12.07.2024

Why have a business credit card

The credit card has been ideal for contributing to the growth of small businesses. Although many think that this means of payment is the villain of financial control, when used well, it brings numerous benefits.

Especially for small and micro-businesses, where it’s not always easy to get credit to invest, the card can give you the boost you need to buy goods, raw materials or hire tools on time, or in installments, and sell and receive cash from your customer.

With this in mind, the business card limit – which works like a loan and does not charge interest if paid by the due date – helps with cash flow and working capital.

But what do you think: is taking out a card worth it or not? That’s exactly what you’ll find out in this article. Check out the advantages and disadvantages, how to use it in a beneficial way and the precautions that need to be taken when contracting this service.

Business credit card: how it works:

If you already have a credit card contracted with your CPF, know that the way it works is basically the same: you apply for it, it goes through an analysis, you receive your credit limit, you use it and pay it off on the agreed due date.

Now, if you use your personal card in your company, stop immediately. This simple attitude can complicate and disrupt your entire financial control, both personal and business.

What’s more, when you apply for a credit card using your own, the credit limit tends to be higher, especially if your company honors its financial commitments on time and is well regarded in the market.

To apply for a business credit card, the process also tends to be very similar to an individual card: you need to have an active CNPJ – the positive status that your company is fully authorized to carry out its economic activities.

However, as mentioned above, it is common for these institutions to carry out a credit analysis before granting access to a business card, in order to check whether your company is really able to pay for the credit requested.

An important point to bear in mind is that each bank is free to create its own policies to define whether or not your company is able to have a card or any other service made available by them.

Why have a business credit card?

Knowing a little more about how a business credit card works, it’s time to start learning about the advantages of having this form of payment in your company.

Personal spending and business spending

The first major advantage of having a credit card exclusively for your company is that you can separate corporate and personal spending. This way, everything that is spent for corporate purposes is easier to control and understand how much it impacts on your profit.

When you have partners, this factor becomes even more important, as it makes it possible to reconcile the expenses that each one had for their respective sector and separate them at the end of each cycle.

So, in summary, separating personal expenses from corporate expenses can already be considered a major advantage of having a corporate card.

Centralized spending

Running a company requires you to be very clear about all the money coming in and going out of your till. From this you can analyze whether the profit you make is worth the monthly cost of maintaining it and not going bankrupt.

So anything you can do to make it easier to compile and monitor this data is important. And based on this reasoning, the best way to facilitate this compilation is to centralize all the business’s financial transactions in a single place – which, in this case, will be the credit card.

Higher limit

This isn’t a rule, but credit limits tend to be higher than those for individuals when you have a card or a account.

Of course, this means you have to be much more careful to keep your finances organized and not spend more than you should. However, having a good limit also means having greater purchasing power.

It’s possible, for example, to buy raw materials in installments, or in installments, and receive cash from your customer. In other words, more cash flow to invest or take advantage of opportunities.

Lower interest rates

This isn’t a rule either, but it is very common for interest rates to be lower when it comes to business credit cards, whether it’s revolving credit or interest charged for late payment.

This is because financial institutions understand that the risk of default for companies is lower than the risk for individuals and therefore allow more attractive rates for negotiation.

Annual fee exemption

In recent years, a wave of technological solutions has emerged with much cheaper and more attractive financial services. This is due to the arrival of fintechs, which has made the credit market more competitive.

And one of these cheaper services is the credit card, which now has the famous annual fee exemption. This fee is normally charged once a year and varies according to the financial institution and even the card limit.

If you look at it coldly, it may seem like a small amount, but not having to pay this fee makes it possible to use the money and invest in other things for the company itself. After all, anyone who runs a business knows how important it is to cut every penny in order to make a good profit.

Credit card precautions

Using your credit card with caution can really help your business grow. Avoiding delays allows you to avoid the horrendous interest rates, which are considered one of the highest in the country.

Therefore, an important tip to avoid headaches is: keep track of everything that is spent on it and cut off use immediately when you realize that you are spending more than expected.

Running a business requires a lot of attention, care and organization. Use tools and services that help you to quickly, effectively and reliably control everything that involves your company.