Charging It: How To Manage Business Credit Cards

Credit cards can play a vital role in building a sustainable business.

In fact, one of the most important lessons a business owner can learn is how to manage business credit cards effectively.

It’s not simply about having them, though. It’s about using them, paying them off, and taking advantage of the opportunities they provide to grow your business. 

Today, we’ll share some strategies you can use and how you can stay on top of your finances with reliable insight and tracking. 

How Business Credit Cards Work 

Just like any other credit card, you buy things and pay for them later. 

Your credit card is an asset, it can help grow your credit and benefit your business. It’s part of the essential mix that we have detailed before (which you can learn more about here).

The way most people use it, though, is as an eventual liability – something which will hurt you in the long run.

That might sound like an oversimplification, but there are two key differences which change the way business credit cards operate apart from ones for personal use:

  1. Helping Your Credit – Having multiple business credit cards can help build your credit – so long as you know how to manage them. 
  2. Various Benefits – Business credits can come with certain advantages – travel credits, cash back, and points which can fund future purchases. 

As you might be able to tell the differences are marginal when compared to personal credit cards. 

That said, the purchases you make are typically going to be larger and work toward the success of your business. 

That’s why learning how to manage business credit cards should be top of mind for you. 

Managing Credit Cards: The Basics 

Let’s start from square one. 

Your business credit cards are going to directly contribute to your business’ success in the following ways: 

  • Helping fund and streamline operations without a hitch (either paying employees or expenses).
  • Multiple credit cards can bolster your credit and open up funding opportunities. 
  • Ensuring you retain access to money available in case of accelerate growth or emergencies. 

If you need to establish credit, make an investment back in your business, or ensure that your employees get paid on time, your business credit can satisfy each. 

Keeping that in mind, your credit card is not a silver bullet or a magic solution to all of your money problems. One of the biggest mistakes business owners make is assuming they can charge everything [‘How Do Small Businesses Manage Money?’ blog].

Managing Credit Cards: Strategies & Tips   

How you utilize your business credit card should be an essential part of your business long-term planning – here’s what we would start by recommending…

In Case of Emergency

In an ideal world, you wouldn’t ever carry a balance. 

Using your credit card only for emergency situations. But, life isn’t perfect and sometimes you need the money to cover the cost of doing business.

It’s important, though, to keep this mindset about your credit card. Pay with cash or your bank account when you can, and save your credit card purchases for when you really need them – preserving credit and avoiding carrying a balance. 

Read the Fine Print

Make sure to always understand the fine print of your credit card. 

While an introductory offer might seem attractive, it may be concealing high interest rates, late fees, or something else that will make it hard for you to do business. 

Before you even touch an application, you should have a good idea of what a credit card is offering (and what happens if you miss a payment or carry a balance). Look beyond the major benefits and know all of the details. 

Pay Attention to Rates 

Different cards come with different rates, and it helps to know which cards provide lower rates in the event that you need to carry a balance. 

Have A Payment Plan

Before you even receive your credit card, you should plan ahead to understand how much you are going to be able to pay, per month, to help cover your expenses (as a part of your general operating costs, emergencies aside). 

Maximize Your Benefits 

One of the best parts about having a credit card is making it work for you. 

Understand the available rewards, how they can feed your business, and actively use them. 

Your credit card might even help finance your next business trip or software purchase. 

Best Practices You Can Use 

All of these strategies can help you learn how to manage business credit cards with purpose and with great effect. But, some basic best practices are always important. 

These are the things you should always keep in mind whenever you pull out your credit card: 

  1. Pay Your Full Balance – Debt on a credit card is never good, so paying off your balance every month should be your top priority. 
  2. Be On Time – Missing a payment is a huge mistake. You’ll risk your interest rate rising and receiving a hit on your credit – neither of which are good. 
  3. Avoid Co-Mingling – Keep your business expenses separate from your personal, so that you can keep your expenses streamlined and in one place. 
  4. Require Permission – If someone on your team requires the company credit card, you need to be sure they are using it the right way.

The most important thing is to always keep an eye on your money, where it is being used, and in what amounts. If you can’t keep track of your credit card, you may risk impacting your business in a number of negative ways. 

It helps to get started with tracking and insight you can trust. 

Manage Your Business with BOARD

When it comes to the health of your business, remaining organized is key. 

You need to be able to track your spending, your accounts, and your expenses – both when they are due and how much you owe. Without this, you are going to be lost. 

With BOARD, you can keep a close eye on your finances and where your money is coming in and heading out. Learn more about how it works.

Start your own free trial today!  Find it on the App Store or Google play or try our WebApp.