|
No,
I'm not a fan of running up lots of high-interest
debt. But, yes, I am a fan of using credit
wisely in your business. Here are six
ways you can take advantage of credit
cards to help your business:
Start
by just getting a business card.
This isn't usually an issue for larger
businesses; but many small-business owners
don't even have a card in the name of
their business. So, when you as the business
owner want to charge a business expense,
you have to charge it on your personal
card. Then, when your personal charge-card
bill arrives, you have to separate out
the business charges and have the business
pay the charge or otherwise reimburse
you under a qualified reimbursement plan.
Even if you've designated one personal
card to be used solely for business, you
still have the paperwork mess between
your business and personal accounts. It's
also easy to sometimes mistakenly pull
out the "wrong" personal card
for a business purchase. In short, I've
seen small-business people spend way too
much effort worrying about whether the
right checks are being written out of
the right accounts when personal cards
are used for business expenses.
With a card in the name of your business,
life gets much easier. That card becomes
the only one you use for business expenses.
The business card's charges are paid with
checks written on the business account.
Paperwork and recordkeeping are simplified.
Review your
rates.
With interest rates falling, you should
check to see how much you're paying for
the convenience of business credit.
As with other credit accounts, it's easy
to be attracted by the lure of a low initial
rate and then forget that the rate can
increase after the end of a "teaser"
period. Businesspeople with good credit
histories should be able to find attractive
rates on cards. In some cases, I've seen
business cards with rates of less than
5% for the first year and less than 10%
thereafter.
By the way, credit-card companies have
gotten tremendously sophisticated in their
marketing. For example, don't be surprised
if an initial application states that
you will be offered one of two or three
different rates, depending on the results
of the card issuer's credit check. A single
card issuer may have dozens of variations
on its credit-card terms. There's no longer
such a thing as the "Standard XYZ
Bank Credit Card."
Consolidate.
If you've been using several cards in
your business, now is a good time to consider
consolidating your charge balances and
accounts. Again, simplifying your business
life and reducing the flood of papers
coming to you is the primary goal here.
But consolidating also makes good business
sense. If you're carrying high-interest
debt, rolling it onto a lower-interest
card will cut your expenses immediately.
You can also take advantage of those extra-low
initial rates to give yourself some extra
financial breathing room.
Check the fine print.
It's not just the late payment fee of
25€ or the returned check fee of
30€ that you have to be aware of.
I've seen cards that charge monthly fees
regardless of how much or little they're
used and cards that assess the equivalent
of upfront application fees.
Fortunately, important information about
a card including the annual percentage
rate, annual fee, interest-free grace
period on purchases, minimum finance charge
and miscellaneous fees can be found
on the so-called "disclosure box"
that is required as part of every credit-card
application form. Reading that will help
you cut to the chase in identifying the
good deals.
Take
advantage of convenience.
I'll let my own bias show here: Am I the
only person who just hates standing in
line watching someone write a check for
7 or 14€ at the office supply store?
(And to add insult to annoyance, the checkbook
doesn't even come out until after the
items have been rung up.)
I understand why people sometimes prefer
not to use cash it can be harder
to remember what you spent that money
on, especially if you lose a flimsy receipt.
But writing checks is slowwwww. Use a
business charge and you'll have a receipt
of your purchase and a better running
tally of your expenses. And the person
in line who thanks you for your efficiency
might be me.
Take
advantage of technology.
I tend to be a send-it-to-me-in-the-mail
kind of guy. But even I am seeing how
credit-card companies are starting to
do a better job of harnessing computer
technology in ways that can make small-business
people's lives a little easier. Automatic
payments through the Internet are probably
the most obvious example of that. Online
account access (which could be very useful
if, for example, you provide a business
card to an employee and want to be able
to monitor expenses) and other features
also are likely to increasingly become
part of a small business's integrated
financial world.
|