Business Credit Card

Thursday, June 7, 2012 at 4:19pm by Site Administrator

How to Effectively Manage Your Business Credit Card

Although business credit cards provide a valuable way to control your company’s spending, they can easily lead to trouble if mismanaged. Just like a private credit card, spending on a business card can get out of hand, and when multiple employees have access to the card, the risks multiply. Fortunately, with a little forethought and planning, you can manage your business credit card in a way that will improve both your company’s credit score and the financial health of your business.

When you first obtain a business credit card, you most likely used your personal credit history to qualify for it. Once the card is established, however, your business begins generating its own individual credit, and this business credit needs to be cultivated and maintained with the same care as you give your own credit.

Tips for Managing a Business Credit Card

You should work to maintain your company’s credit score as thoroughly as you do your own. In fact, it may be somewhat more important. A business is judged by how well it manages its finances, and your business will be viewed as more trustworthy and successful if it has excellent credit. Additionally, maintaining good credit for your business makes it easier for you to obtain loans or other sorts of funding in the future if they become necessary.

Here are a few tips for establishing and maintaining a business credit card to improve your company’s credit:

  • Apply only for the amount of credit that you will need and can maintain with the financials of your business.
  • Establish a profile with all three credit unions so that you can self-report.
  • Maintain business credit by placing various business expenses such as utility bills under your company’s name, not your own, so that the credit card is not the sole method of affecting the company’s credit score.
  • Be sure to ask vendors to report your payments as well since business payments are not automatically reported.
  • Pay the bill on time; it goes without saying, but it’s harder to rebuild damaged credit on a business account.
  • Don’t allow your personal and business expenses to co-mingle; keep the purchases separate for each.
  • Only take on debt that will help increase your revenue. If an action doesn’t improve the health of the business, avoid it.
  • Keep an eye on your statements. By keeping strong financial records, you can watch out for any problems or irregularities.
  • Choose a car with good rewards. Business credit cards are usually rewards cards, and by choosing one with rewards that are relevant to your business, you can maximize the benefits of your card.
  • Use your interest-free days wisely and pay off the balance in full before the introductory period has finished.

Maintaining a Card With Multiple Employees

Maintaining your business credit card becomes more complicated when multiple people have access to the accounts. In addition to all of the above practices, you will need to ensure that everyone who has a card is on the same page as you about spending habits and financial responsibility. Choosing who to trust with a business card is not a decision that should be taken lightly. Many banks hold the company’s owner personally responsible for a company’s debts, so irresponsible card use can wreck your personal credit as well as your business’s.

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