With the vast array of bonuses, packages and deals available in the business credit card marketplace, it can become easy to forget the primary function of a credit card and just what that means to a small or new business. As a means of providing a vital supply of credit during ‘lean times’ that can affect a business of any size at any time, the business credit card remains unsurpassed and it is worth taking stock and considering just how important a function this can be. The worlds of business and finance can be harsh and unforgiving ones – especially when the chips are down – so it pays to have as many tricks up your sleeve as you can.
Ask most successful businessmen about the history of their business and the majority of them will tell you about the bleak periods that came along the way. The reasons may be different – a delayed payment from a large client or a time when your services or product seem as though they can’t be given away; each company has its own story and it is generally littered with unforeseen events. The offer of credit from a business card acts as an insurance policy against such times; regardless of whether a client pays on time or not, staff wages and bills still have to be paid in order to facilitate the normal running of the business.
Other, less successful, stories can be heard from those who have decided to try and use their own personal credit cards to try and tide their business over in times of difficulty. Not only do the comparatively expensive interest rates of a personal credit card put great strain on the owner’s account, but a personal credit card is simply not designed to cope with the often heavy demands that a business can put upon it; a business credit card is designed specifically for this task and the accompanying interest rates reflect the lender’s investment and belief in your organisation. The APRs are created to be manageable, if the account is used sensibly and there are even introductory offers as low as 0% to help the entrepreneur in the early stages of trading. But do investigate the rates that come into play after the introductory offer has expired; if you want to be able to take advantage of a credit offer, you want to be able to meet the monthly repayments on time and in full.
This last point is worth bearing in mind, even if you apply for a business credit card that is only there as back up for when cash flow is a problem. While it’s true that the facility doesn’t have to be paid for until it is used, introductory rates do not wait for that time – they exist for a fixed period and when that time is over, so is the 0% offer; researching what you’ll be paying after that time period can save you a lot of money and worry.
Using credit and paying it off also benefits your company in another way: it launches your company’s credit rating. As the business owner, your personal credit rating will have great bearing on just how much and the type of credit you can expect to be offered. As your company’s score improves, it will eventually disentangle itself from your own and allow the company to qualify for larger credit deals with all the associated benefits.
Finding the right card can mean a certain amount of research and investigation, but it can only pay dividends in the end. A company card is likely to be one of the most useful and important assets that your company will have, so it is worth putting the work in to get the best result.
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