Using a business credit card can make it easier for your employees, managers, and other authorized individuals to make the purchases necessary to keep your operation running smoothly and efficiently.
Managing business expenses with traditional reimbursement systems can be a hassle for everyone involved.
Employees are expected to front the cost of business purchases out of pocket, then wait days or even weeks to get paid back. On the finance side, tracking receipts, verifying expenses, and processing reimbursements creates unnecessary manual work and introduces the potential for errors or delays.
While reimbursements may offer some businesses tighter control over cash flow, they can also add friction and slow down operations. Business credit cards offer a more efficient alternative, giving your team the ability to spend securely and responsibly while streamlining oversight for your finance team.
In this article, we’ll explore the key benefits of business credit cards and what to consider when choosing the right solution for your company.
Key Takeaways
- Takeaway #1: Business credit cards come with a variety of benefits that can give you access to more funds, help you keep spending under control, and even make it less expensive to make the purchases you need.
- Takeaway #2: Business credit card benefits include funds flexibility, improved credit profile, separation of business and personal funds, spending controls, and rewards, perks, and discounts.
- Takeaway #3: When shopping for a credit card, be sure to look for the benefits and features that work best for your business.
Business Credit Card Benefits
Funds Flexibility
One of the biggest advantages of a business credit card is simple: it gives you access to credit. Even with the best planning and budgeting, you might not always have cash on hand when you need it, especially if you’re waiting on payments from customers or recently completed jobs.
Instead of pausing operations or dipping into emergency funds, a business credit card lets you make essential purchases now and pay later. Business credit cards are also more flexible than personal credit cards because they often come with higher credit limits, lower interest rates, and customizable payment options.
Improved Credit Profile
A good credit profile can open doors to improved financing options, more spending power, more favorable payment terms, and a better reputation with vendors, partners, and other business relationships.
Using a business credit card wisely can help your operation build its credit rating up to the point that even more options for unique funding and financing become available.
Separation Of Business And Personal Finances
Keeping your business and personal finance separate helps make your bookkeeping simpler and clearer.
This is especially important when it’s time to file taxes. Using a credit card specifically for business purchases can help save you a lot of work when it comes time to categorize expenses and report eligible deductions on your business’s 1099.
In addition, the interest and fees on a business credit card can be tax-deductible if you use the card for business expenses only.
What To Look For In A Business Credit Card
Spending Controls
Spending controls are an essential feature to look for in a business credit card because they give you the ability to dictate how, when, and where the card is used to make purchases for your business.
Common spending controls include:
- Spending limits (by cardholder, location, vendor, time, day, etc.)
- Real-time alerts for questionable transactions
- Spending categories for easy recordkeeping
- The ability to turn off cards quickly and easily in just a few clicks
- Advanced security to prevent theft and fraud
Advanced business credit cards even make it easy to activate, deactivate, and customize these controls in a matter of seconds from your own personal dashboard so you don’t have to worry that your team members will spend any more than necessary.
Efficient Expense Management
Business credit cards often come with advanced tools to help make your expense management more efficient, including:
- Automated receipt matching, transaction categorization, and expense approval
- Integration with accounting software, telematics, and fleet management software for even more control over company vehicles
Some cards also offer advanced reporting that can help you identify unnecessary expenses, get a clear view of spending patterns, and make better financial decisions.
Introductory Offers
Many business credit cards include introductory offers that can help you save money on all your spending.
Examples of introductory offers include:
- Low annual percentage rate
- No annual percentage rate for the first year
- No fees for balance transfers
- Double rewards for the first three months that you use the card
- Statement credits for use towards future purchases or payments
Keep in mind, though, that introductory offers are usually only good for a certain period of time (e.g., 12 months). After that introductory period, standard rates and account details apply.
Be sure to read and understand the agreement before signing up for a business credit card.
Low Or No Annual Fee
Some business credit cards charge an annual fee, meaning you have to pay a certain amount every year in order to use the card. You may still have access to rewards, perks, and discounts, but if the fee is too high, it can offset these available benefits.
To that end, look for a card that charges a low (or no) annual fee. That said, annual fees shouldn’t be a deal breaker. If the fee is low enough that your business is still enjoying benefits that it can’t get anywhere else, don’t worry about it.
Rewards, Perks, And Discounts
Common rewards, perks, and discounts include:
- Cash back and/or miles on certain purchase
- Membership rewards points
- Travel perks
- Cash bonuses and annual fee refunds when you spend certain amounts
- Discounts on purchases made at certain vendors
When shopping for a card, be sure to compare the rewards, perks, and discounts to find the combination that works best for your business.
Monitor And Manage Spending With Coast
Not all business credit cards are created equal. Some come with a few benefits. Others come with more.
The Coast smart card, however, gives you everything you need to monitor and manage spending like a pro.
With Coast, you get:
- Precise rules by cardholder
- Ability to block purchases from specific merchants
- GPS-powered controls
- Limits on total spend or number of purchases
- Limits by time and day
- Integrations with telematics and accounting software for even more control
- Real-time alerts for declined or suspicious transactions
- Streamlined alternative to employee expense reimbursement
To learn more about how Coast can help your company, visit CoastPay.com today.
Frequently Asked Questions
What credit score is good for business?
There are a number of business credit score rating agencies, and each has a slightly different system.
- Paydex: 1 to 100
- Dun & Bradstreet: 80 or higher
- FICO SBSS: 160 or higher
- Experian: 75 or higher
- Equifax: 75 or higher
Regardless of the rating agency you use, a higher score shows lending agencies — like banks and credit card companies — that there is less risk of lending you money.
Higher credit scores give your business better access to credit, higher credit limits, lower interest rates, and an improved business reputation.
What credit score does a new business start with?
A new business starts at the very bottom of the credit score range — typically zero or close to it. With regular, responsible credit use, your score will increase and stabilize over time.
Building up from zero and maintaining a high credit score shows lending agencies that you pay back what you’ve borrowed and do so on time as often as possible.
How can I improve my business credit score?
Improving your business credit score takes time and good financial behavior, but there are a few things you can focus on to get the ball rolling.
Pay on time (or early). Whether you’re paying a credit card, a loan, or a bill from a vendor, send or transfer the money on time (or early) to show that you abide by the rules of the agreement.
Pay balances in full if possible. Pay off small credit card balances and vendor bills in full whenever possible. This shows the credit rating agency — and future lenders — that your business is trustworthy with their money.
Keep credit usage below 30% of your available credit. Granted, it’s not always possible to pay your balance in full every month. That said, do your best to maintain a balance at or below 30% of your available credit. So, if your credit limit is $20,000, you would aim to keep your balance at $6,000 or less every month.
