Managing business finances by maintaining a steady cash flow is a massive challenge for business owners. But the availability of business credit cards gives instant access. Revolving credit helps a lot in bolstering the finances. Credit cards are convenient to use and increase the purchasing power, which helps in better cash flow management, believes Vic Di Criscio. Business owners who use small business credit cards get instant access. To cash subject to the approved credit limit, which allows them to jack up the finances. And use the funds for availing unexpected business opportunities. Business credit cards work in the same way as personal credit cards, and also interest is payable on unpaid bills.
To ensure proper use of business credit cards, it is necessary to have a system in place to monitor the spending closely so that it does not negatively impact the bottom line. The following strategies about using business credit cards should come in handy.
Establish accountability- the first tip from Vic Di Criscio
When devising a system for using credit cards for business, it is imperative to establish proper accountability for users. The system must include a detailed SOP about using credit cards that covers. Everything from pre-approval of all spending by using a credit card to making receipts mandatory and also even blocking card usage. For those who fail to submit timely reports along with the receipts for spending. Enforcing the system without any deviation will help to ensure proper utilization of the credit cards.
Define card eligibility
Having credit cards for business does not mean that everyone in the organization can use them. Business owners must identify the persons who could be eligible to use business credit cards instead of making it a privilege for everyone. Issuing credit cards to specific persons by considering their role in the organization. Will help establish a robust system that prevents the misuse of credit cards and also helps plug the gaps in uncontrolled spending. Setting the rules about credit card usage will help avoid any hard feelings among individual employees and avoid confusion.
Set limits spending limits
Businesses must have clear policies about using credit cards to ensure their disciplined use. There must be explicit mention about the permissible spending limit of credit cards, the type of expenses that can be allowed. For using credit cards, and also how often someone can use them. All card recipients must sign and acknowledge in writing about adhering to the set rules and also guidelines. Besides setting overall spending limits, some credit cards allow setting sub-limits according to various spending categories.
Monitor card usage
For better control of credit card spending, some business credit cards allow users to set up activity alerts. Every transaction undertaken by using the credit card will trigger a message to the cardholder who will be aware of the card’s use. You can set up a similar alert to track inappropriate use of the credit card that contravenes the company’s laid down policy.
Having proper checks in place will help businesses to avoid the burden of heavy interest arising from uncontrolled spending.