6 Reasons Credit Cards Are Useful for Businesses

6 Reasons Credit Cards Are Useful for Businesses

A credit card isn’t something only individuals can take advantage of. Various organizations, particularly businesses, can also greatly benefit from the use of credit cards. Here are six reasons credit cards are useful for businesses.

1. Paying for Advertising Expenses

With a credit card advertising costs can be financed. You can use a regular business credit card to pay for your advertising expenses, but you may also want to consider a card meant specifically for advertising financing. A credit card for advertising may come with several unique features, including no required personal guarantees or credit checks when applying, higher percentages for cash back on purchases related to advertising and high limits for daily spending. If you decide to use an advertising credit card, you will need to consider whether that should be your business’s only credit card or whether you should have another account for expenses unrelated to advertising.

2. Streamlining Your Cash Flow

Credit cards can be used to streamline your business’s cash flow. This benefit is particularly useful for small businesses. Using a credit card, you can finance any type of business expense, from operations funding to equipment purchases. By financing your expenses with a credit card, you can ensure access to the things you need to run your business successfully, even if you don’t have all the required funding available. You can then pay off those expenses with monthly payments and have the full line of credit at your disposal once the debt is paid.

3. Taking Advantage of Rewards And Protections

Most credit cards come with rewards and protection programs. When you’re searching for the right business credit card, pay attention to the programs and perks the lender offers. Look for ones that will benefit your business or meet its needs. Common credit card rewards include cashback and the accumulation of miles or points. Protection programs typically cover purchases and travel, but you may also want to look for a credit card company that provides cybersecurity protection.

4. Managing Employees’ Expenses

If an employee pays for business-related expenses out-of-pocket, you will then need to reimburse them for it. There is an alternative, however, in the form of a corporate card program. With such a program, eligible employees receive a corporate credit card. They can then use that card for their business-related expenses. These programs allow you to manage your employees’ business expenses more carefully. The business owner or person overseeing the budget can distribute or freeze cards, set spending limits and manage the number of cards available.

5. Utilizing Account Management Programs

You should always take advantage of your credit card company’s account management program. Whether you have an online account or prefer reviewing paper statements, you need to keep track of your spending, debt level and financial summaries. Check whether the lender offers any account management programs or tools. These tools help ensure your financial records are accurate and streamlined.

6. Building Your Business’s Credit

One of the ways both individuals and businesses can benefit from credit cards is the ability to improve their credit scores. The process is similar, as well. To build or improve your business’s credit score, make sure you make monthly payments on time and don’t exceed your spending limit. By building your business’s credit score, you will be able to separate it from your personal finances. For example, you may no longer need to provide a personal guarantee when applying for financing. You can also expect lower interest rates for future loan and credit card applications.

The number of credit cards you utilize for your business will depend on the size of your business. A small business or start-up likely only needs one card, while a larger company or corporation may invest in many credit cards for a corporate card program for its employees. Make sure the card or cards you apply for are appropriate for your business and fit into your budget.