As a new year quickly approaches, it is important to put tools in place to manage and grow your business effectively. Cash flow can be limited when you are starting a business or managing daily expenses. A business credit card provides you with a line of credit for your business to make purchases while freeing up capital. Consider how utilization of a business credit card or purchasing card program could fuel the growth of your business in 2024.
- Choosing the right credit card product: The right credit card product for your business depends on the needs of your business and how the product will be used. For a larger company who may have employees who travel, needs to track expenses through robust reporting, or has a fleet of vehicles a purchasing card program may be the appropriate fit. For a business who is looking to support the day-to-day expenses and keep things on a smaller scale, a business credit card may be an appropriate fit. Let’s take a look at what both products have to offer:
- A Corporate Credit Card enables businesses of all sizes from small businesses to large corporations to free up capital and quickly monitor real-time expenses. Many Corporate Credit Cards offer extensive benefits specific to your business. Benefits may include earning rewards, online and mobile access to your account, individualized spending limits, and more!
- A Purchasing Card has additional features and benefits in addition to the ones listed above for Corporate Credit Cards. It aligns your company’s payment program with your business’ needs by providing flexibility, while maintaining control over employee spending. Each month, employees receive individual statements to review and your company pays one consolidated invoice. A purchasing card program also assists businesses with data and reporting as well as making expense management more efficient.
- A Purchasing Card program provides real time transactional data that includes line-item detail such as the items purchased, fuel detail, or other pertinent information. Utilizing reports to monitor and track transactions can provide assistance to your business by ensuring the cards are being used properly by your employees.
- Utilizing spending controls and merchant category codes (MCCs) can assist with managing cardholder spend. A MCC is an assigned four-digit code used to identify the supplier/merchant principal trade, profession or line of business. Adding MCCs to your card program creates guidelines for where your cardholders can or cannot use the card.
- Creating Budgets and Analyzing Data Business credit cards also provide a valuable tool for creating budgets and analyzing financial data. By reviewing credit card statements, business owners can gain insights into their spending patterns, identify areas for cost optimization, and make informed decisions to drive profitability. The availability of extensive data can facilitate strategic financial planning and enable businesses to allocate resources efficiently and effectively.
- Preparing for Tax Season A business credit card can benefit a business when it comes to tax preparation. By utilizing business credit cards for business expenses, management can easily track and categorize their expenditures, simplifying the process of preparing for taxes. The detailed transaction records provided via credit card statements can serve as valuable documentation for tax purposes, ensuring accurate reporting and reducing the risk of audit-related issues.
- Responsible Credit Card Usage: To mitigate the risks associated with credit card debt, it is important for business owners to exercise responsible credit card usage. This involves understanding the terms and conditions of the credit card, adhering to the stipulated business use, and making timely payments. Consider a Cardholder Agreement, an annual agreement, for all cardholders to read and sign; this agreement defines clear and documented use of cards. The implementation of the internal Cardholder Agreement can reduce the risk of card fraud and misuse. By implementing effective budgeting strategies and closely monitoring expenses, businesses can ensure that credit cards serve as a valuable financial tool rather than a burden.
- Card Management On-the-Go: A business credit card or purchasing card program can offer a card management solution that includes numerous features. Consider the benefits of easily creating expense reports, uploading receipts, viewing credit limits, restricting purchases, and accessing statements and transactions. Whether you are accessing from a desktop or mobile device via an app, it’s important to have the information you need at your fingertips.
The future of your business’s growth may lie in leveraging a business credit card. Business credit cards offer numerous benefits, including improved cash flow, personalized spending controls, and access to rewards programs. By responsibly utilizing credit cards, businesses can fuel their growth, navigate financial challenges, and optimize their financial strategies. Learn more about the Arvest Corporate Credit Card and the Arvest Purchasing Card today