Most of us take using credit cards for granted. We use them to pay for gas, lunch, travel, office supplies and other routine expenses. What many people forget is that a business credit card can also be a financial management tool. Having a business credit card, which you use only for business expenses, helps differentiate between personal and business expenses.

Many cards provide year end reports that group types of expenses together, making it easy to see where your money went over the course of the year. Those little expenses add up–it can be a shock to discover that you spent $1000 on ink and toner, for example. But that kind of knowledge is helpful when you are looking for ways to cut expenses and use your money more effectively.

A business credit card can also make sure you track every expense. Cash receipts can get lost or forgotten, so that your expenses are not fully accounted for. The card tracks the expenses and provides a paper trail.

If you travel on business, you will find it difficult to deal with hotels and rental car agencies unless you have a credit card. Many require credit cards in order to hold a reservation.

Although it is best to pay your balance in full each month, a credit card can give you the flexibility to spread payments over time when absolutely necessary. Everyone has the occasional emergency situations or unforeseen expense. When there are large expenses that you pay once a year, you can use the credit card to break the payments into more easily managed payments. Of course, that comes at a steep price, but when an expense is necessary and you do not have the cash, it may be your best—or only—option.

When you must invest in services or supplies to meet sales demands, but you won’t be paid for several weeks, a credit card can help you obtain the things you need without depleting yourcash.

Many business credit cards, like personal cards, offer rewards. Using your business credit card to pay for as many things as possible can mean acquiring rewards, such as airline miles, that can reduce your business expenses in future months. When you have the option of paying a large bill by credit card or check, pay with a rewards credit card unless you can get a discount for paying by check.
If you pay off your credit card every month, consider getting a card that offers rewards. However if you know you’re going to carry a balance at any time, a low interest rate is more important than rewards.

It is likely, especially if you are a sole proprietor or your business is new, that your business credit card application will be judged by your personal credit. You may receive a small limit initially. Be sure to make payments on time, not exceed your limit and maintain a good credit history with other businesses, and your credit limit—and overall access to credit in your business—will increase over time.

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