As a mum you might feel you have enough to keep your eye on without having to worry about credit card bills, but as a mum in business there may be benefits to using a business credit card.
Here’s a look at the pros and cons of using a company credit card.
The pros:
Keeping track
If there’s one thing that mums are good at its keeping track of things. Whether it’s the children’s school schedules and homework, or the family’s spending, it usually falls to mum to make sure everything runs like clockwork.
Business credit cards can take some of the hassle out of record-keeping when it comes to outgoings.
You receive a monthly business expense report so that you can keep track of what’s going out and where it’s going.
Measuring your success
In a way, the records collected from your spending on a business credit card can give some indication of your success.
As your business credit score grows you will more credible in the eyes of lenders and, potentially, investors.
Building trust
When running your own business, company credit cards can help you build a level of trust with your employees, if you have any.
They allow staff to buy items and services they need for work without having to meet the cost themselves and then submit an expenses claim.
It potentially saves you some paperwork and can be seen as a mark of trust in your employees, as well as making it easier to keep track of spending.
‘Mum’ and ‘Boss’ are separate jobs!
Business credit doesn’t affect your personal credit score, so when you use a business credit card, it does not put your personal score in jeopardy.
The cons:
Don’t mix business and pleasure
Just as with a personal credit card, it can be tempting to spend more than you should with a business credit card, and it could also be tempting to make personal purchases on the business card, before trying to justify them as a business expense, so it’s important to be careful.
Trust works both ways
If you do have employees, and you do give them permission to use your business card, then they will feel trusted and valued, but there is always the risk that an employee will misuse the card, so you would need to be careful about who you allow to use it.
Costs
Some business credit cards are free, but some can charge anything up to £80. If you are a particularly small business, this might not be a viable expense for you.
The alternatives
Business loans
With the downturn in the economy in recent years, it has become harder for small firms to get hold of loans. As a result many more have used business credit cards to temporarily finance their operations.
The bank pays, you pay or pre-pay
Small and medium-sized businesses can request an overdraft from their bank, or use pre-paid cards to allow their staff to make corporate purchases.
The other option of course, is that individual employees pay using their own credit or debit cards and then submit an expenses form to recover the costs.
Mark Hooson writes for the financial team at Moneysupermarket.com about credit cards and consumer issues.
What about the interest rate? If you are offered a business credit card at a higher interest rate than you would pay with your personal credit card, then it might not be in your interest to use a business credit card.