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Business Credit Cards Help Businesses Manage Finances

Business owners are faced with more than just the direct challenges that are a result of operating their businesses. Not only do business owners have to perform the duties of their specific business; but they also have the responsibility of managing any staff, and keeping track of finances.
Business finances can be a nightmare! Most business owners are very pressed for time, trying to get everything accomplished- and it could be their record keeping suffers as a result of the lack of time. Business credit cards can help you resolve this situation, and actually save you time and money. You might be wondering how a credit card could save you money, considering they have interest fees and finance charges and all sorts of “hidden” expenses; but with the right business credit card, your financial record keeping will not only become easier to manage, but will in fact reduce the time it takes you to pay your business expenses and saving that time will result in your ability to put your time into money-making activities.
Pay All of Your Business Expenses With a Single Credit Card
The first step to easier financial management and record keeping is to obtain a business credit card and designate it your one-and-only method for paying your operating expenses. Whenever you need to purchase business supplies, make a utility payment, order lunch for staff appreciation day you’ll whip out your new card and that’s where the charges will go.
That means you won’t pay with a personal check and have to transfer funds later to make sure you’re keeping your business and personal money separate. Using a single credit card for all your business needs means at the end of the month, you’ll receive a statement that itemizes every expense you had for the month.
Have you discovered the value in this yet? When you pay for everything on the single credit card, you’ll receive a single statement with a list of everything you’ve purchased or paid for, all in one- convenient place! You’ll easily be able to divide your expenses into categories for tax reporting purposes, and see at a glance what you’ve paid for the month versus what your business income was for the same month.
Give Key Employees a Business Credit Card
If you have office managers or other staff that have to make purchases for the business from time to time, there is a simple solution to this situation as well. Simply order additional business credit cards in the employee’s names and all of their purchases will appear with yours on the itemized statement. Many credit card companies will divide the purchases by each of the credit cards you have on the statement, so you can also easily see at a glance which cardholder made which purchases.
Easier Checkbook Balancing
Once you’ve begun making all of your business purchases and expenses using your business credit card, you’ll find that keeping your checkbook under control is a much easier task! Rather than having numerous entries throughout the month, you could very well have only the need to write out just one check each month to pay your credit card balance. It’s much easier to balance a checkbook with one or two transactions than one that has a few hundred checks and ATM card purchases going through each month!
Additional Benefits of Using Business Credit Cards
In addition to each of the benefits described above, using credit cards for business expenses makes it possible for you to earn rewards from various rewards programs offered through card issuers. You could be earning cash back or airline miles, among other benefits, that build up rapidly when you use your card to handle all expenses each month.

Potential Pitfalls of Business Credit Cards

Although business credit cards emphasize their many benefits to small business owners such as record keeping, rebates on business expenses, and travel related perks, there are also some potential pitfalls related to using a business credit card for small business owners. Below are a few common risks associated with using a business credit card:
Potential for Abuse: Many business owners find the possibility of instantly funding their start up business with a credit card to be very appealing. However, when there is very little or no cash available to a business owner, the potential to abuse credit cards is great. During a business start up, an entrepreneur usually has difficulty obtaining loans or other ways of financing their business, and they turn to credit cards to purchase the items needed. As with many small business start ups, it sometimes takes several years to begin to see a profit. Therefore, they stay in debt, adding financial burden to the new business.
High Interest Rates: Business credit cards, like other credit cards, often charge high interest rates. The accumulation of these interest rates when the card is not paid off monthly can add a large amount to business expenses. This occurs most frequently with cards that offer low introductory rates. Card holders may not be aware of the amount this rate will increase after the introductory period ends. Because of this, and due to low minimum payments, business credit cards may take longer than expected to pay off completely.
Risk to Reputation: Just as with personal credit cards, if business credit cards are not used responsibly and carefully they can lead a new business into a large amount of debt as well as damage the reputation of the business by lowering it’s credit score. This can make it even more difficult to get credit or loans with suppliers in the future. It can even put an owner out of business.
New businesses can be very expensive and the cost of doing business can be very high. However, with effective and careful credit card management and careful planning when choosing a business credit card, most of the downsides of business credit cards can be controlled or avoided altogether. Using a business line of credit rather than a credit card is the best way to avoid many of these pitfalls. Business lines of credit usually have more flexible and also more favorable financing terms.