The general trend among businesses is to borrow a huge sum at one go but business by nature is a risky affair. Small borrowings are not so easy to get with increasing interest rates everyday. So what can small businesses do to sustain themselves during the lean periods?
A small business credit card is a ready solution to keep the balance of payments ratio intact.
Businesses can make use of this type of credit card to make prudent purchases that will not rattle the boat too much. This might include some office equipment and supplies or day to day expenditures.
The obvious question is why to indulge in small payements when a one time engagement will work?
Well logically that seems a workable idea. But remember you are a SMB. Cash is something you cannot dispense carelessly. The use of a business credit card is one way to effectively manage finances. For a user knows that they cannot overindulge due to "cap mechanism" and "minimum account balance" factors. So you end up spending prudently.
Small business cards are not hard to use nor acquire. One has to simply keep in mind basic points in this context:
1. For starts, choose a bank or lending institution carefully. Why? Because it is going to be a long relationship, where your business is the boots of a customer, who is not completely free to act.
2. To get a small business credit card, you need to come clean first of all. Provide your business plan, financial history, credit statements and a solid collateral to quench security questions.
3. Maintaing a good relationship with your banker is a smart strategy always. Remember you are the receiver of credit, so display good professional etiquette. This helps in managing tough situations like a delayed payment or when your cash is stuck in operations. Although we suggest that you do not indulge in this practise at all.
If you are a SMB, hard pressed for a water tight financial plan in place, we hope our tips help you out.
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Personal finance is a good way to go too, but a bit riskier as you have to personally manage all the inflow and outflow of cash of your business.