If you’ve decided to open a startup company then this is an exciting time in your life. You probably have some big ideas and hopefully, a reasonable plan that will allow your business to grow and develop. More than half of new startups fail in the first five years and the predominant reason is that they try to scale too quickly.
One of the things that can help you with handling your business in a more productive manner is corporate credit cards. Although obtaining one can be very difficult for a startup, more and more providers are focusing on this part of the business sphere. Let’s see how you can get a corporate credit card and how helpful it can be.
What are Corporate Credit Cards?
They function pretty much in the same way as standard personal credit cards all of us use. The difference is – they are issued to specific employees by their employer for business-related expenses. You can use them to buy tickets for work-related tips, to acquire office necessities, or something similar. Instead of waiting for the worker to report the expenses, the money will be immediately deducted from the firm’s funds. This way you won’t have to rely on the statements of those working for you to have credit card reconciliation. However, in most cases, you will have to provide a finance team with proofs of purchase, for tax reasons.
This will make the whole situation less stressful for everyone involved. You will have regular reports when it comes to the financial standing of a company while your employees won’t have to worry about payment charges and debt. Most of the corporate cards offer various perks for those who use them such as airport lounge access and travel emergency services.
There are also certain drawbacks when it comes to using this type of card. Those using them might be less inclined to spend the money reasonably since it’s not theirs. Noticing something like this can be more difficult, that’s why you need to have an agreement with those who use them as well as with your financial team. Overall, this is definitely a more practical alternative to filing endless expense reports and waiting to be reimbursed. It’s something you should include in the work practice of your company right from the get-go as it will bring a lot of benefits down the road.
How Does It Work?
We don’t have to say how important it is to manage your finance in a proper manner, especially if you’re just entering the market with a startup company. As experts from https://www.tribal.credit/ know well, the banking sector is not providing this part of the economy with what it needs. The traditional financial system doesn’t look at startups too kindly but more and more providers are focusing on covering the needs of these young entrepreneurs and helping them reach their goal.
Corporate credit cards seem like a good solution for several reasons. First of all, you will be able to separate personal and business expenses. This is important and should be done from the very start. This will not only make it easier to track where your money is going but it will also be very helpful when the time comes to do your taxes.
Another perk is that you don’t have to wait ‘till the end of the month to see the list of expenditures. Many providers are now giving you an opportunity to follow your team’s spending as it happens and get an instant overview of all payments.
Young entrepreneurs very often hear ‘No’ from traditional banking systems when they want to obtain a corporate credit card. Given the fact that they represent completely new businesses, they don’t have credit histories. However, there are more and more providers entering the financial scene directing their services towards startups specifically.
Many of them will allow you to register and submit all the necessary documentation via online application. Understanding the situation these companies are in, they will not judge you by person or by company credit history. Even more than that, you will be able to set and adjust individual spending limits for every member of your team. And if anyone steps over the line and uses more money than needed, you can in one click freeze cards.
Also, having a balanced cash flow is usually difficult for startups. This way, you will get access to higher credit limits which means not worrying about unplanned expenses all the time. Basically, you will be borrowing money now to pay it back later. This kind of leeway will give you more room to create a successful business story. Plus, a higher limit means a lower ratio which also helps improve your overall score.
Are You Familiar with Virtual Cards?
As technology moves forwards and the rhythm of our everyday lives gets faster and faster, we are looking for more practical solutions that will be able to make us more productive and time-efficient. Physical credit cards are something all of us are familiar with but what about virtual ones?
Virtual credit cards can be used for shopping, just like the regular ones, but they are issued on a temporary basis. This option will be good for any startup as they eliminate the waiting period and your team can start using them immediately.
Differently from plastic ones, virtual cards represent random 16-digit numbers with expiration dates and CVV codes. Another benefit of using them is that they add another level of security. If a hacker somehow gets hold of your information, you don’t have to close the whole account. Thanks to spending limits, you will feel safer when it comes to hidden or unauthorized charges.
Getting a corporate credit card will make life easier for those who are managing a startup company. Not only will this allow entrepreneurs to separate personal from business spending but it will also give them a better insight into their financial situation overall. Expenditures will be immediately available to them via online application so they can take the necessary steps if money is being used unreasonably.
