Managing operating business expenses is essential for the smooth operation of any organization. Though companies can avail credit facilities from their suppliers, in most cases, a business should pay their creditors as soon as possible and avail cash discounts for doing so. Credit cards can be of great help at times like these. Organizations can use credit cards to pay for their expenses securely and greatly benefit from doing so.
Apart from discounts from creditors, businesses can also earn money from cashback and rewards for each payment using credit cards. Moreover, a company can effectively maintain the required working capital and ensure that all business operations are carried on smoothly.
While choosing business credit cards online, one must learn about the benefits that each type of credit card offers and whether it suits the business. Two common types of credit cards offered by financial institutions for companies are corporate and business credit cards.
One of the major differences between a corporate card and a business card is that in a business credit card, the cardholder is liable personally for the debt, whereas the company is liable for the payment of the debt if you opt for a corporate credit card.
With a business card, you can obtain the necessary finances for all your short-term requirements. Apart from providing a credit facility, one can also avail of interest-free credit for a stipulated period. It will be a cushion for businesses to collect from their debtors and repay the loan.
It can help new and small companies struggling to generate finance. Since company credit cards have the added benefit of flexible repayment options, SMEs can focus their finance on other important operations to run the company. While choosing a credit card, there are a few things to be mindful of its features.
- Account Management and Payables Process
Account management is a tool provided by credit card companies to help their customers monitor and manage all transactions using their credit cards. Businesses have a large number of transactions. Business owners can use the account management tool to identify unusual payments and unaccounted transactions.
Since these tools can integrate with the company's financial system, managers can generate the required data and conduct proper analysis to enhance their payables process. Depending on the type of card the facilities and tools provided may differ. Therefore, it is advisable to first understand your business needs before selecting any type of card.
- Annual Fees
Depending on the card, the annual fees you pay will differ. In most cases, business cards have lower yearly charges, and corporate cards have higher charges. However, most business credit cards do not charge annual fees for the first year.
- Cash Backs and Rebates
Cash backs and rebates on payments are other advantages of company credit cards. By using the card for a specific purpose or a vendor, you can avail of unlimited cashback and rewards. Since operating expenses form a part of spending for any business, the money-back policy will help many businesses and encourage them to use credit cards.
For example, RHB offers cash back to firms for making specific payments such as business retail expenses and the like. It also specifies that a company must spend at least 0.5% of local purchases and 1% on international purchases to be eligible for the cashback. However, RHB does not provide cash back on spending on donations, fuel cost, FPX transactions, etc.
- Increase Cash Flow
Most credit card companies offer no interest period. If a business pays the outstanding balance within the specified time, it need not pay any interest on the amount borrowed. When it comes to RHB, it offers an interest-free credit period of 50 days starting from the date of purchase. It enables a business to pay for its expenses without dipping into its working capital reserves. Moreover, an enterprise can pay for expenses, such as buying new tools, furniture, hardware, and other essentials for the business.
- Control Expenses
Developing a business requires a lot of time and effort, most of which should be focused on developing and fine-tuning various operations. Under these circumstances, a company cannot waste resources on menial and redundant tasks such as bill management. Using the tools provided by credit card companies, SMEs can effectively manage their expenses and keep track of the billing without much effort. It allows these entities to control their cost-effectively.
Moreover, if you use multiple cards for your business, you can easily monitor each of your accounts on the RHB app. This app allows you to generate individual account statements, using which you can keep track of all your expenditures on each card.
Using a credit card is beneficial to any company or business, considering the various advantages it offers. You can get a company credit card online and enjoy all the rewards and benefits it can offer.