limit, as you will be charged for it. If you use your credit card responsibly, you might be able to take your small business to the next level.
