How A Business Credit Card Could Be A Valuable Asset
Business credit card accounts are generally offered to the owners of small or mid-range businesses. Large companies and corporations tend to be offered special packages by financial institutions, designed to cope with the specifics of their organisation’s needs; the bigger a company gets, the more complicated their financial structure tends to become. But for small and mid-range businesses, there are a large range of business credit card accounts making different offers and vying for custom. But where do you start?
The first place you start is with the word ‘credit’. A business credit card is a simple way of managing the finances of your business, separately from your personal expenditure. However, as the owner of a small or mid-range business, the type and amount of credit you can apply for can be dictated by your own personal credit score. Once you have the card or cards, the company can then begin to build up its own credit history, which will then impact either positively or negatively on future credit, according to how well the account is managed. Ultimately though, the person who has applied for that business credit card account is the person who will be liable for any repayments that the business cannot afford to make. So, the best starting point for any business manager wanting to apply for business credit is to check their own personal credit rating. This can be by applying online or through the post to one of the three major credit analysts: Hyperion, Exquifax or Experion. These data houses will hold records of your own personal spending and credit history and issue you with a credit score, accordingly. Needless to say, a lower score will make it harder for you to obtain credit and a higher one will make it easier.
The next thing to consider is what ‘credit’ means, in business terms. Put simply, it is the opportunity to borrow a fixed sum of money that is then repaid over an agreed period of time with a sum of interest for the service. If your business is already up and running, you should have a good idea of its income and expenditure and then be able to make a reasonable calculation as to how much credit the company actually needs. If your business has been trading for less than 2 years, you may want to seek financial advice to discover how much you reasonably need and, given that you are a relatively new customer, how much you can reasonably expect to apply for.
The other benefit of these cards, credit aside, is the loyalty reward scheme or perk system that many operate. Again, it is worth researching the deals available to find the rewards that will maximise your company’s savings; if your company employs people who need to stay in hotels a lot, then look for a deal on hotels. If your employees travel a lot, then you might want to consider deals on car rental or road-mile rewards. There are many options out there.
Should your company make repetitive purchases of certain items, such as headed notepaper, it can be a good idea to obtain a purchasing card; this will help to reduce unnecessary paperwork and invoices, as these cards operate with just the use of the account number and not the actual card itself.
Where corporations can be approached by financial institutions, small businesses have to apply for credit. It can help the application if it is made to an institution with which the small business manager already has an account. This way, the credit card company can then more quickly assess the credit history of the individual. If it is good, application is more likely to be approved. However, if the individual has a negative or poor credit rating, that can have consequences for that person’s business credit card account application – credit limits are likely to be lower and interest rates are likely to be higher. A business credit card account, in terms of a small business, is a way of keeping the manager’s personal spending separate from the expenditure of their business. Yet, as with a personal credit card, a business credit card account , it has to be managed sensibly in order to maximise the available benefits: repayments must be made on time, as the incurring of any penalties cannot only impact upon the business, but also upon the credit score of the small business manager.
'Yes' -is the answer that's comes out almost immediately. That is true at least for most businesses (especially small businesses). Before we delve deeper into how business credit cards are helpful, let's try and understand what a business credit card...
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