Accounting & Finance Uncategorized

4 Things to Consider About Business Credit Cards Before Signing Up

Written by Andrej Kovačević

For any business, maintaining financial flexibility is essential. Without it, they might be forced to forego lucrative business opportunities, have trouble maintaining inventory levels during times of uneven demand, or may even need to lay off workers when things get tight. For these reasons any financial tool that helps you to operate at peak efficiency is worth looking into.

The good news is that there are no shortage of financial tools businesses can use to meet their funding needs. They include unsecured business loans, invoice finance options and even government grants. Those options are best used as part of long-term financial strategy and not for short-term spending needs for reasons that will be detailed below.

Options for covering near-term business costs like underwriting marketing efforts are more limited. In those situations, revolving credit accounts are most often the best way to go. Business credit cards are designed for just such a purpose, yet many business people are hesitant to make use of them.

To dispel some common myths associated with business credit cards, here are four things to consider when weighing up whether or not to use one for your business.

1. Flexible Payment Terms Might be an Option

If you’ve never had a business credit card, you might be surprised by how they differ from their consumer counterparts. One of the biggest and best differences is that many of them offer flexible payment terms to help meet business’s financial needs. That’s because card issuers know that businesses go through periods where their revenue fluctuates.

In some cases, you might be able to put off payments with no penalty when cash flow is a problem. In others, you might be able to take advantage of special interest rates for large capital expenditures, like office furniture or other big fixed cost assets. In fact, card issuers go out of their way to offer favourable terms to businesses in ways that consumers could only dream of, so it’s worth looking into your options.

2. Business Credit Card Perks Pay Off

There is one way that business credit cards mirror their consumer analogues – and it’s the fact that they offer some pretty useful rewards for using them. If you have a consumer rewards credit card, you’re probably familiar with earning things like airline points, hotel stays, and even fuel discounts by making specific kinds of purchases. For businesses, the rewards are even more tailored to their needs.

So what rewards do business credit cards offer? They partner with companies that cater to the business market and arrange for perks that help your bottom line.

For example, you might get discounts on office supplies or a free one-year subscription to G-suite or ZipRecruiter. Some cards offered by today’s fintech firms may even offer thousands of dollars in credits for Amazon Web Services and WeWork office space. There’s no end to the rewards your business could enjoy.

3. Business Card Use Can be Customised Per-User

One of the big fears many business owners have about using credit cards is about who has access to them and to what use they can be put. Here in Australia, news about employees committing fraud isn’t infrequent, and cleaning up after such an incident isn’t always easy. Instead, you can choose to take some simple steps to minimize the risk of this happening.

Business credit cards often allow you to assign specific limitations and privileges to individual cardholders. That means it is possible to cap the spending limit of most employees. You may be able to allow certain cardholders to access the account’s rewards while others cannot. In short, a business can protect itself from inappropriate use whilst still gaining the flexibility of wide-access revolving credit.

4. They’re Available With No Spending Limits

Unlike consumer credit cards, business credit cards typically come with extremely high credit limits by default. This is because the average business’s monthly payment on their cards can run into the thousands of dollars, or roughly double the consumer card average. What’s important to know, however, is that there are also business credit cards with no preset spending limits at all.

In the past, this kind of arrangement was normally only available via a charge card, which required the balance paid in full after the close of every statement. Now, business cards like the American Express Plum offer a hybrid of the two concepts. They have no spending limit and offer cash back for early repayment, as well as the option to defer full payment of a balance for up to 60 days with no interest.

A Financial Option Worth Considering

It should be clear by now that a business credit card is a great short-term financial tool. They can include a variety of value-added options, offer strict controls on use, and can even help smooth out the peaks and valleys of your bottom line without costing a thing.

Of course, it makes good sense to approach the decision to use a business credit card with some care – after all, credit of any kind can be dangerous when used inappropriately. Be sure to consider all of the options, read the fine print, and choose a card that’s well suited to your business’ needs. Then, there’s a good chance you’ll wonder how your business ever got by without one.


“The opinions expressed by BizWitty Contributors are their own, not those of BizCover and should not be relied upon in place of appropriate professional advice. Please read our full disclaimer."

About the author

Andrej Kovačević

Andrej Kovačević is the head of production at Melbourne based, independent digital agency, Amebae Online. Andrej's favourite topics to read and write about include marketing and the ever-changing landscape of Fintech.

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