Inflation has sent business expenses soaring. Rising operating costs have impacted spending power. Revenue and profits get hurt, too. Better cash management strategies can help. One underutilized tool is a business credit card. Here are five benefits to consider when looking for the right business credit card to fit your needs:
Think about the different ways your business expenses can be paid. As a business owner, you might make payments with checks, debit cards, wire transfers or ACH transactions. A business credit card can free up more cash for your business and create extra purchasing power, according to M.J. Hasso, business card sales manager at U.S. Bank. When you pay a vendor by check or via money transfer, the funds leave your company's accounts right away. A business credit card provides flexibility and allows your company to increase cash flow. “Business credit cards can add tremendous value to the operating cycle,” says Hasso. "They enable more fluid cash flow that in turn creates more purchasing power."
Writing checks and juggling different payment methods can be time-consuming and difficult to track. A business credit card simplifies your vendor payments with a single process. Another advantage is that a credit card can streamline business expense reports. Authorized employees can make purchases for the business with a company credit card to help reduce instances of employee reimbursement and simplify expense reporting. Hasso recommends that you look for an online banking platform that allows you to create customizable reports to help track and organize expenses. It should also sync with accounting software to simplify reporting.
Businesses can enjoy competitive rewards when paying with a card that other forms of payment, like checks and money transfers, do not offer. These rewards can contribute to your bottom line and even create a passive source of income for your business. “Look for a card with redemptions that are flexible, depending on the needs of your business,” recommends Hasso. For example, rewards can take the form of a credit on the account or a deposit to the checking account. The savings can be big. With the rewards, you may be able to hire additional employees or leverage rewards to purchase inventory or expand the business.
Every business has unique needs, which is why a personalized approach is important to help you meet your goals. “Choose a bank that can be a trusted partner,” Hasso says. “Your banking partner should conduct a thorough discovery process to meet your business needs.”
For example, Hasso says that business owners may not realize that many vendors accept credit card payments. She says a business card consultant should be able to collect a vendor file to determine which vendors accept credit cards so that you can maximize your earnings.
Another customization is around mobilizing employees with account management tools. A business credit card should come with the ability to manage expenses with customized alerts to flag due payments, schedule transactions and other controls. For example, clients can designate which vendors are approved for the cards. Limits can be set on maximum authorization per day for employees, as well as when the cards can be used. "This gives business owners peace of mind," Hasso says. “You are in charge of how and when the cards get used."
When searching for a business credit card, look for banking expertise. Your card consultant should work with you to determine operational expenses and credit limits for the card. "It's important to evaluate how expenses are housed on the balance sheet," Hasso says. "Day-to-day expenses paid from a business credit card program do not charge per diem interest," Hasso explains. As long as the balance is paid in full every month, there is no interest charge.
To schedule a complimentary, tailored consultation on how to optimize your business spending and add value to your operating cycle, visit usbank.com/bankerconnect.
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