Is a business credit card worth it?
If you're thinking of getting a business credit card and are in doubt as to whether it's worth it, check out the information we've provided in this article.
One of the biggest challenges for anyone who owns a micro or small business is managing their finances efficiently. A business credit card can be an interesting way to optimize this task.
When used correctly, a business credit card can offer a number of benefits.
As its use is still not very common among entrepreneurs, there are still many doubts about the business credit card. Below, we've provided some important information so you can get to know this tool and understand whether or not it's worthwhile for your business.
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How does a business credit card work?
Similar to a personal credit card, a corporate card has a limit that can be used for the benefit of the company.
The card usually has debit and credit functions, and it is up to the manager to decide which expenses will be paid for in each function. Purchases can be paid for in cash or in installments.
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Is it worth having a business credit card?
Whether or not it's worth having a business credit card depends on each entrepreneur and their ability to manage the use of the card.
You need to consider the type of business and the volume of purchases made. A company that needs to buy supplies frequently can benefit greatly from using a credit card. Since it is possible to pay the same amount for the product upfront, in installments, generating a smaller impact on the cash flow.
For entrepreneurs who use a personal credit card to make purchases for their company, signing up for a business card is much more interesting, as it allows them to separate their personal accounts from their business accounts.
In short, credit cards can be an excellent tool to help organize finances and optimize the purchasing process. However, it must be used responsibly and with control, always considering the conditions of the business in order to keep the bills up to date.
If this attitude is not maintained by the entrepreneur, irresponsible credit card use can lead to debts that are difficult to control.
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Advantages of credit cards for companies
Below are some of the main advantages that credit cards can offer companies.
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Organization of accounts
By opting to use a credit card, the entrepreneur has the opportunity to concentrate all the company's bills on a single invoice. This avoids problems associated with a lack of organization.
Especially in small and medium-sized businesses, it is common for owners to mix up personal accounts with business accounts, or even to keep accounts in different places, creating confusion and clutter.
For those who suffer from these problems, a business credit card can be an excellent alternative for creating organization and improving the financial health of the business.
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Possibility of paying in installments
This is one of the main advantages of credit cards. With the possibility of paying for purchases in installments, you can reduce the impact on your cash flow.
By paying in installments, the value of the payments is diluted over time and the cash flow is preserved.
It also makes it possible to make larger purchases that you wouldn't be able to make if you had to pay cash.
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Security
All credit card purchases are recorded and can be viewed on your bank's app at the same time as the purchase was made, providing greater security.
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Conclusion
The business credit card is worthwhile when the entrepreneur knows how to use it responsibly and it can provide various advantages for the business, helping to maintain its financial health.
If you are an entrepreneur and want more information on the subject or need accounting advice for your business, contact the team at CLM Controller.
We are an accounting firm with over 40 years' experience and we provide modern solutions for companies throughout Brazil that want to improve their financial management and increase their performance in the market.
Visit the website to get to know our work or send us a contact message.
