Business credit cards have become increasingly popular in South Africa with their popularity as transactional tools for small business owners who require finances to be managed conveniently while saving on costs during demanding times.
A business credit card, when used responsibly can be a great source of revolving credit for short-term operational requirements. Moreso, business credit cards are no longer only seen as debt instruments but have become significant financial management mechanisms to start-up companies that are new to the game and need to stay on top of their business finances.
Likemoney has created a list as to why small businesses should frequently use business credit cards:
Credit profile: It is always a good idea to start building a good credit score. Financial institutions often take the credit profile of small businesses when granting loans into consideration. By using a business credit card regularly can help small business owners build a good credit score.
Work related expenses: Small business owners in South Africa can now offer their employees secondary business credit cards to use for work related expenditure. This makes for a convenient way for SMEs to manage and monitor spending. It also helps to reduce the administrative burden of reimbursing employees for using their money for business-related expenses.
Cost savings through credit card rewards: Business Credit cards offer business owners real value benefits, helping them to save on costs in the long-term. SME’s can save on fuel, travel insurance, and earn reward points by simply just using their business credit card.
Cash flow management: In South Africa, one of the largest challenges that face small business owners in the current economic environment is managing money coming in and out of their business. Business credit cards usually come in handy when companies run into cash flow issues due to delayed payments on invoices while still having to pay suppliers or contractors for example. The cards can also widely be used to cover unforeseen expenses, which can also put the strain on cash flow.
No collateral needed: Apart from other forms of credit, business owners do not require a 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.
Tracking expenses: By using a business credit card for all business-related expenses helps SME’s to store information in one place. This makes it easy to pull data and statements for tax & auditing purposes.
Business credit cards in South Africa are now being tailored to suit the needs of business owners. This gives them variety and peace of mind when transacting. Although, the onus falls on SME’s to honour their debt commitments and avoid abusing the credit card facilities.