Top reasons to apply for business credit cards

Say your business makes a lot of monthly purchases, or you're forever reimbursing employees for expenses. A business credit card could be an intelligent way to manage the process. Rather than juggling multiple card payments or bank transfers, you could consolidate spending into a single monthly balance, dramatically reducing administration time and stress.

Similar to personal credit cards, business cards come with rewards, such as a low annual fee, cash back or loyalty points and can provide numerous travel and purchase protections. They can also include perks such as no fees on international transactions, business insurance on device protection, purchase security and trip cancellation. In turn, these can help keep your out-of-pocket expenses down.

Many banks provide businesses with tools that allow you to review a year-end summary and export transactional data to reports providing an easy view of recurring transactions or a monthly, quarterly and year-end summary. Such reports can easily integrate with accounting software or be exported to Excel to simplify bookkeeping. This allows you to track spending and simplify your accounts, ready for tax and VAT reporting.

Many businesses need to spend money to earn money, though this can be difficult to do without a steady cash flow. 

Credit cards can help your cash flow by giving your business the necessary injection of cash and the ability to make purchases that can help fulfil business goals. Without a credit card, you may not have the ready cash to afford such an investment.

Business credit cards can provide a line of credit as a boost to working capital. You can use this to purchase anything you may need for your business, such as:

• Inventory: Whether it's physical inventory to drive sales, raw materials for production, or any other necessary product to run your business, a credit card can ensure you have what you need when you need it. Also, thanks to increased spending credit limits, a company can afford to buy in bulk, benefiting then from favourable supplier pricing.

• Recurring expenses: Business expenditures are rarely the same every month, especially with companies that deal with seasonal fluctuations. However, all businesses need to deal with annual payments, such as taxes or insurance premiums, and credit cards can be an excellent way to cover business expenses.

• Unforeseen expenses: It's always good to be prepared for any eventuality, and knowing you have a solid buffer to weather the storm can give you peace of mind. 

As soon as your company has a business account, it's wise to apply for a dedicated business credit card as soon as possible.

• Reduce personal liability: To run your limited company as a distinct entity, you must demonstrate that its finances are separate from your personal expenses.

• Simplify accounting: Tracking business expenses is easier with a business credit card statement. This can also help you deduct and claim back business-related expenditures.

• Business credit score: Building a solid business credit history reduces the pull of your personal credit rating for loans and vice versa. Should, for example, something damages your personal credit report, your company can still have the solid footing needed to request financing.

It can be challenging to secure financing without a credit history to look at, as banks aren't sure what to think and won't know if you'll be able to repay a loan or not. A business Credit Card allows your business to build a good credit score, which is beneficial and crucial for future growth.

A business credit card could make a huge difference. By regularly using the card and being punctual with payments, your company can begin to build a solid credit rating that grows over time. If you want to ensure your company will qualify for long-term loans, there's no better tool.