In larger businesses, it’s common for several authorized employees to be issued company credit cards. This allows them to make purchases easily on the company’s behalf as needed, and not have to go through the long process of reimbursement if they used their own cards.
In a smaller business or a start-up, it’s less common of a practice, since, in some cases, it may just be the owner using their personal card and personal funds anyway.
However, whatever size the business, it’s not a bad idea to have official company credit cards. At the most basic level, it makes it easy to separate business expenses from other expenses, especially for tax/financial purposes.
There are some other advantages to some kind of credit card, including:
- It can help your company build credit. Using the card and paying off monthly is definitely good for your balance sheet, especially if you don’t have to pay interest this way. But it can also help solidify and eventually increase your company’s credit score. This can come in handy in the future if you seek out larger financing.
- Flexible rates. Some companies like the ability to have an interest rate that changes, rather than something that’s fixed that might be a little high. Knowing the rate can change can increase can encourage you to pay things down as much as possible.
- Security. Part of the usefulness of a credit card is that you can use it anytime. Certainly, you can spend money in other ways such as official company checks, but this might take a little longer. Credit cards can be especially handy for emergencies when there isn’t a lot of time to worry about going through official purchasing channels.
- More tools. Credit card companies often can provide a variety of ways to help you keep track of your spending, including different types of expenses and the percentage spent. This can be handy if you perform regular self-audits to assess where your costs are going and if there are ways to cut back in any areas.
For more financial strategies visit Simplicity Capital Finance.
