Business credit cards

A business or corporate credit card could be helpful to your business, simplifying your accounting, improving your cash-flow and making it easier to buy what you need.

Read on for everything you need to know about business credit cards and find out how to pick the best business credit cards for you and your company.

Why use a business credit card?

Business credit cards are a great tool for managing company expenses, streamlining cash flow, and accessing short-term credit. By using a business credit card, you can make purchases now and pay them off later, with the flexibility to spread costs.

The credit limit is typically based on the business's financial standing and creditworthiness. Additionally, business credit cards often offer benefits like expense tracking and rewards.

Always be mindful of that fact that, if you don't pay off the balance in full each month, interest charges may apply.

Advantages of a business credit card

A business credit card offers several advantages, including up to 56 days of interest-free credit, which can improve cash flow and spread out the cost of business expenses. Many cards also offer high credit limits, enhancing your purchasing power, and ease of use for online and phone transactions.

They can also simplify expense tracking, especially for employees, and provide benefits like travel insurance, hotel perks, and concierge services. Frequent usage can unlock rewards such as staff incentives or discounts.

Always aim to pay off the balance monthly to avoid interest charges.

Other benefits of a company credit card

Essentially, using a business credit card can help you to simplify your business finances. A monthly statement means you can keep track of expenses and see them all in one place. You will also have online and app-based access to keep up to date more often.

It can also cut the need for petty cash – you may get supplementary credit cards for your employees, making it easier to administer employee expenses.

Your statement will show who spent what and when, and you can set personal spending limits for each supplementary card.

You may be able to collect airmiles or Avios with a business credit card, so you can reward your staff in future

Credit cards for businesses also offer fraud protection. If there's fraud on your card, you won't be liable so long as you report the incident within the required period.

Some card issuers even offer Cardholder Misuse Insurance, to protect you in the event that an employee misuses their credit card.

A number of business credit cards offer discount and reward schemes. Your credit card could entitle you to discounts on everything from flights to office supplies, depending on the card provider.

You can also earn rewards points like airmiles or Nectar points with some cards, which means you could earn enough to treat some of your staff without having to spend any more than you normally would.

Ultimately, finding the best business credit cards comes down to you and your company's needs.

Some companies will prefer to have an expenses system or pay for things only with the money they have coming in, but a business credit card, if used wisely, can be a financial asset.

Things to consider with company credit cards

Think about how  you would use a business credit card – knowing what you want to get out of it will make it easier to pick the right deal. There are a few important criteria to consider when choosing the best business credit card for you:

• Do you need supplementary business credit cards? If you want to give additional cards to your employees, look into the supplementary services offered by the different providers. For example, is there any charge for supplementary cards or a limit to the number you can have, and can you impose your own credit limit on each one?

• What credit limit do you need? Think about how much you can realistically afford to repay and the maximum amount your business is likely to need to spend in a month. Even if you're offered a higher credit limit, don't be tempted to accept it if you’ll struggle to pay it back each month.

• How much can you afford to borrow? Business credit cards are best for short-term credit. Most business credit cards do not offer 0% interest periods and will charge high rates of interest if you do not pay off your balance in full each month. If you are unable to do this, it’s vital that you make at least the minimum monthly repayment. Failure to do so will result in late payment fees and can affect your business credit rating.

• Will you have to pay an annual fee? Many business credit cards charge an annual fee so consider whether the benefits on offer are worth this cost.

• Are you hoping for credit card protection for purchases? There is none. The section 75 protections are part of the Consumer Credit Act 1974 and apply to individual consumers only, not to businesses. If you use a personal credit card for a business expense and claim it back through an expenses claim, it might be covered, depending on the circumstances.

Always compare company credit cards and check the various offers available to make sure you get the right deal for your business.

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