Owning a business brings a storm of uncertainties and challenges, especially in the financial spectrum.
In fact, one of the largest issues of newly started entrepreneurs is business funding and the cash flow it requires.
Even if you successfully kickstarted the business, it consistently requires hard cash to go on or grow.
It is like feeding a giant monster that you have created! Well, first of all, it is okay to feel so as funding and cash management with business isn’t a piece of cake.
You need to have cash at your hand all the time for plenty of reasons you can or cannot think of rightaway.
But since you found a potential solution for this problem – Business Credit Card!, we are here to convince you further that it is crucial to have one.
And trust us, it is not just about business funding but more than that!
Separating Personal and Business Expenses
Whether you are a small business owner or a solo entrepreneur, business credit cards can help you separate your personal and business expenses.
You can easily part your finances with two different separate statements making it convenient for you for record keeping.
Business Credit cards will be used specifically for business expenses, and not personal.
It also helps you maintain accurate records for annual tax returns. Tracking your business investment and calculating profits or losses also becomes easy with these two separate accounts.
There are many business credit card companies offering offline tools to track your expenses, making seeing the yearly savings much easier.
Not to mention, you can easily find all of your invoices, purchases, business investments and every single business-related penny.
Get Your Overall Credit Expand
If you are aware of how credit works for the financial health of any person, the similar happens to your business financing as well.
Using a personal credit card for business purposes isn’t something you should do at all.
It is not just going to affect your business financial health but also personal financial health as well.
Image Source: Credit Cards
First of all, it is most likely that you have been using your personal credit card for personal purposes.
So you will have less credit available in the card due to the personal or family purchases.
It also goes the other way around as well. If you are using a business credit card for personal use, the same happens.
So you are basically hampering one credit capability and credit balance with another reducing your overall credit capability.
Rather you should get yourself a different business credit card and personal credit card for separate use.
And that, clearly, is going to increase your credit balance and improve your credit score for the long run as well.
Easy Managing Your Cash Flow
To maintain your cash flow, you need to get the credit whenever you need but even your personal credit card has limitations.
Also, the rising balance of your personal account can limit the growth of your business.
Image Source: Easier Accounting
It is due to the fact that the personal FICO score is actually measured by the debt usage which gets compared to the account balance you have in your credit limit.
Overall, it is going to negatively impact your credit score.
And business requirements where the money is involved can rise up to at these points to tense the situation.
For example, the raised invoice to pay for your business will be sitting long at your desk.
Image Source: Engadget
You can most certainly use a credit card here where you don’t have to pay the interest if you pay the amount taken from the credit in a given time.
The benefit of credit cards simply gives you enough time to maintain cash in your business without any additional expenses to it.
If you play smart, business credit cards are a win-win game and help you in any crisis events.
When cash flow is one of the biggest challenges of running a business, business credit cards can simply eliminate or at least reduce this problem.
Business Credit Card Helps You Establish Your Business Credit History
If you have an active business credit card for the past few years or at least one of two years, it is going to establish a well-documented business credit history.
Now where does this help your business?
Well, when small businesses try to get a fat loan from multiple banks, and this happens usually when they are going to expand after one or two year, banks reject their application.
Image Source: Small Business Trends
According to business financial gurus, this happens due to absence of any business credit history of those businesses making them credible for returning money on time.
Now, even if you have taken a loan for your business and paid it but it is on your personal credit card history, it doesn’t matter.
The significance of the business credit history is huge in getting loans or other purposes as well.
This also helps you grow your business financially over the years when it becomes easy for you to get larger loans with the help of a convincing business credit history.
You Can Delegate Without Loosing Control Expenditure
Your business is growing or going to and that needs hiring more and more employees.
Delegation is an essential skill and a necessity to the success of a business. It is also about the right timing.
Image Source: C & EN
When you delegate, it is important to give authority to the responsible person so they can make minor decisions.
This is something that is important and if you are not able to let go of that, your business is going to suffer.
But there is some control that is essential to be in your hands, and that is financing and expenses regarding it.
So business credit cards are the best way to maintain that financial control over the expenses your employee makes on a project without interfering really.
Or at least you will be able to track and monitor expenses and even limit it according to the specified requirements.