Business credit cards can be an important and flexible business finance tool.
They work in the same way as personal credit cards in that you can conveniently purchase goods and services without having to have your own cash at that point in time. Aside from security benefits, they are usually cheaper and more widely accepted than cheques. Cards can also give you interest free access to money for a certain period, provided you pay the balance of the monthly bill in full.
Business credit cards have some additional advantages that make them generally preferable to using your personal credit card for business purposes. Often, you can have a number of cards on the one account, allowing for staff to have separate cards. A dedicated business credit card allows you to easily separate business and personal expenses, making bookkeeping faster and simpler. Many cards offer itemised management reports.
Importantly, they can help you build up a business credit rating. Any costs associated with the credit card (fees or interest charges) may be tax deductable.
Pick the card that best suits your business needs. Beware of cards with introductory offers which leave you locked into a high interest rate after a brief honeymoon period. Many people are tempted by cards offering rewards programs. These often come with high fees and high interest rates, and, depending on your spend level, may mean you are paying more than the cost of the coffee machine or airline flight that you receive.
Not all business credit cards are the same so make sure you know how you will use the card and compare the rates and features to select one that meets your business needs. Where possible always try to pay the monthly statement amount in full to minimise or eliminate interest and other costs.
Greg Taylor is Chief Financial Officer for the Hunter-based Greater Building Society. This article appeared in the Hunter Post 16 May 2012.
The Greater Building Society launched its own Business Credit Card this week.