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The backbone of the U.S. economy is the small businesses
that are growing at a rapid pace. For their efficient growth
they need access to all types of capital, and in particular
unsecured credit offered through small business credit cards.
Insufficient capital is one of the main reasons for business
failure, and business credit cards can take care of small
business capital needs.
The following information will elaborate on how small businesses
can benefit from a corporate credit card.
Extending Cash Flow
Many businesses such as landscapers, hair salons, and interior
designers depend on continuous cash flows to pay for supplies
or contactors. A business credit card can help them purchase
items from clients before invoicing customers. For example,
a landscaper may use a credit card at the beginning of the
month to buy materials from a wholesale nursery and then pay
it off when the statement comes, after the customer has paid.
This way, the landscaper does not have to pay the money out
his cash accounts. If your business is under similar circumstances
you should look for a business credit card with high credit
limits and benefits for paying off within 30 days. If your
billing cycle to customers goes longer than 30 days, look
for a low interest credit card so that you are not hassled
if you carry the balance a little over 30 days.
Flexible Credit Limits
Credit limits for business credit cards are of two types,
one where the limits are preset by the credit card company
and the other with no-preset limits. Credit cards with preset
limits are quite liberal and generally do not carry an annual
fee. Business credit cards with no-preset spending limits,
such as those from American Express offer the flexibility
but charge an annual fee. If your business spending is spiked
due to inventory purchases, for example, a credit card with
no-preset limits can offer welcome flexibility. However, if
your business works mainly on a cash basis or that doesn't
need to purchase inventory on a regular basis then a credit
card for periodic or emergency uses would be best. Small business
credit cards that offers a moderate credit limit with a low
annual percentage rate (APR) turn out to be more beneficial.
This way, if extra money is needed, it is available for your
business and can be paid out over time.
Business Credit Cards with Rewards
Businesses that involve frequent travel, and also ones where
client entertaining is common, should look at business credit
cards that offer reward benefits. For example, you collect
points on frequent flyer business credit cards for making
charges to their cards and for flying their airlines. Business
spending can also be leveraged to earn substantial cash back
or merchandise rewards. Your accountant can advise you on
how these benefits can be used for either business or personal
use.
Expense Reporting
Maintaining proper records is very important for small business
expense reporting and profitability analysis. Credit card
statements - particularly year end statements will help small
businesses to monitor spending by category, report rewards
and simplify tax preparation.
Your financial advisor or accountant will help you choose
the correct business credit card to maximize your benefits,
and help you make a success of your business.
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