A Business credit card is a great tool for companies that need to have an open line of credit for monthly expenses that are not always fixed. These lines of credit are great because you’ll pay interest on what you spend but not for all the lines and can help you through unexpected bumps.
But not everyone needs a credit card so, if you are considering one for your company, you should start your research. Remember that a business credit card is different from small business loans.
If you are considering a credit card for your company, there are some things you need to know about your company and the product you’ll be hiring. Let’s break it down:
What do you need the money for?
The right product for your company will depend on the needs you have. If you need to purchase some new equipment, you should consider doing it with a credit card that has a higher interest rate than, for example, an equipment loan. So, take a hard look at what you need to choose the right financial product and compare small business loans according to your needs. If you need a permanent open credit line to use at your convenience, then a credit card can help you with the awareness of the interest rates mentioned before.
Understand your expenses
Before you hire a credit card, you must know exactly what you’ll use it for and, for that, you need to know how much you spend and where. And, of course, how much are you willing to pay as a cost of having an open credit line. Knowing this will take you to the next stage.
Find a proper credit line
There is no reason for having a small open line of credit like a credit card for business that won’t help you cover your monthly schedule expenses. You should find one that can cover your company credit needs, or you’ll be paying fees, such as annuity, for a tool you don’t use. Now that you understand your expenses, you can ask for a certain amount of credit.
Look for one where you can issue employee cards
This will be useful, especially in companies that have travel agents, because it’s not a good idea to repay expenses your employees had to pay out of their pocket. It’s a bit unfair. And with credit cards for employees, you can keep track of their expenses in almost real-time instead of waiting for them to present their expenses report. Make sure that, if you do issue these credit cards, you’ll also write and share an expenses policy that explains the expenses your company will pay and the ones they’ll have to pay for themselves.
Research its benefits
Some credit cards have extra benefits like air miles, discounts in business class hotels or restaurants. This can be a swinging vote to choose a product because, if you are already using a business credit card, you want to have something extra in return. Ask your executive about these reward programs and compare them to choose the best one for your company and you, so you can keep down some expenses.
Consider other options
Take a hard look at your business needs. You might find out that other small business loans are better for you. Never try to solve a funding problem with a credit card, business, or not. Take a breather and look for options to solve your particular dilemma, and explore term loans that could work best for you. Remember that not only do small business loans are more focused on business needs, but they can also be cheaper and easier to manage.
Business credit cards work a lot like regular credit cards, but there are a few exceptions, like due dates and interest rates. Compare all the options out there and choose the one that makes you feel more comfortable.
Featured Image by Maria_Domnina from Pixabay