You may have gotten away with putting your business expenses on a personal credit card when you first launched your business. However, your business's financial needs change as your company grows. You may then need to get a business credit card when that happens.
A business credit card offers various benefits. For small business owners, corporate credit cards can help speed up the growth of your business while being a convenient source of capital. Therefore, one question worth asking is, should you get a business credit card?
Opening a business credit card isn't always necessary. However, it is important to know when you need to get one. Read on to know the signs your company should avail of a corporate credit card.
Mixing your corporate expenses with one's own can become challenging as your business grows. Knowing when to get a business credit card helps avoid any financial issues you might encounter.
Seeing your business purchases increase substantially over a short period is a tell-tale sign that you might need a business credit card. You may have conveniently used your personal credit card for a few overhead costs during your start-up days. However, expenses may increase as your company starts to expand.
Business expenditures such as employee lunch allowances, company dinners, and business travel expenses may strain your personal credit card. A dedicated credit card for official business activities can help you cover major or recurring payments, such as rent and inventory costs, instead of charging them to your credit card.
Companies spend much more than the average consumer, so business owners can take advantage of the perks and rewards programs that corporate cards offer
Let's say your team spends on business travel. A corporate credit card offering Airmiles, rewards or cashback for travel expenses can help you save on costs. Depending on the card type, you can receive rewards points or cashback for office supplies, telecommunications, or food expenses, which can add to your business savings.
Another sign you should get a corporate credit card is if you often max out your own credit limit to accommodate business expenses. Regularly racking up a significant amount on your credit card may result in a high debt-to-credit ratio, adversely affecting your credit score. In addition, you might find it more challenging to pay for your personal credit card bills due to compounding high-interest rates.
Get a business credit card if you have difficulty organising and keeping tabs on your company spending. Several employee credit cards now include features that sync the cards with their bookkeeping or accounting system, making it easier to complete financial reports.
Some company credit cards also include an expense management feature where employees can submit receipts and notes for out-of-pocket expenses that need reimbursement, allowing for transparency and accountability.
You'll need capital to cover all the expenses for business expansion; this is where your corporate credit card comes in. Lenders and creditors will ask for your business credit score to assess your eligibility for loans and an additional line of credit.
If you practice wise spending and have good cash flow, having a business credit card can help improve your credit score. A good credit report also increases your chances of getting approved for loans with the lowest interest rates.
Using one credit card for business and personal expenses can get complicated when you start tracking them. Having a separate credit card dedicated to business purchases is a better alternative. Besides sorting out your corporate finances, a business credit card could give you more perks and benefits than using a personal credit card.
However, business credit cards may not always be necessary. The signs discussed above should help you assess when a corporate card is needed.
Business credit cards from Spenmo include physical and virtual cards. You can set up your Spenmo account within 30 minutes and get your cards instantly!
Spenmo Corporate Cards allow you to freeze and unfreeze spending with just one click. You can also allot pre-approved funds to avoid going over your spending limits. Book a demo today to learn more about Spenmo's business-friendly features!