How to Manage Small Business Credit Cards

Credit cards can be a great way to get your business up and running, and an even more important route toward building good business credit. When handled correctly, they’re a crucial business tool in today’s economy. Mismanage them, however, and you could find your business in debt, with a bad credit rating, or both. Here’s a look at a few dos and don’ts when it comes to managing your small business credit card.

What to Do:

• Do review your statements. Credit card companies are not without fault, and credit card fraud is rampant. Make sure to account for all charges made on your business’s behalf by you or your employees. Missing a statement means you’re missing an entire month of any fraud that may be occurring, and that’s a miss you’ll pay for later.

• Do pay the full balance. Whenever possible, pay off the full balance at the end of the month. Many small business cards allow you to keep 0% interest as long as there isn’t a carryover balance, but rack up some debt and you’ll be paying interest. This can make it harder to pay the full balance the next month and lead to a slide that ends in a huge pile of debt.

• Do pay on time. Even a day-late payment can result in a large service fee and hurt your credit in the process. Since credit cards are just one more in your business’s already large slate of expenditures and receipts, set a reminder or routine that helps you remember to make your payment.

• Do use your rewards. Credit cards for small businesses often come with rewards – contact your provider or read your statement to find out what yours are. Whether it’s cash back or airline miles, make sure you’re using them to get the most out of your cards.

What Not to Do:

• Don’t mix personal and business funds. Commingling is against the law in some cases. In others, it can make tax filing more difficult, or affect your eligibility for grants and contracts. Your safest bet is to keep personal and business finances completely separate.

• Don’t overspend. This sounds obvious, but can be difficult. Formulate a budget by viewing expected revenues, subtracting expenses, and making sure your credit card spending doesn’t put your business in the red.

• Don’t forget card security. Fraud is at an all-time high, so be wary of credit card scammers, employees who may be using a card improperly, and devices such as skimmers and scanners. As mentioned earlier, reviewing your statements is necessary to catching fraud before it becomes unmanageable. In addition, keep track of passwords, access information, and your physical card so it doesn’t fall into the wrong hands.

Business credit cards can be an asset if you manage them well. Follow these tips for handling your credit cards properly, avoiding common pitfalls, and ensuring your business maintains a good credit rating.

Diversified Management has a wealth of financial services geared toward keeping your business healthy. Request a free consultation by filling in the inquiry form or calling the number listed.

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