A business credit card is a must have financial tool for any self-storage facility, but are you getting the most out of your little plastic friend?
“The right one can save you money and, if need be, fill in the occasional gap in your cash flow at less cost than the other forms of financing available to new businesses,” said Marc Prosser of Fit Small Business.
Follow these strategies to get the most out of your business credit card.
1. Choose the right card.
“Many business credit cards offer business friendly rewards systems, such as five percent cash back on office supplies or three percent back on airfare, marketing, or shipping,” explained Prosser. “Depending on what your biggest expenses are, these bonuses can add up in a big way.”
The U.S. Bank Business Edge Cash Rewards Card, for instance, offers three percent cash back on items bought at office supply stores, as well as gas and cell phone bills.
Some cards, such as Spark Cash from Capital One, issue employee cards for free.
Also consider upcoming expenses, such as a landscaping project or roof repair, when thinking about a card. For example, the Ink Plus Business Card offers 50,000 bonus points if you spend $5,000 on purchases in the first three months after opening the account.
Other features to check for: a low interest rate or a 0 percent APR introductory rate, balance transfer options, business expense tracking, and low – or no – annual fees.
2. Keep business and personal separate.
While it can be easy to pay with a single card for all purchases, use the business credit card only for the storage facility’s needs. You’ll be able to monitor the facility’s ongoing expenses, and you won’t have to file through each statement to find personal charges.
3. Make it a budgeting tool.
Opt for paying bills online, advised John Lindsey, cofounder and president of Lindsey Self Storage Group in Durham, North Carolina. Charge services like electricity, phone, and water automatically each month using your card.
By using your business card for these bills, you’ll be able to see all of your expenses in one place. You can check what amount you paid in the previous months, and set up a budget for what to expect the following month. “It helps streamline the process,” said Lindsey.
4. Use it to track expenses.
If you pay all of your storage facility’s expenses with a business credit card, you’ll be able to easily consolidate all of your key costs throughout the year.
“You have everything on one report,” explained Vito Pagano, business credit card expert and founder of Independent Merchant Group, a merchant services auditing and consulting firm. “It’s simple for tax time.”
5. Set spending limits.
If you have a number of employees using business credit cards, most cards will allow you to establish a certain amount that they can spend.
In addition, you can set limits to prevent fraud, explained Pagano. You might ask the credit card company to call you on any purchases above $1,000 that are outside of your zip code before validating them.
6. Use a card instead of a loan.
If you want to borrow money, don’t overlook your business credit card when considering your loan options.
“Compared to alternative lenders that charge a 40 to 80 percent APR or merchant cash advances that charge 80 percent and higher, a 16 percent business credit card APR is not so bad,” explained Prosser.
“You’ll still want to spend wisely, but credit cards can be a surprisingly effective way to fill in cash flow gaps compared to the alternatives,” he added.