Whether you have an enterprise credit card, a small business credit card, a mid-sized business credit card, or anything else along those lines, you need to know how to effectively use your card to build business credit and manage your finances. Once you understand the process of spending money on your card and paying it back quickly, you will be able to enjoy the benefits of business credit without going into debt. Listed below are the top five rules for using enterprise credit cards so you can make the most of this opportunity.
Never Put Personal Expenses on Your Enterprise Credit Card
As tempting as it may be to use your business line of credit for personal expenses, you need to keep your business and your personal life separate. If you only use your enterprise credit card for business expenses, you can turn all of the credit card documents over to your accountant to deduct from your taxable income. If you have personal purchases mixed in, you will have to go through every transaction individually and determine whether or not it was for the business. Save yourself the hassle and keep your spending separated.
Only Spend What You Can Realistically Pay Back
Do not look at your enterprise credit card as extra money for you to spend for your business. That’s not how credit is supposed to work. While you can use it to make large purchases you do not have the funds for at this time, you still need to have a plan to repay your card in a timely manner. Keeping a low revolving balance on your card will ensure your business credit score stays high, and it will save you from paying a ton of money in interest for high, longstanding debt.
Monitor Employee Transactions on Your Business Credit Card
If you give your employees cards that tie into your main enterprise credit account, you need to make sure you watch what they spend on their cards. You should be able to see the transactions for each sub-account on your main account. If you notice anything unauthorized or suspicious, you can talk to the employee about the expense in person. No matter how much you trust the people working for you, there is always a chance that they will take advantage of your kindness. Watch your funds closely so you don’t end up spending extra for someone else’s expenses.
Understand the Terms of Your Rewards Program (If Applicable)
If you have a rewards program for your enterprise credit card, make sure you understand the terms of it in full. This is especially true if you have a high annual fee tied to the card. Your rewards may be able to offset that cost, but only if you know how to use them. If your card comes with revolving rewards categories, understand when those categories change throughout the year. Maximize the amount of loyalty points you get from your card so you can make the most of money you’re already spending.
Extend Your Line of Credit When Possible
Most credit card companies will eventually offer to extend the line of credit on your card. Take them up on the offer, if and only if you can control your spending habits. Some business owners use this as an opportunity to sink themselves further into debt. That’s not the goal here. Instead, your aim should be to boost your line of credit so your debt to credit ratio is lower. This will raise your business credit score. You should still have a plan for repayment even if you have a higher available balance because that reservation will be what keeps you out of debt.