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10 Credit Card Tips for the New Year
by Kristen Gramigna Wed, 02/06/2013 - 12:22
It’s 2013, a year of new opportunities and new fiscally healthy resolutions for your business. One of these resolutions, applicable to any business, is to control business credit.
We wanted to share 10 credit card tips for the New Year – advice to assist you in controlling expenses, developing an effective monitoring system, and ensuring business profitability. Here they are!
1. Use separate cards for different identities. Use your business credit card for business transactions only and your personal credit card for personal purchases only. Using one for the other can cause a lot of financial hassles and send a wrong signal that you are not business savvy and could be fudging expenses.
2. Control finances. One of the advantages of using a business credit card is that the bank, or the credit card-issuing company, sends a detailed statement of the transactions at the end of each month or cycle. Reconciling your records with these statements helps to identify business spending and thus to control your finances.
3. Monitor your rate. Watch out for any increases in your rates and promptly talk to your bank, if you feel that the rates have been raised without any real reason.
4. Use 30-day credit periods. By making payments with credit cards instead of check payments, you improve cash flow, as checks get cleared almost immediately whereas credit card payments are made after a grace period of 30 days. This is a great way to make the credit card work for the business.
5. Pay online. Make payments online and thereby save on printing checks, envelopes, mailing, and postage.
6. Build business credit. By making prompt payments on the business credit card, in full, every month, the business is building credit, which can go a long way in getting loans and lines of credit when needed. Prompt monthly payments also help avoid fines, fees, and interest payments on the unpaid balance, thereby increasing business credibility with financial institutions.
7. Be a watchdog. Before tackling an expansion, or buying new machinery, or hiring more workers, ensure that your credit will help generate more revenue in a fixed period; otherwise, this debt can get out of control and put the business in the red.
8. Use credit card rewards. Make use of the discounts, cash backs, and reward points offered by the credit card company -- for supplies, travel, etc. -- and thus lower expenses.
9. Monitor employee spending. Business-related expenses by employees, with proper and prior permission, can be tracked consistently with the business credit card via the banks monthly statements.
10. Buy only what is needed. It is easy to spend money on things not needed. However, as a business owner, taking on debt for luxuries is usually a mistake. Buy only what the business needs. Just because you have a credit card does mean you need to rack up debt.
When it comes to tracking spending, controlling expenses, and building up your company’s credit credibility and history, credit cards are a tremendous asset.
Remember, though, that once you have obtained a business credit card, you need to avoid potential fiscal pitfalls and put in place efficient credit management techniques to ensure that your business spends well, has good payment plans, and avoids costly fees and penalties.
These 10 credit card tips for the New Year should help you keep up with your knowledge of effective business credit.
About the author
Kristen Graminga is Chief Marketing Officer for BluePay, a firm that provides ways to accept credit cards for small business. She brings more than 15 years of experience in the bankcard industry in direct sales, sales management, and marketing to the company and also serves on its Board of Directors.