We often hear the advantages of using business credit cards. But the benefits you earn also depend on how well you use them. Here are ten tips that may help you:
1. Apply from your personal bank. Getting a card from your personal bank can give you a faster approval with your application. If you haven’t yet established your business credit, your personal credit history will be used instead. Applying with bank who has had you as a client for a long time will work in your favor.
2. Don’t get too many credit cards. One or two should be enough for you to use in your business. Not only is managing multiple cards difficult, it also puts you at a greater risk of bad credit.
3. Use your credit card for all your business expenses. Some entrepreneurs use their personal credit with their business purchases, but it is wise to stick with your business credit instead. Even if you’re running a home-based business, it’s best to separate your personal finances from your business account. In addition, your business statement of accounts will be a big help in doing your accounting tasks and in filing your taxes.
4. Use your yearly summary as reference to your bookkeeping. The yearly summary of account provided by your card issuer will come in handy in your bookkeeping tasks.
5. Use your card wisely. Just because you have a card on hand doesn’t mean you shouldn’t watch your spending. Make sure that everything you charge on your business credit card is really important for your business.
6. Make the most of rewards. Take advantage of the rewards you can get from your business credit card by choosing one with the right reward program. Make sure that the card you get matches with the needs of your business.
7. Distribute supplementary cards to your employees. Because all purchases charged to your business credit card will be reflected in your statement of account, you’ll have more control of your employee’s expenses.
8. Pay off your bills before the grace period. Usually, the card will extend up to a 21-day grace period before you incur the interest rate. To save your finances, make it a point to submit your payment before the due date to avoid the interest rate completely.
9. Check your business account regularly. Always check your business account to make sure that all the charges are accurate. Generally, credit cards provide business owners online access to their accounts, so you can check them right from your desk.
10. Avoid cash advances from your card. Cash advances are not covered by the grace period, so you incur the interest rate the moment you take out the cash. You might as well charge it to your account and pay it back before your payment due date.
Following these ten tips won’t eliminate all challenges or risks associated with credit cards, but they will help you establish a set of best practices to build upon.