The credit card can be a useful thing to have for any individual when used correctly. The same applies to business credit cards. If used properly they can be a useful asset to both business and individual alike. The same dangers apply though and businesses should be aware of the day-to-day use of a card and be vigilant that outstanding balances are paid on time and in full.
A business credit card can be of significant benefit to the individual. It means that all or nearly all business expenses can be purchased by business credit card, which will have a beneficial impact in several areas. Firstly, it will make the often consuming expense forms easier to complete, as the expenses should match or nearly match the transactions on the card. This will result in less time on boring and unproductive paperwork. Secondly, it will separate personal expenditure from business expenditure so the business will be responsible for paying of the card balance, rather than the individual waiting for the expenses to be reimbursed before clearing the business expense from their credit card.
As mentioned previously the business credit card will reduce the paperwork burden on the individual. The same also applies to the business, as the banks provide excellent reporting facilities on credit card transactions. The business will not have to write cheques to individuals for expenses, but can take care of the debt directly, thus saving time in processing the expenses. Another benefit from the reduction in cheques could be a reduction in bank charges, as many business accounts charge for cheques issued.
Most credit cards provide a 45 day interest credit card limit, which gives many small businesses some breathing space when it comes to cash flow. Also, a balance could be maintained on the card if absolutely necessary, but with interest rates likely to be high this is not something that should be entered into without careful thought and planning.
Most banks provide an online management facility for business credit cards, so that means that transactions and card activity can be checked daily. Also, it means limits can be controlled by managers and directors on credit cards.
The ability to monitor spending daily and set the limits on a card does to some degree combat the dangers of individuals spending erroneously on the card issued to them. Another way is to limit the spending to certain items like fuel and some banks do allow this facility. There are the normal risks of security and fraud as with any credit card.
It is possible to get a tailored solution from some banks depending on your requirements. Also, you should be able to get charge cards and debit cards as well as the normal credit card offerings. The British Bank Association (http://www.bba.org.uk) has a list of banks with business banking facilities.
A comprehensive look at uk credit cards and in particular low interest credit cards and how to comparing credit cards can work for you. Also, a look at the different credit card types such as cash back credit cards
YOUR HOME IS AT RISK IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOAN SECURED ON IT.
The articles on this site are for general information purposes only and should not be construed as advice under the Financial Services and Markets Act 2000. We strongly advise that you take appropriate professional and legal advice before entering into any binding contracts.