5 Reasons to Own a Corporate Card for Your Business
As with personal credit cards, corporate credit cards can have many advantages for a business' finances. Fortunately, today they are easier to access and there are more options are available.
Of course, the risks must also be taken into consideration, as well as using them wisely so that they work in favor of the growth and stability of your Australian business. As with a personal card, you should always take into account the credit limit, interest rates and payment deadlines. Today we focus on the advantages of a corporate credit card and the positive impact it can have on the growth of your business.
It is normal that during the first months or years of operation of your business you use your personal credit card or your own cash to make payments for merchandise or services. However, this can generate problems in the administrative and accounting order; for example, when recording expenses or managing cash flow. Of course, confusion can also arise when calculating tax payments.
Just like a corporate bank account, a card is very useful for separating expenses, bookkeeping and budget monitoring. So having one goes a long way toward ensuring the financial health of your business.
A corporate credit card allows a business to go to the next level for another important reason: the possibility of acquiring equipment, tools, supplies and systems in interest-free monthly payments. Many times, small and medium-sized companies (SMEs) do not have the funds available to purchase a computer or a refrigerator with a single payment; nor do they have the banking history to apply for a credit.
On the other hand, with a card, not only can you take advantage of installments or deferred payments, but also of offers and discounts such as those that appear at the beginning of the year, and even pay taxes such as car ownership or property taxes. Of course, it is important to make sure that the payment option does not generate interest and to comply punctually with the monthly payments.
Credit cards can also help you out of an emergency in times of low sales and cash flow problems. Ideally, every business should have an emergency fund, but the reality is that this is not always possible.
For example, perhaps one of your most important customers is late in paying a bill, so you have to replace merchandise or pay for services such as Internet and electricity. With a card, you can get out of this predicament, but always keep in mind the payment deadline for the current spending period and whether or not you will have the necessary funds at that time.
If you meet your commitments on time, the bank or credit card operator will eventually grant you a longer payment term, which will mean more financial leeway for your company.
If you use your corporate credit card regularly and with financial discipline, your business will build a good credit history. This will earn you points so that in the future the credit line of the card can be extended, for example, from 30 to 45 days. And you may even be able to apply for a larger loan to buy machinery, commercial premises or other business needs.
Remember that a good credit history also includes the payment of services such as Internet or cell phone, so it is very important that you keep them up to date.
Finally, do not forget that credit cards usually grant for accumulated consumption. For example, some points can be used to be exchanged for airline tickets, card bonuses or to purchase products from a catalog, among others. When you apply for a plastic card, take into account what these benefits are and what is most convenient for your business according to its line of business.
Likewise, there are cards that offer important discounts throughout the year in certain establishments or that allow you to pay for a purchase three months after it has been made. There are also those that include travel insurance or insurance or the purchase of electronics and telephone products.
All in all, it is a great idea to have a credit card for your Australian business.