The Beauty of Business Credit

Business credit cards can simplify your company's expenditure system by setting specified limits on spending, generating an itemized list of paid expenses and freeing your accounting department from the mountain of paper typically generated by reimbursement requests. Whether you own a small business or you are the CEO of a multi-million dollar corporation, the decision to provide your employees with a line of credit is one of great importance. There are many benefits to be reaped by using company cards, in the form of time saved, transparency achieved and money earned.

In the fast-paced world of modern day business, credit cards provide a way to streamline the accounting process and create a system of checks and balances for your employees' spending. Many business owners today simply cannot afford the risks associated with doling out cash to employees, and the fees paid for credit services can pale in comparison to the amount of money lost through a faulty cash reimbursement system.

1. Help Separate Business from Pleasure

The line between business and pleasure can sometimes get blurry when a business uses cash instead of credit cards. While reimbursement forms often require the attachment of a valid receipt, these receipts are often vague and devoid of specific, itemized information. This may tempt some employees to blur the lines between personal and business spending, which can cost your business a great deal of money. Credit cards, however, provide a very clear receipt of each employee transaction, including the amounts, the locations and the dates of your employees' expenditures. The paper trail created by business credit cards help to ensure that all of your employees' expenditures are solely relegated to business purposes.

For example, if you send one of your employees on a business trip to Hawaii, you are probably prepared to pay for your employees travel, lodging and food costs. You may also expect to pay for certain costs associated with courting new clients and entertaining loyal customers. However, your company is probably NOT prepared to pay for extraneous expenses such as tourist trinkets, clothing items and alcoholic beverages.

If you send your employee to Hawaii with a large amount of cash and instructions to collect detailed receipts for your accounting department, you are setting yourself up to fund your employee's pleasure as well as their business expenses. There are many ways of making excuses for extraneous cash spent for personal expenditures and only the most loyal and integrous of employees would be strong enough not to take advantage of the situation. However, if you send your employee to Hawaii with a business credit card in lieu of cash, you are making it clear that every purchase will be accurately recorded and accounted for. This will encourage your employees to spend their own cash on personal items, as ringing them up on the company credit card would be difficult to explain.

2. Set Your Individual Employees' Credit Limit

Many banks are willing to issue credit cards to business employees that carry individualized credit limits. This means that you can increase or decrease the line of credit you give your individual employees based on their job related expenses and various levels of demonstrated integrity. You can even request a credit card with a set limit from the issuing bank that can serve an employee throughout the course of only one project. This means that you can set a budget for any given project and make sure that the budget is not contravened, as the employee to whom the card was assigned cannot charge even one dime more than the credit limit allows.

A business credit card can help your employees to keep a clear picture of their spending limits fresh in their mind, as up to the minute reports of their remaining credit line can be obtained either online or by contacting the issuing bank. Your business accountants will therefore be privy to up-to-the-minute information on the spending habits of your employees. In addition, unlike cash or checks, which rely heavily on the personal accounting skills of your employees, credit spending is automatically tracked and calculated by the issuing bank. This reduces the amount of money your small to large business will lose through accidental overspending.

3. Credit Cards Create a Real Time Accounting System

Reimbursement forms are time consuming to fill out and employees sometimes put off completing the necessary paperwork associated with cash purchase reporting. This means that your business expenditures are not kept up to date in real time when your employees are using cash. Budgets can be difficult to create and maintain in this scenario and it can be frustrating and difficult for any accounting department to maintain a high standard of excellence in their daily battles to keep track of cash-based expenditures and reimbursements.

Introducing credit cards for your employees to use for daily expenses can greatly improve the quality and accuracy of your business' accounting department. All expenses can be tracked on a daily basis, since all expenditures are filed in an automated credit card reporting system, which is easily accessible by customers. These accurate figures can then be used to create and maintain individualized employee budgets that are equal to the monetary demands of each employee's specific job related duties.

4. Research Business Credit Cards Online

Credit cards can bring a new level of financial organization, transparency and accountability to your business related finances. A simple online query through your favorite search engine will yield a lengthy list of lending institutions that are eager to do business with your company. Be sure to check the monthly interest rates, terms and service charges associated with each bank before settling on one in which to do business.

You may also be wise to do research on one of the many online forums dedicated to rating and reviewing various lending institutions in an unbiased manner. Here you will find honest evaluations from business owners and individuals who have had real life experience working with various lending institutions. These evaluations can be invaluable to business owners, as they can help you to avoid lending institutions that make promises but do not deliver on them. They can also help steer you toward institutions that are a joy to work with and that provide great rates and superior customer service to their customers.

Conclusion

Business credit is an essential part of any small to large company, as it can help to streamline accounting and limit spending amongst employees. It is wise to research all of your options before choosing a credit provider with which to do business, as each lender will have a different set of loan terms to offer you.

Obtaining a current credit report is a good place to begin the process of securing business credit, as it will make you aware of your credit standing from the viewpoint of lending institutions. The internet is a great spot to secure a credit report swiftly and with ease. Sign up for a credit report today and take the worry out of your business credit application process. Once you have secured your credit report, be sure to sign up for a business credit card today, and bring your company up to a new standard of excellence.