How to Manage Your Business Credit Card Debt
Credit cards have long been the bane of many business owners; not because of the high interest rates but because of all the unexpected charges. Even the slightest oversight can leave you with a hefty amount of debt if you aren’t careful. However, with all the attention placed on building up your business credit rating, it’s easy to overlook an important aspect of business: your business’ ability to manage all your business expenses.
By making regular payments on time and in full, your credit rating will go up and your business’s reputation with potential creditors will ensure your business keeps an positive status. By understanding the risks of a poor credit rating and managing those risks you can keep your business from a disaster.
A business needs to be able to manage its debts in a responsible manner or it can get in serious financial trouble. The following are some tips on how to manage your business debt:
A business credit card can also be used as an effective preventative measure against credit problems. By all means, you should never default on a business credit card payment. However, it is a smart business move to do everything you can to avoid a major financial problem altogether. Your credit card can be an excellent tool for managing expenses, which includes all your client, supplier, and employee expenses.
By using a business credit card them to purchase office supplies, then paying off the balance in full every month, you will be able to avoid interest payments and late fees. In addition, it prevents you from owing more than 80% of the allowed credit on your account at any time. The extra added costs of interest payments can quickly eat up a substantial chunk of your profits.
Treat Credit Card Expenses Like A Tax Payment
When you are taking out a loan for a major purchase, the largest monthly bill will probably be your monthly household bills. Because the cost of interest is so high, it is wise to put aside tax money for the purchase, as well. Credit card interest is the same way, and it makes it a great deal more expensive to carry a balance on one than to simply use a credit card with a cash back rewards program or other rewards system. If you are purchasing multiple items with your business card, review the interest rates and get a lower rate on your business card to play off against the extra curve card. This is one reason that capitalizing on a business credit card rewards program is a great idea. Business Credit Card Debt
Watch Out For Early Mail forfeit
Don’t ever give in to early charge off by the creditor. Not only could you ruin your credit for further purchases, but the burden of the debt still lies on your business’ balance sheet and will show up on your current repos list and credit reports. Be sure to pay up early and at all costs. Even going as far as setting up automatic payments can help prevent some complications in the future.
Even Rewards Programs Aren’t Free
They can be a wonderful perk for a business, but that doesn’t mean that you should use them. As much as they would love to help your business, rewards programs have their place in a business, but never abuse them by having too much fun. The reason why cash back discounts are so useful in the business is because in the end, each dollar put toward a credit card payment helps you keep better track of finances. When the purchase you make at a gas station or office supplies turns out to be a terrific deal, it just may end up on your credit card statement and on your personal credit report as well, not the business accounts. Business Credit Card Debt
Don’t Let Late Fees Dudley You
Five dollars or more is all it takes to put a dang kink in your cash flow, especially with cash back rewards. However, that is also how many business owners receive penny-pinching interest rates. Make sure you have taken all precautions to stay on top of late payment practices in order to maximize the benefits of a cash back rewards program. Even outstanding debt has the potential to balloon into trouble with cash back rewards on certain accounts. Business Credit Card Debt
Never Borrow On A Business Credit Card
There are many benefits related to business credit cards with rewards programs that work for business owners. However, the problem with the use of business account cards for business is that lenders tend to offer fantastic benefits to business owners with larger spending limits and promotional bonus programs without verifying the credit history of the applicant.