Business Corporate Card
There should always be a border between your home and your business – in the manner of Las Vegas adventures, company affairs have to stay with the company. And for your personal credit card, the one you use to meet family needs (pantry, entertainment, medical services, appliances), this division should also be inviolable.
What is a business credit card (and why you need it)
Take into account that when you use your plastic to cover business expenses (pay suppliers, buy supplies and even to cover the payroll), you run the risk of getting into complicated situations. For example: not being able to use your personal credit card to attend a medical emergency in the family, because its financing limit was used to acquire merchandise for the company.
Of course, in the day-to-day life of any SME, dispensing with the owner’s plastic is not easy; financial commitments arise at all times, and there is not always enough cash on hand to satisfy them. However, if your business meets some requirements, it may be time to turn to another type of tool: a business credit card.
The market offer!
Financial institutions, especially commercial banks, already provide business cards for SMEs. Two modalities dominate the offer:
Corporate card: It is a plastic backed by the resources of your company that are deposited in an account. With this card (generally debit), the expenses made by the company will be vaccinated against «dizzy choros» or attacks of amnesia. Thanks to the reports you receive (account statements), you will always know how much and in what was invested, at what time and place, and even who made the expense. In addition to providing this level of transparency, given their characteristics, these plastics are widely used to manage travel expenses, representation expenses or purchases, among others.
Card associated with a credit: It is a plastic that you get when you hire financing for your business. In this case, the card is tied to the amount and conditions of the credit line you received. Plastic is a means with which you have the loan resources (checkbook and electronic banking, for example, are other means of disposal that normally accompany the card; although the options may vary depending on the provider). As in the previous modality, these plastics offer ample clarity in the expenses that are made in a company.
With these cards you will not only enjoy a better interest rate, you can also pay for services and supplies, have cash at ATMs, take advantage of special promotions (discounts, months without interest), have insurance on purchases, have several plastics for your company (each one even with specific usage policies), etc
Due to the benefits they provide, business cards are a good option for your business. However, as with any other financial tool, these plastics imply a great responsibility, which you must assume with good habits and high doses of planning and discipline.
Paint the stripe.
If you want to use a business card, your first commitment is to separate personal and business finances, that is, that each area has its own resources and that these are managed independently.
And your conviction must be firm: «do not use company sales to pay for vacations, and do not take the money from tuition to pay the payroll,» says Mario Marín, director of SME Business at BBVA Bancomer.
If you are going to trust a business plastic for your business, dismiss your personal card and without the possibility of rehiring.
Papers in order.
This requires, first of all, regularize the tax situation of your company. Thus, the process to obtain the specialized product for SMEs (account, credit) will be facilitated through which you will receive the plastic.
If the division between the personal and the corporate is not very clear (for example, you are registered as a Natural Person with Business Activity), financial institutions “will assess two payment capacities: that of the father of the family and that of the employer, and that can complicate things. The analysis will be different if the entrepreneur is a Moral Person”, points out Marín.
Analyze the moment of your company.
Although these plastics are undoubtedly useful, your business may not yet have the necessary stability to take full advantage of them. Businesses less than two years old and still struggling to maintain a steady stream of income should wait a bit.
«When a company is in its early stages of development, these cards are not the best idea»
It is better to turn to other sources of financing, for example, looking for a loan or financing that meets your needs.
Look at the mirror.
A corporate card must be a tailored suit. Explore the available offer and find the one that best suits your characteristics and requirements. If your business does not need credit for daily operation, a business debit card could be enough.
Requirements to apply for a corporate business card:
If you require short-term financing (five days, for example), locate a product that charges daily interest; And for higher credit solutions, you will not lack alternatives either. “The entrepreneur must identify the needs that he will meet with the card.
So to take advantage of these tools, it is essential that you perform this analysis, «explains Alejandro Macías, Director of Commercial Products at MasterCard.
Say no to the «great card.» A business plastic associated with a loan – says Torres, from Condusef – «means using resources that can generate debt.» For this reason, the card also represents an obligation, which you must satisfy correctly (paying the financial institution in a timely manner).
When they are well used, business cards provide benefits that go beyond the immediate (accessible interest rate, promotions and permanent control of expenses).
Among the medium and long-term advantages, these two main points stand out:
In the framework of the new tax regulation, to be tax deductible, a business expense has to be made through an electronic means. And in that aspect, «a payment that is applied with a corporate card allows to cover this requirement», points out Macías, director of MasterCard.
The responsible use of a business plastic is a good start. Financial institutions will take note of this, which will put your business in a pleasant position: the possibility of obtaining better conditions on an upcoming loan or access to other financial products, since the card helps to create a credit history.