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Understanding business credit cards and how best to use them

purity muriuki



David Luck 2

Running a business can be stressful, with constant outgoings to keep suppliers happy, and maintaining sufficient cash flow can sometimes be difficult. One convenient way to overcome this and increase any company’s spending power is to find out more about business credit cards, as they are a simple way to access a revolving line of credit for business purchases and cash withdrawals.

By understanding the features, uses, and benefits of business credit cards, you can make an educated decision about whether it’s the right option for your company, and how to make the most out of having a business credit card. We explore the world of business credit cards in detail below.

What is a business credit card?

A business credit card has a revolving line of credit that should generally be used solely for business expenditures. In the same manner as personal credit cards, statements are issued on a monthly basis providing details of the balance owed and minimum payment due. If a business credit card balance is paid in full each month then no interest is payable on expenditure, however, if a minimum payment is made interest will be due.

Benefits of business credit cards

The advantages of business credit cards are plentiful. They offer maximum flexibility to business owners while assisting cash management. Just some of the fantastic benefits available with many business credit cards include:

  • Cashback
  • Employee cards
  • Integrated accounting functions to synchronize with business accounts
  • Spending controls
  • Travel insurance
  • Opportunity to build business credit.

Considerations before applying for a business credit card

There are many factors to consider before applying for a business credit card. For example, consider the different ways a business credit card will work for the business and how its use will be monitored. Jot down the pros and cons beforehand, to ensure the correct decision is made.

Many cards feature an annual fee, so it’s important to be comfortable with paying this and also the level of interest charged on outstanding balances. Ideally, you should be looking at clearing balances on a monthly basis to avoid any unnecessary costs.

If you intend to use a business credit card overseas, it’s important to find those offering fee-free transactions while abroad. You’ll also want to source a card offering competitive currency exchange rates.

Using a business credit card

Once you receive your business credit card, it’s important to put robust controls in place for tracking business spending, as this expenditure ultimately impacts bottom-line profits. Some measures to consider are discussed below.


Damian Brychcy COO at Capital on Tap in office 1

The accountability of all business card spending is paramount. It may be a good idea to insist that all business credit card spending is pre-approved, to ensure there are no surprises when the monthly statements arrive.

Most businesses opt for rigorous reporting of receipts cross-referenced to all expenditures. It may be necessary to take credit cards away from any employees who fail to submit comprehensive expense claims to justify their card expenditures.

Who should receive a business credit card?

It’s important to limit access to business credit cards and only provide them to those who genuinely need one for essential business requirements. Establishing a clear policy on spending limits for individual cardholders is also wise, as this helps ensures expenditure does not exceed the set limit.

Those who may benefit from a business credit card include sales reps, who may require cards to cover travel expenses. Managers and executives may also need access to make regular purchases for their departments. And finally, entrepreneurs and business owners themselves may find a business credit card the best option for managing cash flow.

David Luck, co-founder and CEO of Capital On Tap, says: “Using a business credit card is an excellent way to manage cash flow, but it’s essential to stick to a budget and ensure that all expenditures are accounted for. With the right approach and controls in place, it can be a real savior in business finances.”

Set card limits

The business credit card policy should also detail rules about acceptable spending. Employees should be advised which expenses they can put on cards and how much they can spend. It’s also important to regulate how often cards can be used.

When issuing an employee with a business credit card, they should be given a copy of the policy and asked to sign it as an agreement so that they will be bound by these rules. Some business card providers work with businesses to limit the transactions allowed on certain cards. It’s even possible to specify that transactions can only take place at certain times.

Damian Brychcy, COO and US MD of Capital On Tap, says: “Having a business credit card can be an invaluable tool, giving you the ability to make purchases while giving your cash flow some breathing room. It’s important to remember that whatever you purchase on the card has to be paid back, so ensure that all spending is responsible and within budget.”

Monitor business credit card activity

Accounts departments should be tasked with the duty of monitoring business credit card activity to ensure expenditure is acceptable.

Activity alerts via text or email can be requested from business credit card providers to facilitate this. Business leaders can specify whether they want alerts for each and every transaction or just each time an employee tries to use a card for a purchase of a certain amount or in an unapproved area.

Wise use of business credit cards

Business credit cards can be a useful tool for many businesses, providing a revolving line of short-term credit that’s paid off at the end of every accounting period. However, it’s not generally a good idea to use a business credit card for large business expenditures that could be funded by way of business loans. A very large business expenditure could max out the credit card and render it useless for other expenditures throughout the month.

If it seems likely that expenditure cannot be cleared the following month, it may be more practical to apply for a business loan as the interest rate on credit cards is higher than for most loans. This frees up your credit card limit for employees to use as needed.


Business credit cards can be an incredibly flexible solution to enhance cash flow, offering a range of useful benefits. They can be issued to a large number of employees, giving them the convenience of paying for services as needed.

However, it’s important to put a card expenditure policy and employee guidance in place to ensure employees are aware of what can and cannot be charged to a business credit card. Furthermore, it’s not advisable to make sizeable expenditures using a business credit card. It can be more cost-effective to opt for a business loan for large items, and this also avoids overextending credit limits that might prevent employees from using cards for essential expenses.



I'm a passionate full-time blogger. I love writing about startups, how they can access key resources, avoid legal mistakes, respond to questions from angel investors as well as the reality check for startups. Continue reading my articles for more insight.

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