The Do’s and Don’ts of Choosing a Business Credit Card
By Andrew Marder
You’re an awesome chef or graphic designer or whatever, which is why your favorite part of the day is figuring out how to reimburse your second-in-command for the $28 they spent on office supplies last week. “Of course,” you think as you’re sitting in a dark room, five hours after everyone else has left, filling out some form in QuickBooks. “This is the reason I got into the business.”
Or maybe, you don’t think that way. Maybe you think all that reimbursement stuff got old as soon as you hired your fifth employee or got your third van or bought a second location. What would be lovely, you’re now realizing, is a way to let people buy the things they need to buy to do their jobs without generating a small encyclopedia’s worth of paper.
Welcome to the world of the corporate credit card.
The “Do Nots”
Here’s what you can’t do. You can’t get credit cards for your employees because you’re too lazy, time-pressed, or confused to figure out how to manage your expenses. If you’re tired of people asking you for things and you just want to tell them all, “Yes, go buy it,” you’re setting yourself up for failure.
You also can’t assume everyone that you hire is going to be a perfect fit for a corporate card. That guy who always leaves his wallet on the bus and forgets his keys and who once tried to pay for lunch with his Safeway Club card? He doesn’t get a card.
Finally – and most importantly – you can’t get cards for your employees if you haven’t yet reined in your own spending. If you look at your debt every month and wonder, “How did we spend all that money,” then you need to keep everything as close to you as possible, and that means late nights and no credit cards.
If you’re still reading, congratulations, you’re a candidate for giving your employees business credit cards. If you’re seriously considering going down this road, here’s the most important piece of advice I can give you – talk to an accountant. They’re probably going to push back and suggest that you don’t move ahead. That’s awesome, and if you can convince them, then you’re in a good place.
When you pick a card, it’s important to remember that you’re not getting a personal credit card. With a personal credit card, you want high limits and low interest rates and perks and universal acceptance. With business cards, you want to impose limits right out the gate. Keep that limit low and, if you only need to pay for gas, just get fleet cards.
The points and perks are interesting and can be rewards for your employees, but they’re not more important than good customer support and a fraud prevention department that pays attention.
You may also wind up paying a fee, and that’s not the end of the world. While there are great free options out there, cards that cost you an annual fee often come with great small business tools that make the fee worthwhile – travel insurance and extended warranties can keep bad days from becoming bank-breaking days.
Two final considerations
At the company I work for, we help small businesses find business software. That means I can’t let you go without telling you to make sure the card you get plays well with your accounting software. You’re goal here is to make less work for yourself, and a card that doesn’t let you import statements into your accounting package – probably QuickBooks, but there are others – is no friend of yours.
If you end up totally sold on a smaller, less well-integrated card, look into some of the third party solutions on the market to see if you can still get your statements into your accounting system. Hubdoc and Receipt Bank both help small businesses do this, and I’ve met them. They’re nice folks.
The last thing to talk about is fraud. I don’t mean the guy who steals your account details at the office supply store, I mean Tom. Tom is the guy who works for you, who you were happy to give a credit card to because he’s nice and trustworthy and always on time and he never forgets his keys.
Tom has a rich life, though, and you don’t know that he’s behind on his rent, his mother is sick, and his girlfriend is leaving him. Tom has all sorts of sad reasons to abuse the trust you’ve put in him, and if he does, everyone loses.
Nip this in the bud by paying close attention to every purchase, every time. Talk to Tom about the card when he gets it. Draw those clear lines between business and pleasure and never, never, never budge on usage.
If you keep all this in mind, you’ll find the right corporate credit card for your business, and you’ll save yourself a heaping ton of time.
Andrew Marder covers financial and small business trends for Capterra, a free service to help businesses find the right software. He used to write for the Motley Fool. He plays with his kid, reads with his wife, and chats with his barista.