Use your business credit card to protect your cash flow

Much has been written about the benefits of owning a business credit card, and the focus always seems to fall on the seemingly endless lists of offers and promotions that companies that use these cards can qualify for. Of course, these cards are multi-faceted and serve a variety of purposes, not least of which are the available deals and discounts. However, for many businesses, the availability of credit is a vital tool in managing finances through times where cash is limited and yet there are still things that have to be paid for. No-one starts a business in order to close it and this particular feature has steered many small and new businesses away from bankruptcy.

Cash flow problems are almost mandatory in the business world and the majority of companies will experience them at one time or another. There can be many reasons behind these issues, ranging from a large account that doesn't meet payments on time to an unanticipated, seasonal dip in sales. It is virtually impossible to accurately perform how a business will be performing a year after commencing trading and, in these early days, it can be difficult for a company to accrue the necessary funds to cope with difficult times. A business credit card offers a company a lifeline during these circumstances; a safety net to fall back on until the business is back on its feet again. It is wise to make the application for a card at the beginning of a company's career, or when there is a significant amount of cash in the account; lenders are more inclined to respond favourably to those who appear to manage their finances with prudence.

A business credit card also offers favourable rates, compared to using personal or even corporate cards to see a company through a period of difficulty. Each lender has its own rates beyond the enticing introductory offers, which can be as low as 0%. It is worth finding out just what that APR rises to once the introductory offer is over; there's little point in opting for a lifeline that you simply can't afford to use. Offers of credit are designed to be used, then paid off and used again, so try to find repayment rates that you can afford to make on a monthly basis. It is also worth noting that the card is not a facility to try and bail a business out of an ongoing financial crisis; this approach can only lead to greater problems.

The beauty of the business credit card is that it doesn't have to be paid off until it has been used, so it is worth applying for one even if you do not foresee ever having to use it. This way, if for whatever reason your forecast is incorrect, the safety-net facility is already in place and can be utilised at a moment's notice to pay suppliers or wages and other outstanding demands.

Using a business credit card offers peace of mind during unforeseen circumstances and, if used wisely, also serves to establish and develop the company's own credit rating. This in turn, as the company's rating becomes more and more positive, can lead to greater offers of credit being made, which are usually accompanied by more enticing discounts, deals and promotional offers.

There are many business credit cards available in the marketplace and a little research, along with tools such as online comparison websites, can provide you with enough information to help you make the right decision for your organisation. A business credit card is a long-term investment that can prove to be a valuable asset - allowing bills and wages to be paid without touching the money that is in the company account.