More business owners to manage their spending with credit cards in 2023
Since the year 2023 began, banks and credit card providers have reported a slight increase in the number of credit accounts being opened by business owners. Now, this may be due to inflation and the cost of living, or it could be due to the great benefits that go hand in hand with having a business credit card. It’s true that small business owners are turning to industry related credit cards, and for good reasons. Here is everything you need to know about this growing trend, and how it could benefit you.
The benefits of biz credit cards
You might be wondering why there has been a sudden rise in the use of credit cards amongst businesses this year. Well, other than the rise in the cost of living it may be due to the number of benefits that go hand in hand with using credit cards. For example, if you look at Fleet Card: Definition, Benefits, And Expert Tips, you will be able to see first hand how fleet managers are benefiting from these types of cards. As well as helping to manage spending it can also help to reduce administrative time and expenses. Industry specialist credit cards can also make bill paying much more simplified. Charges can appear on one simple bill and there aren’t mounds of papers to wade through in order to balance the accounts and manage the funds of the company.
Helping with short term debts
Having a small business credit card can help you as the owner keep your company expenses separate from your personal ones. All too often there are blurred lines with regards to what should or shouldn’t go on the company credit card, and having a separate account can help to simplify the rules. Recent research has shown that inflation could be the reason why businesses are turning to credit cards this year. Paying off short term debts is therefore a reason to take out a credit card for your business.
Choosing the right credit card for your business
It’s no good taking out just any credit card to help you stay on top of your business debts and expenses. You need to carry out thorough research and find a credit card that offers rewards related to your industry. Benefiting from credit card rewards are a valid reason to take out a credit card, as it can balance out the interest you pay in the long run.
More start-ups mean more credit cards
It seems that 2023 is the year of the start-up. More and more people are looking for that longed for side hustle to help them ditch their 9-5 and give them creative freedom. With the dramatic rise in start-ups, this also means there has been a rise in business credit card usage. When a company is first getting off the ground a credit card is the ideal way to purchase equipment, buy stock or get a website up and running in the initial months and years. All essential goods and services may be paid for via credit card so that they can be paid off when the revenue is returned into the business.
Assessing your business’ need for a credit card
If you’re currently on the fence about whether your business needs a credit card, you need to consider a handful of things. The size of your business, type of industry you’re operating in and the potential for growth can be deciding factors. Getting a business credit card may be a good idea if you currently have a business that operates in the hospitality sector. This is because the early days of running these types of companies can be costly and the initial costs outweigh the first couple of years of revenue. Similarly, you may feel like credit cards are more accessible to you if you don’t qualify for certain business loans. Credit cards can help you get set up with a strong marketing plan so it will bring quicker returns for your business.
Potential drawbacks of a business credit card
There are undoubtedly risks that go hand in hand with business credit cards. First of all, business credit cards can be extremely tricky to manage and keep track of. If you find yourself in a position where you have taken out a few credit cards, this can become financially risky. You need to be responsible for your spending, so you should only commit to using one credit card. This can help you to closely keep track of your spending, and manage your credit status. If you have employees using credit cards you need to carefully go through each monthly statement and make sure the card is being used in a responsible manner.
Another clear drawback of having a business credit card, is that you may start to spend more than you can actually afford. In some cases, it can be safer to fund your business with investors or business loans. Try to steer clear from making risky purchases using a business credit card.
Tips for successful use
If you’re a small business owner looking into credit card options, you may be wondering how you can make the most of it and use it to your advantage. Your credit card should not be used to keep up with the long term needs of the business; it should only satisfy short-term debts. If you won’t be able to repay this in a few months, you shouldn’t be using your credit card to make the purchase. Unfortunately, even the greatest credit cards have high interest rates that many businesses would struggle to afford long term. All in all, business credit cards can be a brilliant tool for a start-up, small business or large company, but only if they’re right for you. Funding short term costs are a great idea, and they can be extremely useful if your employees often spend money on behalf of your company as mentioned earlier in the article.
As you can see, business credit cards are on trend and come with a number of benefits. If your business is in the position to take out a credit card, now might be the ideal time!