How to optimise your business credit card use

Key Points

• Separate your business and personal cards to track your spending accurately
• Be strategic in the types of purchases you make and how you use rewards points to get the most out of your cards
• Set clear rules and expectations on how cards are used within your business

Business credit cards can provide a source of short-term financing for businesses – but they can also offer so much more. By laying down some clear rules and using your cards more effectively, you can get the most out of your cards.

Business credit cards can be a useful tool for managing cash flow and taking quick advantage of new opportunities as they arise – provided you use them properly. Below, we outline some good habits to help you get the most out of your business cards.

1. Separate your business and personal cards

It should go without saying, but your business credit card should be treated like any of your business’ other financial assets – it’s only used for work purposes.

Just as importantly, you shouldn’t use your personal card for any business expenses even if it may seem easier to do so at the time.

Mixing up how you use your business and personal credit cards makes it much more difficult to track your spending on either card accurately, eroding the effectiveness of your budgeting and forecasting both at home and in the office.

This applies to paying down your credit card bill, too. You should only pay your business credit card out of your business accounts to ensure all money ends up in the right place.

More importantly, keeping your accounts separate will save you a lot of pain next time you try working out your tax deductions.

2. Be selective in the type of purchases you make

Business credit cards can provide a flexible source of finance for your business. While this may be ideal for managing your daily cashflow, they might not be the best option when making some purchases – particularly large and expensive assets.

That’s because the rates offered on credit cards are often higher than what might be offered on other lines of credit, such as an appropriate business loan. If you’ll be making repayments on your purchase for an extended period, the additional interest on a credit card may offset the other benefits – like reward points.

If you’re making an expensive purchase that will take you a longer than usual time to pay off, you may like to consider whether an ANZ business loan might be a better option.

3. Set clear rules and expectations for use

Most employees understand what they can and can’t use a business credit card for, but it’s still good practice to formalise your own internal rules and expectations to prevent accidental misuse.

 These rules should cover:

• Who is allowed to use the card, and for what purposes
• How much can be spent before approval is needed from a manager
• What kinds of purchases are acceptable
• Who to contact in case something goes awry

Be specific in the way these rules are written.

Giving an employee the business credit card to book themselves a hotel for a work trip could deliver you a nasty surprise if you weren’t clear on what an appropriate budget looks like.

4. Make the most of the features offered

Business credit cards can offer a lot more than just access to a quick line of credit. ANZ business credit cards can offer a range of additional benefits, such as:

• Up to 55 days interest free on business purchases on selected cards. This statement is only true for some ANZ business credit cards. It must be qualified otherwise it may be misleading. This doesn’t mean you have 55 days interest-free after every single purchase. Rather, because an interest-free period runs from the beginning of a statement cycle until the payment Due Date, the number of interest-free days will depend on when you make that purchase within your statement cycle (and the type of purchase)^disclaimer
• Business expense tracking features like bank feeds can help you keep tabs on your cashflow and account management. Most ANZ business credit cards integrate with accounting software including Xero™ and MYOB®. With bank feeds, your transactions appear automatically in your accounting software, freeing up reconciliation time. By reducing human error from manual entry, you can ensure your books are not only up-to-date but also accurate, giving you piece of mind. Also, when tax time comes around, you won’t be scrambling to reconcile your transactions as you’ll have everything recorded in one place. Simple as that.

5. Be smart in the way you use rewards

Some credit cards earn reward points on purchases, which may be redeemed for things like gift cards, airline points or items.

Although it can be tempting to use these rewards as soon as you earn them, it often pays to be more strategic in how you use yours.

For example, if you’ve accumulated enough points for big ticket items such as phones, computers and tablets, it may make more sense to wait until a period of the year when sales are on (for instance End of Financial Year sales) to spend them.

Another strategy might be to use your rewards to purchase vouchers for everyday business expenses – for example, stationery – that can be traded in as and when needed.

Think about how and when your reward points will be of most use, and save up for the moments that really matter.