If your practice is like many, you consider your business credit card a convenient tool for making day-to-day purchases and tracking your costs. Using this card for every expense—and capturing them all in one place—makes recordkeeping much easier. When you clearly know where your money is going, you are better able to assess your practice’s fiscal health.
From simplifying tax preparation and keeping your personal and practice expenses separate to providing practice-specific perks and rewards, the advantages of using your card are many. But there may be additional benefits you have not considered.
Your Business Credit Card as a Lifeline
Your practice’s cash flow can be threatened by any number of economic realities, from reduced insurance reimbursements to higher technology costs.
“All the insurance companies have to do is jam you up for three or four weeks,” says Marc Lion, the outgoing President of the National CPA Health Care Advisors Association. “All of a sudden you are in a cash crunch.”1
This is where your business credit card can prove unusually valuable.
Let Your Business Card Step Up When Needed
According to a Harvard University study, money given in small business loans has declined 20% since the financial crisis. Given the added scrutiny these loans are receiving and the increased difficulty of securing them, getting working capital via a business credit card can be a much easier proposition.
It is not uncommon for businesses to use their credit card for more urgent issues—like making payroll or updating outmoded computers.
According to Brian Capuano, a business finance specialist with CreditBuilder, a business credit card can address a variety of working capital needs from “trying to get your business off the ground, expand it or simply maintain a healthy cash flow.” He adds, “One of the world’s most successful businesses, Google, was launched on the back of credit cards.”2
Do not forget: Any credit card interest generated from business-related expenses is tax deductible.
Over 1/3 of small businesses turn to credit cards for financing to meet their capital needs, an increase of 3% from 12/2013 to 12/2014.
National Small Business Association, 2014 Year-End Economic Report
Let It Build Your Credit Rating, Too
Perhaps at some point, a bank loan will make the most sense for your business. You can build up your practice’s credit score by using your business credit card on a regular basis and making timely payments each month. This can give you an important edge and lead to attractive loan opportunities down the road.
Market-influenced changes in the healthcare industry will continue to impact small practices, and they must remain flexible to keep operating in the black. Your practice is no different than any small business when it comes to cash flow and capital needs.
Give your Business Card Even More Credit
- Can smooth cash flow and address working capital needs—generally easier to access than loan financing within the current economy
- Can Build business creditworthiness — making it easier to secure future financing
- Provides daily purchasing power and convenience
- Offers business-specific perks like 60-day repayment
- Rewards you with cash back that can be reinvested (rewards can add up faster than personal credit cards)
- Simplifies expense tracking and financial reporting
- Keeps business and personal expenses separate
- Gives your practice a tax benefit — interest is deductible
1 “Credit line can be a lifeline for your practice,” David Bennett, Medical Economics®, 3/15/13
2 “5 ways a business credit card can help your small business,” Brian Capuano, CreditBuilder, Linkedin.com