6 Ways Business Credit Cards Can Benefit Start-ups

Money can help entrepreneurs immensely, especially if you have just launched your company. Having sufficient liquid capital will allow your business to become flexible in fluctuating market conditions, covering immediate essentials and letting you make wise investments later. Luckily, there is a way to help you finance your business – and that is to have a business credit card.

Using a personal credit card for business expenses may seem like a more favourable option. But once your company begins you thrive, you will realize that using a business credit card allows you to gain more tangible benefits.

From gaining access to increased financing and improving credit rating to rewards and ease of online banking in the UAE, here is an in-depth examination of how a business credit card can positively impact your company.

1. It gives access to increased business financing.

A personal credit card is meant to satisfy the spending habits of consumers, meaning it has lower spending amounts. For start-ups, this limited credit cap is not enough. Inventory purchases can easily consume all the available funds.

On the contrary, credit cards meant for business use offer higher spending limits to cover the usual corporate expenditures. This financing option offers better payment terms, such as zero interest and additional grace periods, which then leaves you with more freedom to invest in your company. These cards may even come with purchase protection, wherein you can make disputes about any improper charges on your account and avoid making payments until it is solved. Some cards also offer purchase protection in cases wherein the products you bought are not delivered, stolen, or lost.

Furthermore, you choose to get your corporate credit card from a provider offering other products that fuel business growth. It can be the start of a strong, lifelong financial relationship. For instance, a company like CBD in the UAE offers a wide range of business credit products that allow you to gain more purchasing power and growth. They also provide innovative business tools to help you receive payments from your clients whether you do business on the go, in-store, or online.

2. It improves business cash flow.

Money going in and out of your company is a part of healthy commerce. Banks and investors prefer ongoing profitability and growth.

Here are ways business credit cards can help you in driving company expansion:

• Cyclical expenses – Companies dealing with seasonal fluctuations may have varying business expenses each month. But most businesses deal with annual payments like insurance premiums and taxes. Corporate credit cards are among the best solutions for covering costs that fall outside the norm.
• Inventory purchases – A business credit card guarantees that you can get what you need when you need it – whether it is a physical inventory, raw materials, or other products that ensure smooth business operations. And with high spending limits, you can buy larger quantities to benefit from more favourable supplier pricing ranges.
• Unforeseen emergencies – As soon as you launch your business, prepare it for unexpected emergencies. Having a buffer to keep your operations running, regardless of what the market conditions throw at you, will give you peace of mind. It is your perfect weapon for weathering the unexpected without problems.

3. It boosts business credit rating.

When it comes to credit, start-ups have a blank slate. This may seem like a good thing, but it is not. Without a reliable credit history to investigate, banks and lending institutions will doubt whether to grant you a loan. As a result, this will make securing financing a bit difficult.

Having a business credit card makes a huge difference. If you use it often and make payments in full and on time, your business can establish a solid credit rating that can grow over time. And this will allow you to borrow money at a lower interest rate and can even have a positive impact on insurance rates.

4. It provides company-specific rewards.

In most cases, business credit cards go above and beyond other card types in terms of providing perks – perhaps because entrepreneurs are more likely to spend more than average consumers each month. Some offer more miles and bigger travel rewards, while others give attractive signup bonuses and bigger cashback percentages.

What makes these rewards more desirable is that they are customised to your business needs. If your company engages in regular travels across regions or countries to meet with suppliers, food distributors, investors and clients, there is a card that offers superb airfare perks to match. But if you won’t be needing hotel points or travel miles, corporate credit cards that provide monthly cash back bonuses for all your purchases might be a better fit, giving you extra money to invest back into your business.

5. It helps monitor employee spending.

If you have employees who make purchases of supplies, travel, or have responsibilities that involve spending corporate finances, a business credit card will help you monitor their spending habits.

You may also set up specific spending limits for employee cardholders. If not, you can create a credit card policy within your company to keep them accountable for unnecessary expenses.

6. It is convenient to use.

It is safer and more convenient to carry a business credit card than a cheque book or a large amount of cash whenever you make a purchase. And with the trend towards cashless economies, it is an excellent way of paying for some goods and services.

A corporate credit card is particularly convenient for online transactions. The government payment card even allows you to make payments at several government entities for different services across the UAE.

Having a business credit card indeed offers several advantages to boost company growth and profitability. But the best card will depend on factors, such as your company size, required credit limit, and priorities. So before committing to a specific card, make sure to review all its attributes. Get one that fits your company’s objectives and situation.