Manage Expenses More Effectively Using A Business Credit Card

photo credit: Darren Hester

Written for The Closet Entrepreneur by Steve Sildon…

From small businesses to large corporations, it is vital that each one efficiently track their expenses and responsibly manage their finances. Whether it is for tax purposes or expense reporting, a business must be able to account for all expenditures. For an entrepreneur operating a home-based business, failing to keep business expenses separate from personal purchases can be particularly problematic, leading to bookkeeping and accounting challenges that will inevitably lead to money management issues. Even though small businesses are one of the largest contributors to our nation’s economy, at a time of fiscal crisis and declining economic activity, this is a responsibility that no company can afford to neglect. Fortunately for entrepreneurs, a business credit card is a readily accessible tool that can go a long way in assisting business owners with this particular problem.

There are many advantages to using a business credit card to manage expenses more effectively for both small and large businesses. For tracking purposes, many of the most popular cards provide a detailed monthly statement, breaking down each expense individually in line-item fashion as well as breaking out the expenses into specific categories. Having the expenses categorized in this manner provides a much clearer vantage point of potentially problematic spending areas. Even easier still, if the company utilizes business accounting software, such as Quickbooks, the credit card statements can easily be downloaded into the software, simplifying the process and making the reconciliation of your monthly and yearly statements much more palatable for business owners and their bookkeepers. You can even setup Quickbooks to download the information automatically at a set time to simplify the process even more. Automating some of the accounting process for small business owners can save a substantial amount of time, and that reason alone might justify the proposition of having a business credit card entirely. Less time reconciling expenses might mean more time for developing new products and increasing your sales. This type of automated reporting capability can also make the task of producing financial statements at a moment’s notice for investors or lenders considerably easier, ensuring a much higher level of accuracy.

The average business might only have a few select employees who are authorized to make company purchases, but there are other organizations whose employees must make company purchases on a daily basis. For those companies, these statements can significantly reduce wasted company time by employees filling out an expense report that may not even reveal all the details of their purchases. Would you rather have your highly paid sales people filling out detailed expense reports or selling your products? Obviously, it should still be mandatory that hard copies of all receipts be submitted for record keeping purposes but also to document any and all employee expenses for tax authorities should that be necessary (knock on wood). Additionally, when an employee is required to use a credit card for business expenses, knowing their supervisor and the owner will see each and every purchased item is a constant reminder to keep their purchase activity on the up and up. By having each category clearly outlined, this also enables the business owner to target areas of overspending or non-essential spending.

Before choosing a business credit card, it’s imperative to do research. Online comparisons and reviews of most major credit cards as well as an outline of their vast array of options and special offers is readily available. These websites clearly explain and outline the details to look for low or no annual fees, low interest rates, special discounts, credit limits, and hidden fees such as late-pay penalties, set-up fees or finance charges. Some major credit card companies offer special discounts offered only to businesses, such as air miles and hotel discounts for frequent travel. One popular offer is credit towards a business’s favorite office supply store, accumulated from purchases made with the card. By taking advantage of a frequent flier program, a company could reduce their travel expenses for out-of-town conferences or training seminars. This type of program can trim the cost for companies with Pharmaceutical Sales Representatives, Regional Sales Directors, Insurance Producers, and those whose employment consists of daily or frequent long-distance travel.

If you are concerned about the thought of giving your employees credit cards, you are in good company. As the primary cardholder on the account, small business owners have the ability to set much smaller credit limits on any of the individual company cards used by employees in order to minimize the risk of abuse. You will not have to lose sleep with the thought of employees running around with credit cards on your dime. You can assign credit limits to your card holders based on need, but you also have the flexibility to make the monthly credit limits as small as you want to increase your comfort level.

Nevertheless, many small business owners are hesitant to use any type of credit card in their business. However, the bottom line is this: a business credit card can be an incredibly useful, cost-effective, time-saving tool, if used properly. By putting in place smaller credit limits on individual cards, establishing clear guidelines for card use and properly reconciling all expenses made on the cards each and every month, many of the potential pitfalls and concerns that small business owners have about the prospect of utilizing credit cards in their business can be effectively minimized.

About The Author…

Steve Sildon is a featured writer for and frequent contributor in the personal financial community on business finance topics such as small business loans, credit cards and alternative financing.

The Closet Entrepreneur

» This entry was filed under Advice


  1. Managing your finances would be easier having a business credit card. It scares me handing out company cards to people. I was just doing a little bit of research. I have learned quite a bit. TY

  2. I agree with you that using a business credit card is a smart way to track expenses. I like the paper trail created that allows me to keep track of even the smallest dollar amounts. And in this economy, I believe that’s key to a strong bottom line.

  3. Using a business credit card can take you a long way and doing it will put you on the right path as you can track expenses, which are vital to the success of the company.

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