4 Reasons Businesses Need Credit Cards

Credit Cards

Running a business requires a constant cash source. You need it to keep up with the day-to-day operations. This includes paying suppliers, salaries, and logistics. Some entrepreneurs will use personal credit cards to pay such expenses.

But, what you are doing is mixing personal and business finances. Talk to any financial expert and they will tell you that is a bad idea. An inability to make repayments on a credit card has significant ramifications. One is the impact it will have on your credit scores.

A good idea is to apply for a business credit card. We will show you the benefits of doing this below.  

1. Business Credit Cards Build Your Business Credit

We go back to the point of separating personal and business finances. In this way, one does not affect the other. If the business should run into any problems, you will not have personal liability.

The separation will also help during tax preparation. You don’t want the nightmare of tracking company cash flow and expenditure while adding personal use to the mix.

Apply for prepaid cards that report to the credit bureaus. The bureaus will establish a separate business credit report.

A strong business credit score has so many advantages. It allows you to qualify for competitive rates when borrowing cash. Lenders are only too happy to do business with a company that has a good repayment history.

Suppliers run business credit checks to establish creditworthiness. Keeping up with credit card repayment will improve your credit scores. It provides a clear indication to the suppliers that you will be able to pay them.

Do take the time to monitor your business credit report. Any errors or inaccuracies will lower your credit scores. You can hire credit repair professionals to keep a watch over them for you. If they identify any mistakes, they can help rectify such.

They can, for instance, remove paid collection accounts from the credit report. Do note that any errors on the credit score will stay for up to seven years. Through no fault of yours, the business could be losing the opportunities that come with a good credit score.   

2. Business Cards Are a Source of Funds

Personal credit cards have a limit on what you can spend. They are typically lower than what you will get with business credit cards.

The higher limits provide an excellent source of funds to keep the business operational. The issuers will offer other incentives like interest-free repayment terms of up to three months.

We go back to the point of looking at the benefits the issuer gives. Such terms give you some breathing space when making payments. It also ensures that you do not affect your credit score.

A good cash flow allows for higher productivity and scalability. It can also keep the business afloat in times of business fluctuations. And, you can take care of emergencies without resorting to using personal finances.  

3. Access to Excellent Bonuses and Rewards

Some business credit card companies offer fantastic bonuses when you sign on.  You may not get the same when you apply for a personal one. Take the time to research for the best issuer. Look at what they have to offer in terms of introductory rates, bonuses, and payment terms.   

Credit card companies will tag the bonuses on your credit history. The stronger it is, the more value you get. The competition is high amongst credit card issuers.

Issuers throw in rewards/bonuses like cashback, traveler miles, points, and discounts on purchases. Some offer zero interest rates on new cards. The Business Platinum card from American Express is a fantastic option if you travel a lot.

Ink Business gives you up to 100,000 points when you sign up. Also, go for those that offer package protection. That means zero foreign transaction costs, warranty protection, auto rental damage collision waivers, and so on.

A good example is All Capital One business credit cards. There are tons of excellent business credit card options available. Don’t be in a rush to sign up for one without taking note of the bonuses, rewards, and incentives.  

4. Business Expense Management Becomes Easier


Managing business expenses can be tough. It helps to know where the money is going at all times. Business credit cards can help with budgeting and record keeping. The company gets statements making it easy to track spending.

Records are available on request which is a big help when preparing taxation documents. Some issuers offer integrations with accounting software. You can import or sync the records making it easy to track expenditure.

And, you don’t have to spend hours manually inputting data. The automatic updates will save the accounts department precious time.  

Business credit cards are also ideal if employees manage significant business expenses. And that is not all, you can set a cap on how much they can spend. Most issuers have apps that let you monitor expenditure. They send an alert anytime someone uses the business credit card.  

Here is a handy tip. Develop a credit usage policy for your company. It should define how many people get to use the cards, for what reason, and spending limits. Without one, the business can run into serious debt.

Final Thoughts

There are tons of benefits to using business credit cards. We have highlighted the major ones above. These include the separation of personal and business finances. Prepaid cards that report to a credit bureau can help build your business credit score.

The higher spending limit will improve cash flow to the business. The issuers give bonuses and rewards that provide a lot of value to credit cardholders. Do your research to find the best credit companies. The advantage is there are tons of options available.

Business credit cards can help with money management for the company. It becomes easy to track expenditure. As the business owner, you can put a limit on spending amounts.

Develop a business credit card policy to control usage. And, it is critical that you keep up with repayments, otherwise, you will affect the business credit score. Keep a close eye on the credit report because any inaccuracies can impact the score as well. Credit repair professionals like Los Angeles credit repair services can help with monitoring and correcting any mistakes.

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