What are business credit cards and what do they offer?
Whether your business is brand new or long established, whether you are a sole trader or a sizeable company, a business credit card could be just what you need to manage your finances more effectively. So, what does a business credit card actually offer?
- Separate business spending from personal spending. When you have a business, it’s important to separate business spending from personal spending. But, that’s not always easy, especially if you are a sole trader or small business owner. With a business credit card though, you can easily keep all business transactions separate from personal spending, making dealing with your accounts that much easier.
- Keep track of business spending. Whether you have a team of two or 20, it’s not always easy to keep track of who is spending what and where. Giving each employee their own credit card however, and tracking spending becomes simple. As each card is held under one business account, you can see how much each employee is spending and where, which again, makes tax time a lot less stressful.
- Ditch the petty cash. Petty cash becomes a thing of the past with the right business credit card. Whether you have one business credit card that gets used for all business expenses, or you provide a card to all employees who need one, there is no need to keep petty cash topped up – and no need to spend time settling it either.
- Extend cashflow. Just like personal credit cards, business credit cards allow you to buy what you want now and pay for it later. As long as you use your card correctly, you could take advantage of features such as interest free days on purchases, helping you to save day-to-day while making your cashflow work for you.
- Allow employees access to funds as needed. Whether you have employees who need to buy office supplies or flights around the world, you can give them access to the funds they need, when they need it. Many business credit cards offer individual spending limits for each cardholder, with the option to limit certain types of transactions in real time.
- Take advantage of business tools and features. Depending on the business credit card you choose, you could benefit from any number of handy business tools and features. Business tools could include easy ways to export data to accounting software or business budgeting apps, while features could include essentials such as travel insurance, airport lounge access and flight upgrades for frequent business travellers.
- Earn rewards on business spending. Opting for a business rewards cards allows you to earn rewards points on your business expenses. As long as you choose a card that offers value for your spending, this could be a great way to get something back, to reward either yourself, your employees, or the business as a whole.
How do you choose the best business credit card for your business?
Before you compare business credit cards, first think about what your business needs and what kind of spending and repayment patterns you have. Taking all that into consideration, be sure to assess the following factors carefully.
- Number of cardholders: Some business cards limit the number of cards that can be held within one account, so think about how many employees will each need a card, and make sure your chosen account allows for this.
- Overall cost or cost per cardholder: Like personal credit cards, business cards typically charge an annual fee. You will either pay a standard annual fee or an annual fee based on the number of cards in use. Make sure the overall cost offers value in terms of what you are getting in return.
- Features: Business cards can be basic or filled with features. Consider what you and your employees actually need from the card, and make sure the value of the features on offer is greater than the amount you are paying in annual fees.
- Rewards: If you want to earn rewards on your business spending, choose a business credit card that offers the most value back on the spending you do most often. Think about the type of rewards you want to earn, whether that’s flights with a certain operator, or products and gift cards that the company can use.
- Functionality: Whether you want to export spending data to a particular accounting software brand, or track and limit individual cardholder spending in real time, check out the functionality on offer and match that to what you need.
- Fees: Aside from annual fees, check for any other fees that may apply. If you have a significant overseas spend, for example, you may want to look for a card that charges low or no foreign transaction fees.
- Interest: If you think you will carry a balance month-to-month, comparing interest rates is essential. Opt for a low rate card that will help you save on interest as you work on keeping your balance down. Or, if you know you will clear your balance each month, look for cards that offer interest free days on purchases.
What should you avoid if you want to make the most of your business credit card?
With a number of cards in use, it’s important that you always keep track of spending. While you should only give cards to employees you trust, it’s still a good idea to track their spending, making sure each transaction as is it should be. Tracking spending can also work to prevent overspending, making sure your business doesn’t over-extend itself.
It’s also important that you pick a business credit card that’s fit for purpose. That means taking into consideration where the card will be used and whether it will be accepted in those places, as well as making sure it offers value on the type of spending your business does most. This is especially true for business credit cards that earn rewards.