Author: Greg Taylor

Business Finance: Business credit cards more popular

Our CFO Greg Taylor talks about the benefits of business credit cards as research shows they are becoming more widely used.  

Businesses are increasingly taking up credit cards. I don’t mean as a customer payment option but as a way for them to pay their business bills.

I was reading a report by Retail Finance Intelligence (RFi) which said that recent data from the Reserve Bank shows the average business credit card transaction in 2012 was $302.49 compared to $127.76 for consumer credit cards. The report said the average business credit card transaction has been increasing over the past few years, while the average consumer card spend has been decreasing.

A recent CPA small business survey showing the number of business card accounts is growing at almost five per cent each month. RFi’s own data shows the proportion of small to medium businesses intending to take out a credit card with their primary business bank in the coming year increased from 30 per cent in September to 36 per cent in December 2012.

Business Credit Cards can be a useful business finance tool. They can be more secure and more widely accepted than cheques. Cards can also help with cash-flow by giving you interest free access to money for a period, provided you pay the monthly balance in full.

Having a dedicated business credit card allows you to separate business and personal expenses, making bookkeeping faster and simpler. Any costs associated with the credit card (fees or interest) may be tax deductable.

If you are thinking about getting a business credit card, shop around. Make sure you know how you will use the card to help compare the rates and features.

Beware of cards with introductory offers which leave you locked into a high interest rate after a brief honeymoon period. Where possible always try to pay the monthly statement amount in full to minimise or eliminate interest and other costs.

Cards with rewards point are only useful if you spend big. If not, the fees can be more than the coffee maker you get with your points.

This post is taken from Greg Taylor’s weekly Business Finance Column in the Newcastle Post newspaper.

Do you use a business credit card? Please share your thoughts and tips on using them below.