In the early stages of building your business, you might reach a point where you consider if a business credit card is a good choice. Used responsibly, a business credit card can be a valuable tool to help you continue to grow your business. Here’s why:
Credit cards can help you manage cash flow
It’s a reality of small business ownership that you might need supplies, or your bills might come due before your customers have paid. This can take a lot of juggling and can tie up your cash, even if your business is cash flow positive. Credit cards allow you to put payments on a predictable schedule, and help manage the time between invoicing a client and receiving their payment.
Using a credit card as your primary source of payment can help you manage the monthly ebbs and flows of business, but it’s never a long-term solution. The key to success is to set and stay within your budget, and never extend yourself beyond what your business can manage.
You can easily separate your business and personal expenses
It’s much easier to track your business expenses if they are clearly separated from your personal expenses. And, it’s much easier to produce a list of expenses if all you have to do is print your credit card statements.
You can earn rewards for spending on items you would buy anyway
If your business has regular monthly expenses, or if you’re making capital purchases, why not earn rewards for those things you have to buy anyway? Using your card for purchases like gas, travel, phone, Internet, or office supplies can provide you with perks that help stretch your budget.
Cash back rewards are also a sweet deal for growing businesses. Our No Fee Cash Back Mastercard is a great option for businesses, because it offers cash back on your purchases with no annual fee.
You can enjoy other perks and benefits (and save money while you’re at it!)
Credit cards offer another layer of protection such as price or purchase protection, extended warranties, or benefits for travellers such as auto rental insurance, trip cancellation insurance, and more. In the case of travel insurance, you can actually save money because you might not need to purchase additional insurance coverage while you’re away from home.
These additional benefits are offered on credit cards with an annual fee, so they are only valuable if you use them enough to cover the additional annual cost. It’s a good idea to evaluate your cards annually to ensure you are actually using the benefits that come with the card, and using them enough to cover the cost of the annual fee.
However, beware the pitfalls of the business credit card
Of course, a business credit card is only helpful if you use it responsibly. They can hurt your business, or affect your personal credit score, if you miss or make late payments, end up carrying a balance and therefore pay interest, or if you lack the ability to budget and spend more than your income allows.
Want to learn more about SCU’s business credit cards? Visit our business credit cards page to see which card is right for you and apply today!