Effective financial management is vital for the success of marketing agencies, and one frequently overlooked tool in supporting marketing expenditure is the business credit card. In this article, we’ll explore the world of credit cards designed specifically for businesses, examining their distinctive features and highlighting the advantages they offer to marketing agencies.
What Are Business Credit Cards?
A business credit card functions similarly to a personal credit card. It allows for delayed payment on purchases while offering various rewards and benefits. However, it is designed specifically with the needs of businesses in mind
Business credit cards are available to entities of all sizes, from small sole proprietorships to large corporations. This includes “beginner” business credit cards for emerging businesses and corporate cards tailored for larger companies.
Benefits of Using Business Credit Cards for Marketing Agencies
Businesses can gain significant advantages by utilizing company credit cards. This is especially true for marketing agencies, which can reap multiple benefits by incorporating these financial tools into their approach.
Earn Rewards on Advertising Purchases
One notable benefit to having a small business credit card is the chance to earn rewards on advertising expenses. Various cards provide different points or cashback options, which can be advantageous for recurring costs like Facebook advertising or internet ads.
Starter business credit cards typically come with reward programs that allow you to earn points or cashback based on your agency’s promotional spending. This can help stretch your budget and add value to your marketing efforts. It’s important to choose a credit card that aligns with your spending habits and offers the most beneficial reward options for advertising.
Access to Exclusive Offers and Discounts
Marketing agencies can also leverage the benefits of exclusive offers and deals that are frequently available with corporate credit cards. These advantages may include discounted rates for advertising space or special packages from media outlets aligned with the card’s network. Many financial institutions offer specialized business credit cards for marketing agencies. These cards come with customized rewards and benefits that are specifically designed to support their advertising and promotional efforts.
These promotions are typically aimed at businesses and designed to meet operational needs such as software subscriptions, SaaS product purchases, or even travel arrangements.
Manage Cash Flow More Effectively
Another important aspect to consider is how a business credit card can help improve cash flow management. Advertising campaigns often require upfront payments, long before clients pay their invoices. Effectively managing this gap without impacting operations can be crucial to the success of an agency.
One of the key advantages of a corporate credit card is its interest-free period, typically ranging from 30 to 60 days. This gives agencies extra time before they have to cover expenses. This additional buffer can facilitate operations while awaiting customer payment.
Build Business Credit History
Finally, another crucial aspect is establishing a strong business credit history. Similar to personal credit scores that affect securing personal loans or mortgages, a solid business credit history is essential when seeking financing options for your company.
It is advantageous to begin building a positive credit history early on. This can be achieved by consistently making timely payments on advertised services using corporate cards and effectively managing other financial responsibilities. By establishing a good credit record, individuals have the potential to access larger lines of credit in the future at lower interest rates.
David Luck, CEO and Founder of Capital on Tap
“Marketing agencies stand to unlock a host of benefits by leveraging business credit cards. These cards streamline operations through simplified expense tracking and reporting. With real-time visibility into cash flow, agencies can gain greater control and insight over spending. The flexibility of credit access empowers agencies to capitalize on new opportunities, whether launching client ad campaigns, securing software subscriptions, or covering client travel. Ultimately, they provide the agility marketing agencies need to thrive. On top of operational efficiency, the cards also deliver tailored rewards and cashback to boost the agency’s bottom line.”
Types of Business Credit Cards Suitable for Marketing Agencies
When it comes to marketing agencies, understanding the types of business credit cards that are most beneficial is key. In this regard, there are three main types worth considering: cash back credit cards, travel rewards credit cards, and low-interest rate credit cards.
Cash Back Credit Cards
One popular type widely used by marketing agencies is the cash back credit card. These company credit cards essentially “kick back” a percentage of the amount spent in various categories like advertising or other expenses.
Using these business credit cards offers you an opportunity to earn money while spending. For example, if your agency uses Facebook, every dollar you spend might give you a defined percentage as cashback. The best credit card for advertising purposes would be one that prioritizes its cashback points on advertising spends.
Travel Rewards Credit Cards
Travel rewards credit cards are particularly beneficial for agencies frequently dealing with national or international clients. With these types of corporate cards, companies earn points or miles which can be redeemed for airline tickets and hotel stays.
If your staff regularly travel, using a corporate travel reward credit card can accrue significant rewards that offset expenses. Effectively utilized, these cards can help save on travel costs while also offering exclusive perks like airport lounge access or priority boarding.
Low Interest Rate Credit Cards
Lastly, low interest rate, or low APR, business credit cards are another option perfect for agencies wary about carrying large balances month to month. Paying off in full each billing cycle is optimal but sometimes circumstances may prevent immediate settling. In those circumstances, a low interest rate minimizing accrued additional charges can be extremely useful.
How to Choose the Right Business Credit Card for Your Marketing Agency
Selecting the right business credit card can optimize your marketing agency’s financial growth and streamline expenditure. There are multiple factors that require consideration during this selection process, including checking your personal credit and comparing fees and rewards.
Check Your Credit Report
When you’re embarking on the journey of acquiring a corporate credit card for your marketing agency, it’s vital to understand the role of personal credit scores.
Before applying for a company credit card, it’s prudent to review your individual credit standing because issuers evaluate these scores before issuing corporate cards. Benefits of a good score include improved chances for approval and accessing excellent deals with lower interest rates.
Keeping tabs on your personal standings also helps prevent any surprises caused by undetected errors or fraud that might affect financial health.
Compare Fees and Rewards
Examining fees associated with a prospective business credit card is another essential step towards making an informed choice. Some options are laden with annual charges. Unexpected circumstances could mean you need immediate funds so knowing about any costs for cash advances could be wise. Also look at possible late payment penalties or foreign-transaction fees if your agency conducts global services.
Then there are rewards programs. Incentives via business-specific cards can be valuable when aligned with organizational spending patterns. Think about what your organization needs, and the card that delivers the most benefits with minimal costs.
5 Tips For Using Business Credit Cards Responsibly
Maximizing the advantages of corporate credit cards requires responsible use. Here are five essential tips to help ensure that your company credit card is an asset rather than a liability.
Compare cards before applying
When it comes to selecting a starter business credit card for your agency, don’t simply choose the very first offer you come across. Credit card companies offer a range of competitive benefits tailored to different business sizes and types.
Take time to compare these offers based on their features such as interest rates, reward programs, additional fees, and payment terms. By comparing several options, you can identify a corporate card that addresses your marketing agency’s needs.
Only use the card for business spending
Mixing personal and business expenses blurs financial statements and complicates tax matters. Reserve your corporate credit card strictly for advertising purchases or other work-related expenditures.
Separate accounts will give you a clearer overview of your operations. It makes tracking expenses easier and provides concise financial data when planning budgets or making decisions.
Pay the balance in full each month
The primary advantage of monthly settlement is freeing yourself from accumulating interest charges. Besides that, consistent timely payments will positively impact your firm’s credit rating, which will be invaluable if you wish to borrow funds in future.
While there may be instances where clearing the full balance might not be feasible due to cash flow constraints, it’s recommended to at least make the minimum repayment.
Avoid cash advances
Cash advances often entail higher interest rates compared to regular transactions and are a cost most businesses would want to avoid if possible. Consider seeking alternative funding options if necessary. Cash advances typically don’t earn any form of rewards either and another reason to avoid them.
Compare rewards redemptions
Although many corporate cards promote exciting reward schemes, remember not all incentives are created equal. Evaluate which type would benefit your agency most before choosing.
Best Practices When Using a Business Credit Card for Advertising Purchases
Utilizing a company credit card, particularly for advertising expenses, can benefit your marketing agency in numerous ways. However, to fully leverage potential benefits and mitigate associated risks, adhering to some best practices is recommended.
Keep track of spending and set up alerts
Monitoring spending behavior can help avoid unnecessary confusion or financial stress. Many credit cards for businesses offer expense tracking tools that categorize transactions and produce visual reports. You should consider setting up alerts for large or unusual transactions via the bank’s mobile app or online portal. Such alerts can serve as the first line of defense against fraudulent activity and can help restrict overspending.
Understand how interest rates work
Another crucial aspect of effectively using a credit card means understanding how interest works. Business credit cards have an Annual Percentage Rate (APR), which sets out the annual cost of borrowing money from that lender.
APR influences any unpaid balances on your corporate card after each billing cycle ends. If you plan to carry balances forward, opting for low interest rate business credit cards could save substantial amounts.
If you intend to pay off card balances immediately every month, other factors such as cashback points might be more important in selecting the best business credit card for your needs.
Remember that defaulting on minimum monthly payments or going over quoted limits may lead to higher APRs being applied by lenders. This is another reason for carefully evaluating fees before making a choice.
Business Credit Cards FAQs
Can I use a personal credit card for my business?
Yes, you can technically use a personal credit card for your business expenses. However, it isn’t typically the best practice for several reasons.
- Credit Building: Using a business credit card lets you build your enterprise’s credit history separately from your own which could be beneficial as good commercial credit scores might help you secure loans in the future on favorable terms.
- Expense Tracking: Business credit cards offer expense management tools streamlining tracking,categorizing your operating costs, and organizing tax records.
- Reward Match: Many business cards offer rewards and cashback points in useful categories such as office supplies, travel and advertising spend.
How can a business credit card affect personal credit?
Typically, small business owners are required to personally guarantee their company’s credit card. Consequently this means if the firm fails to pay its bills, it may land on the owner.
Additionally:
- Some issuers report both positive and negative information about commercial account activity to consumer bureaus, besides customary reporting to commercial bureaus, impacting individual scores indirectly.
- Applying for too many new lines of credit in short succession, including products for small businesses, can reduce credit personal scores.
Do business credit cards have the same protections as personal credit cards?
Financial products ensure similar fraud protection against unauthorized transactions whether for corporations or individuals. But unlike standard consumer cards, they don’t universally offer various additional legislated safeguards, like billing rights disputes resolution or potential limitations on interest rate changes as set out in the Credit CARD Act.
Some providers voluntarily extend these provisions while some don’t, so it’s essential to read all terms and conditions carefully before signing a contract.