Guide to Business Credit Cards
A credit card can be a useful way of getting access to business finance in the very short term, helping to overcome cash flow shortfalls. It provides access to funds up to the value of the credit limit and there could be limited or even no charges for users who pay off the entire balance in full.
Business credit cards provide other benefits. They make it easy for business travellers and they provide a detailed list of transactions that can be analysed and accurately accounted for.
However, borrowing money with a credit card can quickly become expensive if balances are not paid in full each month.
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Choosing a Business Credit Card
Before selecting a business credit card a business needs to understand why it is looking for one.
If the card is primarily a way of getting access to business finance it is important to consider other, more cost-effective solutions, such as invoice discounting or factoring.
Credit cards do not give the cheapest access to business finance but sometimes they might be one of the few choices available. Selecting a card with the lowest APR will help to control finance costs.
Some credit cards offer a promotional low or nil rate of interest for the first few months. This means that if the business manages their use of the card very carefully they can get access to funds at no cost at all for several months.
Other features to consider are the annual fee, if there is one, and the maximum interest-free period between making a payment and paying it off. Some cards offer additional benefits such as cashback or other reward schemes.
Advantages and Disadvantages of a Business Credit Card
Advantages:
- Allows on-the-spot purchasing without worrying about immediate impact on cash flow.
- Provides a detailed statement allowing transaction tracking and analysis.
Disadvantages:
- Very high rate of interest on balances not paid off in full.
- Increases the risk of purchases being made without the usual approval processes being followed.
- Not suitable for meeting medium or long-term financing needs.
Access to Business Finance With Touch Financial
We are the UK’s leading commercial finance broker and we have helped thousands of organisations to find the right finance solution for their needs.
Our team of advisors have years of experience in indentifying solutions to finance issues. We seek to partner with our customers, taking the time to understand their needs before recommending any products.
The Touch Financial service is free of charge to customers because our fees are paid by the lenders, and we are structured in such a way that our advisors can give entirely impartial advice.
If your business is looking for access to business finance and wants to get the best deal, it makes commercial sense to talk with the experts. Make contact with Touch Financial today and discover how we can help you.
