Credit cards for business can make funding at the outset as well as day-to-day expense management a whole lot easier. At the same time, these cards should be used with adequate caution – as much or more than with personal credit cards.

In this article, we provide a complete, holistic perspective on critical aspects to consider when it comes to credit cards for businesses.

After reading until the end, you will know all the best practices that you must follow when it comes to using credit cards for business in the most judicious and practical way possible.


Instant Funding for Businesses

One of the foremost facets of business credit cards is that they provide instant funding for enterprises that need it. Remember that not all businesses need a HUGE amount to get going; sometimes it takes only a small amount to kickstart proceedings.

For instance, let’s say two entrepreneurs come together with each of them having two separate business credit cards that have a $10,000 (or equivalent) credit limit on them individually. Together, this $20,000 amount available to the business may well be enough to at least get it going.

Therefore, from an instant funding standpoint, such business credit cards really prove very handy. In fact, that is the reason we see business funding with credit cards increasingly becoming commonplace these days, especially when the funding needs are not very large.

Caveat – The Funding Comes at a Very High Cost

The caveat to the above point about business funding with credit cards is that this funding comes at an extremely high cost. In fact, if we compare with practically any other mode of funding, you will find credit cards for businesses to be the most expensive funding proposition by far.

Therefore, any attempt to take this source of funding lightly, perhaps being delinquent about repayments, etc., should not even be thought about. Rather, from the very outset, there should be a clear plan on how repayments will be made on business charges made on these credit cards.

Additionally, prior to getting on this path of using business credit cards for funding, every attempt should be made to seek out alternative funding avenues. This includes asking friends and family members; for a business venture that may flourish at a later stage, there is absolutely no harm in asking for money from those that are closest to you.

Thoughtfully Use Business Credit Cards

When you are using credit cards for business purposes, you must ensure that adequate thought goes into practically every charge made on those cards.

Ideally, if the business is handing out such credit cards to its employees, there should be clear rules laid out on the kind of expenses that can be charged on those cards along with a possible upper limit on the value of those charges made.

This ensures discipline on the part of employees, minimizing chances of misuse.

If you are the proprietor and you have business credit cards made out for business expenses, even then we recommend that you lay out some ground rules for yourself. Yes, you need not closely evaluate every single charge made on the card, but you should map out a broad framework within which you would like to see the charges that are incurred on such credit cards for businesses.

Credit Cards for Businesses
There are a number of solid Credit Cards for Businesses out there; you need to choose the one which you deem to be best for your business. Image Source –

Repayment System

Along with a methodical and thoughtfully laid out usage system as indicated above, it is equally important that you also have a clear repayment system in place.

Ideally, before you even make the first charge on your business credit cards, your repayment system should already be in place.

For fledgling businesses that are short on funds from the very outset (which is why they are resorting to credit cards for businesses as funding sources in the first place), having such a system in place from the get-go may prove to be formidably challenging.

But, for running businesses that are not reliant on business credit cards for funding, there is absolutely no excuse whatsoever as far as having a clear and systematic repayment framework in place.

Ideally, expenses incurred on credit cards for businesses should be repaid from a business bank account with adequate funds at all times. This can be set up in such a way that as soon as the billing cycle is complete and payment is due, the payable amount is automatically debited from the business bank account.

This way, there will not be much of following up to do, and yet, there would be absolute assurance regarding repayment of the amount due on these business credit cards.

Additional Benefits that Come with Credit Cards for Business

Business credit cards come with a wide variety of additional benefits, especially tailored for business users. For instance, there could be additional air miles accruing on some business credit cards, more than what you would see in case of personal credit cards.

Further, often these credit cards for businesses come with enhanced lounge access, say more FREE lounge visits in a year, as compared to personal credit cards.

From a hospitality standpoint as well, such as tie-ups with business hotels, complimentary meal vouchers, and stays, etc., business credit cards continue to rule the roost.

Now, where a lot of businesses lose out is on not availing these services in the very first place. And with many of these perks having timebound validity clauses, once they lapse, they cannot be renewed. They are gone, poof!

Therefore, our recommendation in this instance is to have a system in place that closely monitors all these various benefits accruing on business credit cards. As and when it notices these benefits expiring without being utilized, it sends out alerts well in advance so that they are not wasted.

In Summary

Business credit cards clearly offer a lot of value. Business funding with credit cards is especially becoming commonplace today. At the same time, financial discipline and timely, FULL repayment will always be sacrosanct with business credit cards, as with personal ones.