Managing company accounts can be quite complex. Even for the most seasoned business owner. The larger the size of the enterprise, the more diversified the expenses. From the input to produce the products, even the paper clips that employees will use. All this has to be organized so as not to get out of control. A business credit card is an option to centralize business spending. At the same time it offers advantages to the entrepreneur.
The business credit card can help the company to have more control over their spending.
Even so, some business owners neglect to pay regular rates and can accumulate unnecessary debt. Read the following how the credit card works for business and tips for not falling into the pitfalls of spending.
Business Credit Card Operation
The business credit card is quite simple. It is very much like credit cards dedicated to traditional (individual) consumers. They have annuity, a credit limit and installment payment options , including for consumer goods purchased with another currency.
To have a business card, simply go to a bank branch and place the order. The difference is that the request must be made with the data of legal entity. Since the business card is very specific, banks do not usually advertise as much as credit cards dedicated to the individual.
What few know is that financial institutions provide differentiated conditions for legal entities. For example, business credit card rates may be lower. The credit limit is much higher.
For banks, a well-structured business represents more assurances that the company will be able to pay the expenses with the card.
On the other hand, it is difficult to find a business card that gives the advantage of cash discounts. This is a widespread practice in credit card options for ordinary consumers.
Why make a credit card for the company?
The first advantage that business credit card offers is the management of corporate expenses.
With a single credit card, you can control the spending limits of the business areas and centralize expenses. This makes it easier to manage accounts.
Another advantage of a business credit card is the operation of the card. There is a single invoice, which allows for scheduled payments. You will know that always on a certain date you will have to pay the amount referring to the expenses of the company of the previous month. This strategy also serves to plan spending for the following month.
There is good practice in using corporate credit card. This practice is to leave all the fixed expenses on the same invoice. In this amount, the bills for water, telephone, electricity, internet, gas (if any) can be entered.
Still on the justifications, there is nowadays in the market a series of products and online tools of business management. They can be vital to the company. For example, for some direct and indirect marketing tools, the only form of payment is through a credit card . The automatic trigger s newsletter (email marketing) is one of those cases.
Other companies whose employees depend on specific paid software or applications also need the credit card to create and maintain the signatures of those programs. Again, the advantage of centralizing spending facilitates the administration of all these items.
Purchases in installments and credit
Another interesting option for those who want to acquire the credit card for business is the possibility to make purchases in installments.
Especially for small business owners , the option of purchasing installments can be attractive. Smaller firms usually have smaller working capital than larger ones. In case of emergencies, the business owner can use the card for unplanned payments. This is valid in cases of some necessary maintenance, acquisition of new equipment and many others.
The credit arrangements are quite varied. It pays to search the bank where the company has an account – or even competitors – which are the available business credit card options.
Banks are now prepared to offer cards targeted to the company’s spending profile. It is possible to establish, in addition to the credit limit, a limit of expenses or transactions. The seasonality of these items can also be changed to: monthly, weekly or daily. Some banks even let the company choose in which branches the cards can be used, such as restaurants, transportation (like taxis), general trade.
Business card also requires discipline
Just like the credit card aimed at individuals, the business credit card works on a monthly cycle. On a given day, the invoice is closed, containing all the expenses of the previous period. If the company does not pay the invoice in its entirety, interest is generated for the next cycle. And that way the entrepreneur starts getting into debt.
Even with lower interest rates on the corporate card, credit cards still have one of the highest interest rates. Therefore, it is important to keep the use of the company’s card for relevant purchases and for fixed expenses, as already mentioned .
The idea of having a quick and easy way to make purchases is also a way to stimulate spending on superfluous items. Discipline is essential at this time.
The company evaluates to use more than one credit card
Before the company chooses to use more than one credit card, it must evaluate well its financial health and the real need to have more than one card. Sometimes, in an attempt to cover multiple flags or even to distribute to some employees, the company may incur debt. The existence of several cards can hinder control, which would be the main advantage in owning the corporate credit card.
Before researching credit card options at financial institutions, identify what the business needs are. Define which areas of your business will have access to the card and know very well what the flow of payments will be, considering the deadline to pay the invoice.