01 Mar Pros and cons of business credit cards
Do you have a business or are you about to start it and do not know the business credit cards? This interests you Relying on personal credit for your work is very risky; business cards specifically help in concrete benefits for business. If you do not know very well what they are or how they are used, we explain it right away.
What is a business credit card?
They are plastics issued by financiers or banks, designed specifically to help the administration of expenses of SMEs. Usually the following variants are issued:
Card associated with a credit
They are cards that the bank or financial institution delivers when it gives a financing for the business. In this case, the card is linked to the amount and conditions of the credit line. With the plastic, the client can dispose of the loan resources, and generally a checkbook and access to electronic banking is also granted.
It is a card backed by the capital of the bank account of the company. It usually works as a debit card and the expenses incurred show the account statement received by the cardholder, so the type of expense, the date and the amount are transparent. This type of card is ideal for managing travel expenses, travel, representation or purchases, among others.
Pros of business credit cards
- You have a banking instrument exclusively to manage the common expenses of the business, such as the payment to suppliers, the acquisition of supplies and even the payment of payroll.
- It favors the transparency of the business, without limiting the line of credit of the owner or the employer to attend a personal emergency.
- Ideal to buy merchandise for the company, and additionally obtain direct advantages for the business, such as discounts, accumulation of points, greater line of credit.
- Most business expenses that are tax deductible must be paid with a banking medium such as a credit or debit card.
Cons of business credit cards
- Risk of generating more debt; If the company does not need credit for its daily operation, perhaps a business debit card might not be the best alternative.
- The owner of the account (usually the employer) must maintain absolute discipline so as not to mix personal debts with the business credit card.
- The irresponsible use of a business card will affect the credit reputation of the business before financial institutions and even in credit bureaus, which will limit the options in future loans.