For just about any small business, cash is king, but credit cards are the power behind
the throne.

Some business credit cards have interest-free grace periods that extend beyond the monthly billing cycle.

In an ideal world, revenue would pour in steadily, covering all your expenses with ease. In the real world, seasonal fluctuations, economic trends, and supply chain issues can make things a lot trickier. Fortunately, with the right strategy and tools – including the right business credit card – you can stabilize your cash flow and give your business a solid foundation for growth.

Let’s look at three ways that a dedicated business credit card can help you enhance your cash position.

1. Credit
   A credit card is a convenient way to pay for necessary expenses in-store and online – and it can also be a powerful tool for cash flow management. It provides a dependable source of funds for operating expenses, and if used wisely, you can access this valuable resource at a low or no cost.

   To be sure, if you routinely rack up charges that you can’t repay at the end of the month, the accrued interest can get out of hand very quickly. But if you keep your spending within manageable limits, your credit card will buy you precious time. Most key cash flow metrics are measured in days, so the ability to delay an outgoing payment by any length of time can move those needles in the right direction. But you can amplify this benefit by putting recurring charges on autopay for the beginning of your card’s billing cycle and timing big-ticket purchases toward the beginning of the cycle as well. And the best part? While you get to enjoy the extra breathing room, your vendors will get paid instantly. That’s a boon for your supplier relations and the small-business community as a whole.

   Some business credit cards have interest-free grace periods that extend beyond the monthly billing cycle. For instance, a card might have a 21-day grace period, giving you up to 51 days to pay for a particular product or service that you bought on the first day of the cycle at no extra cost.

2. Rewards
   Rewards points and cash back are major perks offered by many business credit cards, and, if they’re applied strategically, they can support sound cash flow management. By using rewards or cash back for essential business expenses like air travel or office supplies, you can reduce your cash outflow on the spot. By transferring cash rebates from your credit card account to your operating account, you can put those funds to use faster than if you wait to apply them to your monthly bill.

   To maximize your rewards, switch over recurring expenses like subscription services and energy bills that you might be paying by check or automatic ACH withdrawal. Also, do a little research ahead of time and try to find a business credit card with perks that align well with your typical business operations. For example, if you have a fleet of delivery vans, a card that gives you double points on fuel could be a smart choice for your cash flow.

   Look for valuable introductory offers and aim to meet the requirements to unlock the rewards (e.g., spend $5,000 in 90 days to get 20,000 points). But be aware that offers without spending requirements (e.g., get $1,000 just for signing up) may be considered taxable income.

3. Insights
   If you’re sifting through invoices and check stubs, it can be hard to keep track of spending and even harder to leverage that information in crafting sound cash flow strategies for the future. A business credit card with digital monitoring and reporting functions can help.

   Whether you’re a sole proprietor or you have multiple employees in charge of purchasing supplies, entertaining clients, and more, implementing a card solution can streamline the procurement and bookkeeping process so you can spend more time on revenue-generating activities. And with online account access, you’ll gain oversight on all card transactions in near real-time.

   By keeping an eye on card usage, you’ll be better able to avoid short-term cash flow snags. You might even be able to set up custom text or email alerts when spending reaches a predefined dollar limit. Additionally, many cards come with advanced analytic tools, enabling you to view and export detailed data to identify longer-term trends, developing forecasts, and planning for success.

Strengthen Your Business Financials

To explore your business credit card options and other smart cash management tools, consult your financial institution.