The top 10 benefits of having a business credit card in Canada

As a business owner, you always seek ways to streamline your operations and maximize your profitability. One way to achieve this is by getting a Canadian business credit card. As a matter of fact, businesses can reap numerous benefits by using a credit card tailored to their specific needs. Here are the top 10 benefits of having a business credit card in Canada.

Benefit #1: Establish a clear difference between your personal and business spending

The role of business owner comes with a lot of responsibilities, with managing your finances as just one of them. Above all, keeping your personal and business expenses separate avoids any confusion and makes tax season less stressful.

A business credit card easily establishes a clear distinction between your personal and business spending. By using a separate card for business expenses, you can track those expenses without any mix-ups with your personal finances. This will not only save you time but also help you avoid any potential legal issues.

Benefit #2: Benefit from interest-free grace periods

When it comes to managing cash flow, businesses need all the help they can get. As a key benefit, a business credit card offers an interest-free grace period. This allows you to make purchases with your card and pay off the balance each month without any interest charges.

But what exactly is an interest-free grace period? Essentially, it’s a time during which you can carry a balance on your credit card without paying interest. For most business credit cards, this period lasts 21 days. However, some exceptions, like the American Express Business Gold Rewards Card, offer 55 interest-free days. 

For businesses with fluctuating cash flow, such seasonal industries or those with irregular payment schedules, this can be a lifesaver. It provides some extra breathing room when it comes to paying bills and managing expenses. In turn, it allows you to focus on growing your business instead of worrying about cash flow.

Benefit #3: Get access to an easy-to-get credit facility

Getting a business loan can seem challenging, especially if you are a new or small business. However, a business credit card can provide an easy-to-get credit facility to cover unexpected expenses or seize new opportunities.

For instance, a business credit card is relatively easy to obtain compared to traditional business loans. In short, credit card companies often seem more willing to extend credit to small businesses, even those with limited credit histories. In fact, many credit card companies have special offers for small businesses with lower interest rates and more favourable terms.

Benefit #4: Earn rewards points or cashback on your business expenses

When running a business, every penny counts. That’s why you’ll want to take advantage of any opportunity to save money or earn rewards. Most importantly, sign up for a business credit card that offers rewards points or cashback on your purchases.

With rewards points, you can earn value for every dollar you spend on your business credit card. Next, you can redeem these points for a variety of rewards, such as travel, merchandise or statement credits. Depending on the credit card you choose, you may also transfer your points to airline or hotel loyalty programs. As a result, this gives you even more flexibility when it comes to redeeming your rewards.

With cashback, you’ll earn a percentage of your purchase as a statement credit. This means that every time you make a purchase with your card, you essentially get a discount on that purchase. Some business credit cards even offer higher cashback rates for certain categories of spending, such as office supplies or travel.

Benefit #5: Track your expenses more efficiently

A business credit card serves as more than a transactional tool. Done right, it can act as an effective resource for managing your company’s finances. Most business credit cards in Canada, including Amex Canada business credit cards, also integrate with accounting software like QuickBooks. This syncs your expenses directly with your financial records, providing an up-to-date and accurate reflection of your business’s financial health. 

Using a business credit card also streamlines budgeting and forecasting. As you gain clarity on your spending habits, you become better equipped to allocate resources strategically and anticipate future expenses. With such conveniences, you can bid farewell to manual expense tracking and the clutter of physical receipts. 

Benefit #6: Build your business credit score faster

Using a business credit card works as a powerful tool to help you establish and build your business credit score. A good credit score is essential for any business that wants to secure financing for growth or expansion. By using your business credit card responsibly, you can demonstrate to lenders that you borrow reliably.

Ideally, a business credit card can help you build your credit score by establishing a credit history for your business. When you use a business credit card and make timely payments, you demonstrate responsible credit management to credit-reporting agencies. Over time, this can help to establish a positive credit history, which can be invaluable when you apply for financing.

Benefit #7: Track employee spending more efficiently

A business credit card becomes a strategic asset by tracking employee spending. If your employees need to carry out business-related purchases, issuing each one a dedicated card can significantly streamline expense management. This approach doesn’t merely centralize expenses but also allows real-time transaction monitoring.

Real-time monitoring creates a key advantage; it enables swift detection and rectification of any potential overspending, contributing to better cost control. It also provides insight into spending patterns, which can help in establishing necessary financial policies or identifying potential misuse. Moreover, setting individual spending limits becomes seamless, fostering responsibility in employees while safeguarding the company’s budget.

Furthermore, the use of business credit cards negates the need for reimbursement procedures. Ultimately, this saves time and reduces administrative tasks. Employees can simply use their assigned cards for approved expenditures.

Benefit #8: Make your business trips more comfortable

Business credit cards offer an invaluable resource for those who frequently travel for work. Besides paying bills, these cards often come loaded with a range of travel-centric benefits to elevate your comfort and convenience.

Many business credit cards give perks. For example, exclusive airport lounges provide a quiet space to work or relax away from the bustle of the airport. These lounges often offer amenities such as Wi-Fi, complimentary food and beverages and sometimes even shower facilities. All in all, they ensure your travels start off on a positive note.

Benefit #9: Establish additional controls with virtual business credit cards

Further, some companies like Float allow their clients to create an unlimited number of virtual credit cards. These cards allocate a specific spending limit per card and monitor transactions in real time, keeping expenses within your budget.

Consider, for instance, a company that advertises its product on Facebook Ads. A minor mistake in ad settings could result in large unplanned expenses. By designating a card exclusively for Facebook Ads, you can set a limit – say, $10,000 per month – to safeguard against overspending.

Furthermore, you may have security concerts when subscribing to new software-as-a-service (SaaS) platforms, particularly lesser-known ones. With a virtual card, if the service proves unsatisfactory or potentially fraudulent, you can simply cancel the card. This provides a secure way to try new services without changing payment information for other services.

Benefit #10: Get free business insurance to cover purchases, employee fraud and more

Business credit cards often come with complimentary business insurance coverage, adding an invaluable layer of protection. In short, they safeguard business assets and reduce financial risks. This coverage can extend to various aspects of a business’s operations.

For instance, some credit cards provide purchase protection insurance for business purchases. Above all, this safeguards against accidental damage or theft of purchased items within a certain period after buying them. This can empower businesses making significant equipment or supply purchases, ensuring these investments are protected.

Employee fraud and unauthorized transactions create other risks businesses face. Certain credit cards, like those offered by American Express Canada, include specific insurance coverage against employee misuse of the card. This provides an additional level of security and peace of mind.

Furthermore, many business credit cards include travel accident insurance. This protects cardholders in the event of accidents during business travel, providing both financial security and personal safety.

The Bottom Line

When researching for the best way to manage your company’s finances, take time to compare business credit cards. These cards offer various benefits and features that can prove invaluable in running a business. Examining the different rewards programs, interest rates and other terms can assist in making an informed decision. Ultimately, this could significantly affect your bottom line. By scrutinizing these factors, you can select the most suitable business credit card and thus effectively streamline your financial management.