Credit Cards Offer Flexibility to Small Businesses
Business credit cards have a number of advantages for the small business owner, but as with all business decisions, there are two sides to consider before using a card. Financial flexibility can be very important to both new and established businesses. Dates and amounts of payments you have to make tend to be fixed, while income can vary greatly from month to month.
Occasionally, the cash needed for expenses may be greater than the cash received from sales, especially for a business just starting out. A business credit card can offer flexible payment terms and help ease the strain of temporary cash shortfalls, but should always be used wisely.
Credit cards can also help add flexibility to a small business owner’s schedule. Employees can use the card to make routine, small purchases, reducing the time demands on the owner. This could also lead to reduced costs since an employee could use the card to shop around for the best price and buy when they find the right deal.
Small businesses can also build a strong history by using a credit card. Owners should have the card issued under their D&B D-U-N-S® number, which will be used by issuers to access your business credit history.
Risks for Small Business Credit Card Users
Unfortunately, there will always be a risk of employee fraud. Credit card charges need to be reviewed at least monthly and any unusual charges should be questioned. Many card issuers will also send alerts in the case of unusual activity, which could be an early warning sign of fraud.
Excessive debt is a cause of many business failures. Credit limits on business cards can be high, and it could become a challenge for business owners to keep up with payments if the debt becomes too high. Total debt, especially credit card accounts, needs to be continuously monitored.
Many small business owners will find that the benefits of a business credit card outweigh the risks. If they decide that a card will help them grow, then they should be sure to monitor their credit history regularly with the DNBi Self Monitor TM service offered by Dun & Bradstreet.