Written by Suzette Covalt
Business owners can utilize credit cards two different ways. The first way is accepting them as payment for their goods and services. Studies show that businesses who accept credit cards tend to make more money than those who do not, simply because customers who pay with credit cards generally spend more than those who pay with cash or check. Here are the most common pros and cons to the business owner:
Pros
- Convenience
- Increased sales
- Helps with cash flow (immediate payment)
Cons
- Processing fees (mitigated by increased sales or compliant surcharging)
Payment Card Processing works together with the business owner to create the perfect payment option for you and your business. i.e. mobile pay, invoicing, gift cards, online processing, wireless terminals, countertop terminals. They also offer reporting tools to help with efficiency.
The second way a business owner can utilize credit cards is to use them as a tool to help achieve short-term goals, such as keeping your cash flow going until you receive the payments you are expecting or take advantage of 0% interest for a larger purchase and make sure you plan accordingly and have the balance paid off by the time your intro rate expires.
Business credit cards provide significant advantages for responsible borrowers. i.e. cash back, rewards/points, interest free periods and expense management tools. Keep in mind, utilizing credit cards can benefit your business as long as you know and understand the pros and cons. Here are common pros and cons to the business owner:
Pros
- Helps separate business expenses from personal
- Easy accessibility vs. a business loan
- Helps to organize your cash flow
Cons
- Higher Rates after Intro
- Impact to your personal credit if personally guaranteed
- Risk of overspending
- Employee abuse (mitigated by monitoring their spending and enforcing limits)
A business credit cards, when used effectively, can be a powerful tool for management and growth. You could significantly enhance your business’ financial health and have easy access to the flexibility of credit. Take time to learn the ins and outs of business credit cards. Talk with your CPA or Business Banker to see which card would fit perfectly with the needs of your business.
Three Important Keys To Always Remember: ALWAYS pay on time; ALWAYS keep your spending below 30% of your credit limit; and ALWAYS watch for changes in your terms and conditions.
