Business Credit Card: A credit card is in most cases, a plastic card that helps users pay for purchases, other payments, and services using their credit limit. In most cases, credit cards offer a credit period of 3-5 weeks before which you have to pay the limit used back to the credit card issuing company. Interest is changed on the outstanding amount. Business credit cards have gained popularity today owing to the benefits they offer.
Contents
What is a business credit card?
Business credit cards are intended to be used by businesses for work-related expenditures. Business credit cards are available for all business sizes, allowing them to build a credit profile for better future borrowings. In addition, these credit cards often come with higher borrowing limits, significant reward potential, and tools to help manage spending.
The primary function of business credit cards is to provide short-term access to funds. With the benefit of interest-free days, the business can also improve its cash flow.
The business credit card is a credit facility with a monthly credit limit wherein businesses can purchase anything for themselves. As a business owner, you need to maintain fixed business expenses, such as rent, utilities, etc., so you can use your credit card limit to make up for shortfalls in your cash flow.
You can use a business card to make payments or pay for purchases throughout the month and can pay the balance in the subsequent month. As a result, businesses that want to borrow money over a prolonged period often choose these business credit cards.
How does a business credit card work?
There are fundamental differences between a personal credit card and a business credit card. While business credit cards are used by businesses to purchase goods or pay for specific business-related expenses for the business, personal credit cards can be used to buy anything for yourself. In addition, business credit cards can be given to employees for expenses. This helps organizations to manage business expenses conveniently.
Benefits of using business credit cards
There are several reasons why businesses choose credit cards as their preferred business borrowing. Some of the highlighted benefits of business credit cards include:
- Builds company credit
Business credit cards allow your business to build or gain a good credit score. As a result, it benefits future growth and helps in getting loans and advances. In addition, a good credit score reflects a business’s financial soundness.
- Increase the cash flow of the business
Whether your business is small or big, cash flow is the primary need of the organization to work for the long term. With the help of a business credit card, opening a line of credit for your business and increasing your cash flow becomes easy. You can purchase machinery, equipment, and inventory for your business. The higher the income of your business, the higher the credit limit, which in turn, provides more opportunities to improve the cash flow.
- Streamline employee expenses
It helps when employees use business credit cards to pay for business-related expenses, as it makes the management process more convenient. A business credit card can be given to employees for purchasing business items.
- Helps keep your business and personal expenses separate at all times
Swiping one credit card for personal and business expenses is easy and convenient. However, from an effective bookkeeping point of view, you should keep both your expenses separate. This is especially helpful during tax season as the account is computed separately. And it helps track expenses easily.
- Enjoy loyalty points, rewards, and cashback
A business credit card comes with different rewards as compared to the ones you get with personal credit cards . For example, you get multiple rewards, cashback, loyalty points, and more on business credit cards.
- Keep a tab on your spending
A business credit card lets you track your expenditure and spend on anyone who uses the online portal. You don’t need to make reports of your spending while using business credit cards.
- Receive travel and purchase protection
Business credit cards provide travel and purchase protection as a personal credit card does. This may include no foreign transaction fees, cell phone protection, trip cancellation insurance, extended warranty protection, etc.
Factors to consider before choosing the best business credit card
Here is a checklist of factors you must consider before choosing business credit cards:
- Requirement for business credit cards
Not all business credit cards are identical. Some are specially designed for startup businesses, while others need you to be in a business for a certain period. You must check the credit card requirement before applying for it.
- Annual fees
Like personal credit cards, business credit cards also come with a price, or a yearly fee charged by the card issuer. It should be worth paying the annual fee, depending on the rewards you enjoy.
- Selecting the Bank
For many people, applying for a business credit card from an institution where you have existing financial relationships makes more sense. They might already have a history of your credit, so you are more likely to get approved for these cards without any hassle.
Spend management and card platforms such as EnKash offer purpose-based corporate cards that allow businesses to spend on expenses like travel, subscriptions, marketing, GST, procurement, etc. Moreover, you can avail of a customized card according to your requirements. With EnKash, a simple-to-use DIY platform, you can create, manage, set limits, track, block and do so much more. The process of onboarding various business credit cards is a one-time activity that requires simple KYC documents.
So, visit the EnKash website and get your hands on easily manageable business credit cards!
