The Benefits Of A Business Credit Card
A business has numerous ways in which to borrow money such as an overdraft facility, loan or mortgage. Another option is a business credit card. The credit card provider would notify you of what the credit limit is on the card. So, let’s have a look at some of the benefits of using one.
It is perhaps first worth mentioning that there are many businesses that are in the fortunate position of not having to borrow money as they have significant surplus funds in their bank savings account where it is earning interest – albeit at a low rate of interest. Well, it may be possible to make some purchases for the business utilising a business credit card and, as long as the outstanding balance is cleared within around 50 days or more, no interest will be payable on the credit card balance. During that period, the funds used to pay off the credit card debt could be earning interest in the savings account.
If you have a number of employees then some of them could be provided with a business credit card to use to make purchases on behalf of the company such as to purchase fuel. These transactions would all appear on the one credit card statement and avoid having to issue those employees with petty cash. It may be possible for different spending limits to be allocated to certain members of staff. It could also avoid the need for the staff member to complete an expenses claim form thus saving on administration time.
Some business credit cards provide additional benefits such as cashback, reward schemes and discounts with certain suppliers. Also, some may provide travel insurance benefits.
Another benefit is that some business credit cards provide a period of say 6 months when any purchases made during that period are interest free. Obviously, at very least, you would need to ensure that the required minimum payment is made on the outstanding balance each month.
Of course, a business credit card could also be used in the event of a temporary cash flow problem perhaps due to a delay in debtor monies being collected. Do bear in mind that, if you are outside any interest free period and interest is paid, it is likely to be based upon a high rate of interest that is probably going to be greater than that charged on an overdraft facility provided by your bank so do try to clear the borrowing as quickly as possible.
So, as can be seen, a business credit card can be of benefit to some businesses if used wisely. There are numerous providers of such cards so you may wish to shop around for the most suitable package to meet your requirements.