Business credit cards can be an invaluable tool for managing and monitoring business spending. Furthermore, they help keep work-related expenditures separate from personal expenses for accounting and taxation purposes.
No matter the size of your business, selecting a business card that meets all your requirements is critical. Not only will this build your credit history for future use, but it can also open the door to larger financing opportunities with lower-rates in the future.
Rewards and Perks
Business credit cards provide a host of rewards and perks designed to assist small-business owners manage their daily expenses. Not only do these cards provide cash flow for short-term purchases, but they may also earn airline miles and cash back on everything a business purchases.
Business owners who use their credit card for all eligible purchases can quickly accumulate rewards if they pay in full and avoid convenience charges. These include cash back, points or airline miles that can be redeemed for statement credits, travel discounts or purchases, as well as merchandise from partner retailers.
Some cards offer bonus points in specific spending categories, such as office supplies, advertising and tech purchases. These bonuses differ by issuer and are activated by merchant codes issued by credit card networks.
Transaction and Expense Management
One of the key benefits offered by business credit cards is a centralized expense management system. This helps reduce time spent reconciling expenses, ultimately saving companies money in the long run.
Expense management can be a complex process, so it’s essential that you select the right solution to automate it and make it simpler for employees to submit their claims. Ideally, this software will integrate with your accounting and bill pay systems and offer fully coded data for easy imports.
Selecting a system with role-based accessibility for your users is beneficial, as you can control who has access to what information. Doing this keeps your business safe from fraudulent spending and policy infractions.
Businesses should look for a digital trail to track expenses and expense reports. This will assist employees and approvers in recognizing possible causes of errors or policy infractions.
Purchase Protection and Extended Warranties
Credit cards may not be the first thing that comes to mind when considering purchase protection, but they can offer valuable advantages for cardholders. Many of these cards extend manufacturer’s warranties on eligible purchases at no extra cost, providing valuable extra peace of mind.
This can be a cost-effective way to extend the warranty coverage on purchases you might otherwise have to pay out-of-pocket for. However, it’s essential to note that these policies vary and have specific exclusions and limitations.
Some credit card extended warranties will match the original manufacturer’s warranty up to a certain point and then double it. Others add an additional year of coverage onto an existing policy.
Some cards provide extended warranties on purchases made entirely with their cards, such as electronics, clothing, furniture – up to $10,000 maximum. These warranties don’t extend coverage for resale-, professional- or commercial-use items like motorized vehicles or real estate transactions; computer software; medical equipment; or used items.
Business Credit Score
A business credit score is an integral factor when small business owners decide whether or not to use a business credit card. It determines if lenders will extend loans or lines of credit and what interest rates will be charged.
Business credit scores, like personal ones, are calculated based on information about a company’s payment history, industry risk and overall financial performance. Additionally, it takes into account credit utilization – that is the amount of available credit you have used compared to what’s left available – when calculating the score.
Lenders, vendors and potential partners all utilize business credit scores to assess a company’s financial stability. A high score demonstrates an efficient track record of making timely payments, giving lenders greater assurance when providing money to a business.