Common Credit Card Mistakes That Hurt Small Businesses

Common Credit Card Mistakes That Hurt Small Businesses

Starting a business can be easy. Managing it on the other hand can be a nightmare. There will always be POS concerns, logistical issues and a myriad of other challenges that can make it hard and sometimes impossible to break even in a competitive market. However, like most business experts often note, there are small mistakes that hurt small businesses to a point where they have to close down. Strangely, these seemingly small mistakes always have simple solutions. One such mistake revolves around the credit card and how both business owners and their customers use it. Here’s a simple breakdown on some of the most common credit card mistakes that hurt small business today and how you can avoid them.

Failing To Segment Transactions

Low interest rates and rewards available today provide value. Unfortunately, you cannot take advantage of these two perks using one credit card. The best you can do is to segment your transactions on different business credit cards. For instance, use a zero interest personal card for funding. Then use a business rewards credit card for day to day business expenses.  This will enable you to take advantage of the benefits of a business card and enjoy the debt stability of a personal credit card.

Ditching The Credit Card When Paying Large Bills

You will most likely have to part away with thousands of dollars in bills and other expenses when starting a small business. Chances are, you will prefer paying in cash to paying using your business credit card. This happens mostly because there is a misconception that credit card payments for business related bills incur extra costs. On the contract, business credit cards often offer bigger reward pints for making large business payments. To be sure, ask your bank to provide you with detailed information on business credit card charges.

Using Credit Cards To Fund Everything

You may be forced to use your credit card to start a business. However, this should only be limited initial business operations and bills. If you have to use credit cards for longer than you anticipated, then negotiate for lower interest rates with your credit card company. Be sure to also work with at least three companies. If you have a good credit card rating, this will make it even easier for you to get interest rates on cash advances low. With three credit cards, you will easily juggle them to eliminate or lower interest charges as you start your business.

Ignoring Fraud Issues

The most effective way to ward off fraud is to exercise common sense. Follow up on credit card transactions that suddenly involve unusual amount. This is the most common sign of unauthorized access.  Then always be careful when exchanging vital financial information with vendors or clients over the phone or online.  Avoid leaving your cards and other financial documents where your staff can easily see them or have access. You can take extra precautions like training your accounts personnel on cyber security issues or even investing in an automated accounting system. Like you will find out though, it all boils down to common sense when it comes to detecting credit card fraud.