7 Smart Ways to Use Business Credit Cards at a Startup

Credit Cards are widely recognized for the convenience they offer. Right from making cashless payments, to offering rewards, from facilitating deferred payments to assisting in credit score build-up, the plastic payment has provided numerous perks to its users. However, not many people are aware of the fact that a Business Credit Card can offer a lot more than an individual Credit Card.

We have compiled a list of 7 benefits favouring the use of Corporate Cards below:

1. Travel Rewards

When it comes to offering incentives with respect to travelling, Business Credit Cards win the race. Not only do they offer a relatively high number of air miles, but also ensure other perks, such as free access to Airport Lounges in domestic as well as international Airports, depending on the card one uses.

For instance, HDFC Corporate Platinum Credit Card offers complimentary membership of- The British Airways Executive Club, Kris Flyer, Trident Hotels, as well as Club Vistara. Customers who are required to travel frequently for business purposes are more than happywith this card.

Then again, for customers Opting for Co-Branded Cards, there are numerous other perks including but not limited to– additional check-in baggage, priority boarding, and complimentary meals. However, one must remember, a co-branded Credit Card is best suited for business owners who prefer flying one airline.

2. Fraud Protection

New business owners often need to deal with vendors as well as clients who are either unknown or are remotely based in India or across the globe. In such cases, they need to be wary of any fraudulent charge on the card, lest the business may have to suffer unscrupulous charges. In order to protect enterprises from such distress, business Credit Card providers offer Fraud Protection Policy.

For instance, all SBI Credit Cards are chip and PIN enabled. These cards require the cardholder to enter a secure PIN at the POS terminal, thus protecting them against any probable skimming, counterfeit, and lost and stolen card frauds.

In addition, SBI Signature Corporate Card offers cover against fraudulent charges on the card. On individual cards, the cover is equal to the credit limit of the card (with a cap of Rs. 2 Lakh). On the corporate level, the insurance covers fraudulent charges of up to Rs. 60 Lakh per corporate entity, making it a truly valuable deal for entrepreneurs.

3. Big-Ticket Purchases

Every business owner intends to purchase some equipment, machinery, or even software, in order to make the business competitive and see it grow. Taking a Business Loan with every cash requirement is not a viable option, given the amount of documentation, time, and effort it takes. In such cases, entrepreneurs can conveniently depend on their Business Credit Cards. Not only do these cards come with a higher credit limit, but also offer facilities such as Cash Advance, and Interest-Free Period, making it fairly feasible to pursue large purchases.

4. Start-Up Funding

Kick-starting a new business is a capital intensive task. However, start-ups aren’t eligible for traditional Business Loans owing to the lack of experience and documentation. Hence, most young entrepreneurs find relief in the fact that they can procure a Business Credit Card on the basis of their personal credit score. They can use the credit limit on their card to fund the first set of expenses pertaining to the business. Once they set the ball rolling, they can then conveniently repay the Credit Card bills.

Hence, it doesn’t come as a surprise when new-age entrepreneurs owe their initial successes to the ready availability of business Credit Cards.

5. Savings

One of the most significant reasons why entrepreneurs love business Credit Cards is the savings they can make when using these cards. While some corporate Credit Cards offer cashback schemes, there are others which offer reward points that can be easily redeemed for other purchases. In both cases, businesses end up saving a significant amount of money on various payments and purchases made using the card.

With cashback rates going up to 2%, one can be rest assured of some incredible savings on day-to-day expenses as well as big-ticket spending. A business owner can easily assume that they are entitled to a lifetime discount on all their expenses, and use the savings towards something rewarding.

6. Building Credit

It is very common for a new business to have no credit rating, which may prove to be a hindrance when Applying for a Traditional Business Loan. This is again, where business Credit Cards come to the rescue of entrepreneurs. More often than not, when one uses a Business Credit Card, the respective bank shares the repayment history with the relevant credit bureau. The bureau, in turn, starts keeping a record of the same, and rates the business accordingly. If the business is efficient with the payment of its Credit Card bills and pays off the bills in full, and in a timely manner, the credit rating increases steadily.

The judicious use of a business credit card can easily help a business build favourable credit score in a short span of 4 to 6 months. Not only does a good score help enjoy easy approval on the Business Loan application, but also guarantees a competitive interest rate owing to high creditworthiness.

7. Expense Tracking Facility

This is one of the least known, and yet highly beneficial aspect of a modern-day business Credit Card. This aspect helps businesses keep track of their expenses without any additional efforts. Besides, this record of expenses comes in quite handy when undertaking tax preparation. This is usually taken care of by the VISA IntelliLink Spends Management (VISM) & MasterCard Smart Data Generation 2.0 (SDG2), the special processing software implemented by the leading card associations.

For instance, ICICI Business Credit Card automatically tracks the expenses and divides them under the following heads –

• Travel and Entertainment
• Vendor Payment
• Fuel, electricity, insurance and other utilities
• Office Supplies and Maintenance expenses
• Professional and marketing costs
• Other miscellaneous expenses

Moreover, the card also allows the user to set daily, weekly, and monthly limits on spends under each category to ensure better control.

Wait no more, before you get a business credit card, and give your enterprise the much needed financial freedom!

Also Read: How Credit Cards Help Small Business Owners to Meet Their Daily Business Expenses?

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