For small business owners cash flow is equivalent to a blood flow. If it stops or is even constricted it can wreak havoc on your body and your business. Still the reality is every business runs into cash flow problems once in a while. A large customer delays a payment for few days and you will be scrambling to meet the payroll that is coming up. You may need additional cash flow if you are looking to expand the business with new products or locations. No matter how you come across the need for additional cash you need to have a plan in place to meet emergency cash needs.
Now, it is relatively easy to get cash from the bank when you have sufficient time. However, when the cash need arises due to emergency you may not have many options available. Banks and other lenders will take time to approve your loan request by which time it may be too late. One of the popular avenues to get cash on a short notice is with a business credit card. You can withdraw cash relatively easily using current credit card or apply for a new one.
While it is easy to get cash you need to be careful about how you use the credit card to meet emergency cash needs. Failing to do so can cost you dearly in terms of cash advance fees and high interest rates. Here are the top credit card tips to consider when searching for and using a business credit card.
- Do not fall for the lure of introductory rates on the new credit cards. You need to be careful about how and when you use these offers. If you don’t have good use of the cash now you will end up wasting the offer. In addition, you need to pay attention to the interest rates you will end up paying on a long-term basis after the introductory period is over.
- Research thoroughly before getting a credit card. Look at the credit card comparison sites that provide a good overview of various options, and don’t forget to read the fine prints.
- Ensure the credit card meets your business needs. For example, if you operate your business internationally look for a credit card that is accepted everywhere and that does not charge fees for international transactions.
- Avoid using your credit card to make cash withdrawals from ATM. This is one of the most costly ways of using a credit card. Not only will you be charged a fee for the cash withdrawal, but you will also pay higher interest for this type of transaction. Besides, you will not be eligible for rewards your credit card company might be offering.
- Always pay off your balance every month or as soon as your cash flow permits. In general, you are able to get a loan at lower interest rate than what you will pay on your credit card. You should use the credit card only as a last resort for emergency cash needs.
- Monitor your credit card usage with online banking. You can keep track of your balance and all transactions on an ongoing basis. This also gives you the opportunity to consistently monitor any transactions made with your credit card. If you provide credit card to your employees it is imperative that you keep a close eye on these transactions.
By following these tips and with some advance planning you will have a backup plan for your emergency cash needs and not end up paying exorbitant interest.
