Use a Credit Card to Improve Your Company’s Financial Plan
Locating funding sources is a critical step for every new and established business. Companies struggle to establish reasonable financing until they have a stronger business credit score. New small businesses can use credit cards to help build their credit rating. Here are some reasons you should consider using a credit card as part of your financial plan.
Manage Cash Flow
Putting day-to-day purchases on a credit card allows you to keep your cash in your bank account until the next month when the payment is due. This allows you to strategically pay vendors to ensure you have the cash you need on hand. While carrying a balance is frowned upon, it can help you through times of low cash flow.
Be creative when motivating employees. Travel rewards, cash-back, or corporate discounts are bigger and better with a company credit card. Many small businesses use the rewards that are accumulated to bulk up their benefits package. Travel rewards may be transferred to a deserving employee. Use Cash-back to help pay annual bonuses.
Improve Credit Score
Build up your credit rating by making purchases and paying off your credit card balance monthly. When lenders see this commitment to your financial health, they typically offer better terms on traditional loans.
Business owners need to keep business spending separate from personal spending. This makes end-of-year accounting much easier and simplifies expense tracking. When only business purchases are put on one credit card, you do not need to filter through statements to determine the intent of the purchase.
Monitor Employee Spending
When you provide a company credit card to employees for their expenses, you can monitor their spending habits. Many small businesses contract with vendors for specific goods or services. With a credit card for each employee, you can monitor exactly where the employee is spending money along with how much they spend.
Writing checks or paying cash for daily expenses increases your bookkeeping hours and opens your financial statements to accidental error. By writing one check at the end of each month to the credit card company, you can save yourself the cost associated with an employee’s time in printing checks and managing cash. This allows them more time to work on higher priority items.
Building a strategic financing plan is important for all business owners. Don’t overlook the benefits that a credit card can provide your company.