Business credit cards are increasingly gaining popularity as transactional tools for small business owners that want to conveniently manage finances while saving on costs during tough times.

Graeme Parsons, Head of Business and Corporate Credit Card at FNB, says when used responsibly business credit cards can be a great source of revolving credit for short-term business needs. Moreover, they are no longer just seen as debt instruments, but have become good financial management tools for start-ups that are still finding their feet and need to stay on top of business finances.

He shares six reasons why small businesses should frequently use business credit cards: 
  

• Tracking expenses – using a credit card for all business expenses helps SMEs to store information in one place. This makes it easy to pull data and statements for tax and auditing purposes.
• No collateral needed – unlike other forms of credit, business owners do not need collateral to secure credit card funds. Furthermore, because credit cards provide a revolving line of credit, SMEs have access to the funds at any time once they have paid off debt.
• Cash flow management – one of the biggest challenges facing small businesses owners in the current economic environment is managing money coming in and going out of the business.

Business credit cards usually come in handy when businesses run into cash flow issues due to delayed payments on invoices, while still having to pay suppliers or contractors, for instance. They are also widely used to cover unforeseen expenses, which can also put a strain on cash flow.

• Cost savings through rewards – business credit cards offer entrepreneurs real value and benefits, helping them to save on costs in the long-term. For example, SMEs can save on fuel, travel insurance and earn rewards points, simply by using their business credit cards.
• Work related expenses – small business owners can now offer their employees secondary business credit cards to use for work related expenses. This is a convenient way for SMEs to monitor and manage spending. It also helps to reduce the administrative burden of reimbursing employees for using their own cash for business-related expenses.
• Credit profile – financial institutions often take into consideration the credit card profile of small businesses when granting loans. Using a business credit card regularly can help small business owners to build a good credit profile.

“Business credit cards are now being tailored to suit the needs of business owners, giving them variety and peace of mind when transacting. However, the onus falls on SMEs to honour their debt commitments and avoid abusing the credit card facilities,” concludes Parsons.