Business credit cards work in the same way as personal credit cards in that they allow the cardholder to purchase goods or services on credit. Although many well-known companies started off being financed by the entrepreneur's personal credit card, once a company gets itself established, there are significant advantages to switching to a company/business credit card.

Advantages of a company credit card

•    The obvious and greatest benefit of carrying a business credit card is that you have an instant source of funding whenever and wherever you need it. Cash may be king, but buying in stock from a supplier in China over the Internet requires a credit card that the supplier can instantly verify as creditworthy.

•    Company credit cards can be used in person, online or over the telephone, and allow for instant acceptance of your purchases.

•    Even when making face-to-face purchases, the security risk of having large amounts of cash on your person is not worth taking.

•    Using credit cards is usually cheaper than writing out a cheque, which is anyway not a guarantee of credit thus cannot secure instant acquisition of goods or supplies.

•    Company credit cards make it easy to keep personal and business expenses separate, making them easier to track, and simplifying tax matters.

•    Linked credit cards can be issued to selected employees, so that you are not the only one with the power to make business purchases. A busy boss will have better things to do than supply the staff kitchen with coffee or the office store-room with pens.

•    Employee credit cards can have specified credit limits, depending on the level of the employee. They can also have controls in place to limit the type of purchases made on them.
•    Special perks and rewards programs can be associated with certain business credit cards, meaning your purchases may result in free flights.

•    Finally, company credit cards are a great way to build up your company's credit rating.

Choosing a company credit card
The main consideration is that the credit card is widely accepted, which is no problem where the Visa or MasterCard logos are in evidence. American Express is a different matter, as acceptance is not as widespread. However, the added perks and kudos of an Amex business credit card mean many bosses may choose to carry one as well as a Visa or MasterCard.

All the usual considerations when checking out a personal credit card should apply to choosing a company credit card, especially the interest rate if a large balance is likely to be carried over from one month to the next on a regular basis. The annual fee is important, although not as much as with a personal credit card because the higher fee may bring with it extra benefits and can be written off as a business expense. Regarding the perks and benefits, are they as useful as they first appear? Are the insurances right for the kind of business you run, and are you likely to take advantage of any rewards program attached to the card?

It is essential that the terms and conditions are read thoroughly, as they form the basis of what is a legally binding financial contract. Make sure it is simple to access your account online, and assess the kind of fraud-prevention measures that are in place.

If you are not entirely happy with the details of a business credit card being offered to you, check out the market and see if the offer can be bettered. You can then go elsewhere, or take this information back to the bank that made the original offer and see if a little haggling can be done. Most banks are willing to be flexible if it keeps a business account on their books.

This guest post is written by Timothy a personal finance writer for BalanceTransferCard.

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