Using a Corporate Credit Card to Grow Your Business

Man places an open sign in the front window
•••

 Hero Images / Getty

Corporate credit cards are a type of credit card that companies use for corporate expenses. Some corporations allow employees to have corporate cards to pay for business expenses, like travel or office supplies. Depending on the credit card program, either the corporation or the individual may be liable for purchases made on the credit card.

Corporate credit cards don’t have the same legal protections as personal credit cards. For example, there’s no cap on late fees, issuers can raise your rate or lower your credit limit without warning, and they can charge a fee if you go over your credit limit. On top of that, bad behavior can affect your personal credit. So, if you’re going to use a corporate credit card to grow your business, you still have to be fiscally responsible so you don’t damage the business’s credit or your personal credit.

Easier Access to Financing

When you’re just starting to grow your business, it can be difficult to get financing. Even small business loans can be hard to qualify. A corporate credit card can be easier to obtain, especially small business credit cards. In some cases, you may not need established business credit history to get a corporate credit card.

You can use a corporate credit card to pay for startup costs and improve your cash flow. When you’re trying to grow your business, you may not have consistent income to cover all your expenses. A corporate credit card can help you stay afloat while you work on building a steady cash flow.

You can use a corporate credit card to finance the right equipment for your business so you can maximize productivity and minimize time losses. In many cases, equipment also impacts the quality of your output. You don’t have to max out your card buying the latest version of the equipment, but try to get a bang for your buck.

It’s important to constantly review your spending to make sure every dollar has a purpose. You should be able to tie your spending directly to an item in your business plan to confirm that it’s a viable expense. Otherwise, you may be spending unnecessarily.

Keep Your Personal Finances Separate

Using a corporate credit card allows you to keep your personal and business finances separate - something your accountant will thank you for. It can also help streamline your expenses. You can pay your invoices with a credit card throughout the month, then just pay the one credit card at the end of the month.

Connect your credit card with your business accounting software to automatically transfer your transactions directly from your online account. That way you can reconcile your accounts without having to go through a ton of receipts.

Promotional Interest Rates

Signing up for a new corporate credit card can give you the opportunity to take advantage of a zero percent financing. A promotional interest rate can give you time to pay off a large balance over a period of time without having to pay any interest. You can save thousands of dollars just by taking advantage of a promotional rate. You typically won’t find an offer like this with a traditional business loan.

Build Your Business Credit

Using a corporate credit card can help you build your business credit. Credit card issuers may consider your personal credit score if you haven’t established business credit. Once you’ve proven your business can handle credit responsibly, it will be easier to get credit cards and loans in your business name only. Make your monthly payments on time each month to avoid late fees and to keep your credit in tact.

What to Watch Out For

No matter the size of your credit limit, be careful not to think of your corporate credit card as free money from a credit card issuer. Racking up large amounts of business debt can kill your business before you get a chance to get started. Be smart with your financial decisions, treating your corporate credit card like cash. Avoid taking unnecessary business trips, pay more for equipment than necessary, put payroll on your credit card, or use it for cash advances.

In the beginning stages of building your business, it’s important to spend on things that will directly impact the customer, which in turn directly impacts your bottom line. As your business grows and you increase your income and improve your cash flow, you may be able to afford some of the extras. Until then, it’s wiser to stick with the basics.