Commercial Credit Cards Make Sound Business Sense for small businesses or just starting
The advertisements for personal credit cards are full of enticing features, from 0% balance transfer deals to lucrative rewards schemes. By comparison, most commercial credit card offerings seem fairly tame and unexciting. Given that many business owners start out using their personal cards for commercial purposes, why would it make sense to switch to one of these seemingly less appealing products?
Keeping your business and personal spending separate makes things much more straightforward when it comes to drawing up your yearly accounts. There’s no need to sift through each statement, trying to remember which purchases are deductible and which are private, and you can present the complete, unedited statement as documentary proof of your expenses. There is also a privacy benefit: if you use an accountant, you may prefer them not to see your personal spending as listed on your credit card statements.
Credit Rating Issues
With a commercial card, you can detach your business’s credit file and rating from your own. This has strong advantages. If your company builds up heavy debts, it won’t reflect on your personal creditworthiness. Conversely, if you take out a large amount of personal credit such as a domestic mortgage, it won’t impact your business’s borrowing ability.
Operating a commercial credit card will usually open doors to other business finance services from the same institution. From insurance to development loans, overdraft facilities to easier international payments, if you’re already a customer it’s easier to be accepted for these additional products. You will also often benefit from developing a relationship with a business adviser at your bank, who will be able to assist with issues far beyond your credit card usage.
No one goes into business anticipating failure, but it’s a sad fact that not all enterprises succeed. If your venture gets into trouble, you’ll want to have kept as many of your business affairs separate from your personal ones as possible. With a commercial credit card, any debt on your account will stay right there – your personal assets can’t be stripped to clear the balance.
Once your business starts to grow, you may need to take on extra staff, to some of whom you might wish to delegate purchasing responsibilities. However, you probably won’t want to hand over complete access to your business finances, even to a highly trusted employee. A commercial card lets you set up many users within a single account, each with individual spending limits, and each with their activity itemized on your monthly statements.
Commercial credit cards may not boast all the bells and whistles found on many personal finance products, but running a business is a serious affair and requires a more pragmatic approach. When your enterprise gets to a certain level, the practical benefits of commercial credit cards far outweigh any lack of sparkle and glitz in comparison to their personal finance equivalents.