This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. For an explanation of our Advertising Policy, visit this page.
Sign up for a free Plastiq account here
There’s much to love about paying for business expenses with a credit card. It makes meeting minimum spending requirements on sign-up bonuses that much easier to reach, you can swiftly rack up credit card rewards and you can take advantage of financing offers that give you more time to pay without incurring interest charges.
Putting as much as possible on plastic also is a way to keep expenses organized, although traditionally there have been some limitations to this because few landlords or banks allow you to pay your mortgage or rent with a credit card.
That’s where a service like Plastiq can help small business owners. The bill payment service allows you to use a credit card to pay for practically any expense. For that service, you’ll be charged a 2.5% fee, although in the case of Plastiq, the company says some business owners are able to write off a portion of the fee on their taxes. Still, the fee wipes out any meaningful rewards you would earn on the transaction, but it may be worth it if you’re trying to quickly reach a minimum spend requirement.
Here are five reasons to put everything — including commercial office space rent and vendor invoices — on a business credit card.
1. You’ll Better Manage the Company’s Cash Flow
When paying with cash, that money immediately leaves the company’s bank account. By paying with a credit card, it extends the time a small business has to pay its bills on its accounts into the next billing cycle. You might be able to extend that period out further depending on the business credit card you hold. This can be especially helpful with your largest monthly expenses, like rent and vehicle leases.
The Plum Card from American Express OPEN, for instance, gives cardholders 60 days to pay off a balance before accruing interest, while other cards, like the Ink Business Cash Credit Card, offer lengthly 0% interest introductory offers. Ink Business Cash comes with a comes with 12-month interest-free intro offer on purchases and balance transfers for 12 months. (After that, it will be 14.74% to 20.74%.)
2. It May Make Your Budgeted Expenses Cheaper
Small businesses know they will have recurring expenses every month — from company insurance and rent to vendors and suppliers. You may be able to reap the benefits of early-pay discounts on some of these expenses by charging them to a credit card. This may not otherwise be an option for you if you have to rely on the money in your business bank account to pay bills early.
3. Enjoy Additional Credit Card Benefits
Increasing spend on your business credit card may make you eligible for higher lines of credit, higher status tiers and invite-only elite card products. The CitiBusiness AAdvantage Platinum Select World Mastercard, for example, offers a $99 annual companion certificate for domestic economy travel if you spend $30,000 in a cardmembership year and if the account remains open 45 days after the anniversary date. And you can lock in elite status on Delta with the Platinum Delta SkyMiles Business Credit Card from American Express; earn 10,000 MQMs and 10,000 redeemable miles if you spend $25,000 on the card in a calendar year (and another 10,000 of each if you spend $50,000).
4. Establish a Business Credit History
If your small business is new, you probably haven’t yet established any business credit, which is separate from your personal credit score. This can make getting a small business loan or a line of credit difficult. Opening up a business credit card and paying off expenses in full each month can help a small business establish and build up a credit score. After you open that card, issuers will report your payment track record to the credit bureaus that monitor business credit. Paying on time will make it easier to get favorable lending terms in the future.
5. Streamline Your Expenses
When a small business puts all of its expenses on a credit card (or two or three), it makes it easier to keep track of where the money is going. This, along with credit card expense management tools, is a great way to streamline your payment record keeping. Use this strategy in combination with a card like The Business Platinum Card from American Express OPEN, which offers Spend Manager, a feature that allows you to add receipts and notes to your transactions either via desktop or your mobile device. It also comes with Connect to QuickBooks, which automatically sends card transactions to your QuickBooks Banking page every day.
Paying for business expenses on a business credit card can be a great boon for an entrepreneur. Not only does it help small business owners stay organized, provide extra float time between payments and establish the company’s credit score, but it can also earn the company credit card perks they might not otherwise have been able to reach with normal credit card spend. If you’re interested in trying out a bill payment service, you can sign up for a free account at Plastiq.com.
LIMITED TIME OFFER. Aside from the 100,000 points welcome bonus (available until 8/8/18), Amex recently made huge improvements to the Business Platinum Card, including the fact that you will now earn 50% more points on purchases of $5,000 or more, earn 5x on flights and eligible hotels at Amextravel.com and cardholders will receive a $200 airline fee credit each year.
- Limited Time Offer: Earn up to 100,000 Membership Rewards® Points.
- Earn 50,000 Membership Rewards® points after you spend $10,000 & an extra 50,000 points after you spend an additional $15,000 all on qualifying purchases within your first 3 months of Card Membership. Offer ends 8/8/18.†
- Get 5X Membership Rewards® points on flights and prepaid hotels on amextravel.com.
- Get 50% more Membership Rewards® points. That's 1.5 points per dollar, on each eligible purchase of $5,000 or more. You can get up to 1 million additional points per year.
- 35% Airline Bonus: Use Membership Rewards® Pay with Points for all or part of a flight with your selected qualifying airline, and you can get 35% of the points back, up to 500,000 bonus points per calendar year.
- You can also receive 35% points back on all First and Business class flights, with all airlines available through American Express Travel.
- You can enjoy access to The American Express Global Lounge Collection℠ offering access to the most lounges across the globe, when compared with other U.S. credit card offerings. As of 11/2017
- Terms Apply
- See Rates & Fees