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Using a Business Credit vs Debit Card 

Should you use a business credit card or debit card? The answer depends on a few factors. Here’s what you need to know about both types of payment cards for business owners.

To pay with cash or credit has long been a business owner’s dilemma. In one camp are those who use a debit card to pay for all their business expenses, and in another are business owners who use credit to cover their outlays. The right strategy for your business depends on your spending habits, the cash in your coffers, and your financial temperament.

Business debit card vs. credit card

Before you can make an informed decision about using a business debit card or a business credit card, you have to understand the differences between the two – and there’s a lot of them.

What is a business credit card?

Business credit cards give you access to a revolving line of credit that you can use to make purchases. In exchange, you pay interest and fees on your balance, known as the annual percentage rate or APR. The APR is the annual total cost of borrowing and comes in these varieties:

  • An introductory APR is the promotional interest rate you pay for a set amount of time.
  • The purchase APR is the interest rate you pay on all purchases.
  • The balance transfer APR is the rate charged on debt transferred from another credit card or line of credit.

Also, many business credit card issuers offer loyalty programs that give users cash back or rewards points on purchases.

What is a business debit card?

A debit card is tied to your bank’s checking account and serves as a payment card. The money to fund it is directly deducted from your bank account. You don’t have a credit line with a debit card, so whatever is in the bank account is what you can spend. You also don’t have to worry about APR, since there is no interest.

Knowing the difference between a business credit card and a business debit card is the first step in figuring out what’s right for you. Before you can make the final determination, you have to delve deeper into the pros and cons of both.

Business credit card characteristics

Before approving your business credit card, the card issuer looks at your personal and business credit scores, as these indicate your creditworthiness and credit history. The issuer wants to know that you can pay it back if it extends credit to you, so the higher your score, the easier it is to obtain credit. Business owners with lower credit scores tend to pay a higher APR, and those with poor credit may only qualify for a secured card. If your enterprise can’t pay the debt on your business credit card, the credit card company can come after your personal assets.

The credit card industry is competitive, so issuers offer a lot of perks for signing up with them, whether you’re looking for a personal or business card. There are often sign-up bonuses, cash-back rewards and rewards points that you can redeem for travel, retail and entertainment. Choosing a credit card presents business owners with good credit opportunities to reap various rewards. Take a cash-back credit card for one example: If it pays 2% cash back on all purchases, the savings can quickly add up. There are also cards that give you extra rewards points or higher cash-back rates for purchases in a certain category, such as travel, gas, dining and entertainment.

Many business credit card issuers offer an introductory APR of 0% on new purchases for a year or more. If your business needs to purchase a pricey piece of equipment, this type of credit card may be attractive.

Pros and cons of a business credit card

Some business owners choose to put all their monthly expenses on a business credit card. They either pay it off each month or carry a balance. The latter can be extremely costly, but if you can avoid carrying a balance, the benefits are plentiful.

Pros of a business credit card

  • It builds business credit. Using a business credit card responsibly is a great way to build up your credit score – and the better credit score your business has, the cheaper it is to borrow money. This can be a huge advantage if you need a business loan to remedy cash flow issues or to chase a growth opportunity.
  • Rewards translate into savings. It may take individual consumers a while to rack up serious rewards with a credit card, but business owners often spend a lot of money each month. The more of it that’s on a rewards credit card, the higher the payback. “If you use it to pay vendors and suppliers, you’re getting a discount, and a byproduct is your margins become higher,” Matthew Gillman, CEO of SMB Compass, told business.com.
  • It provides cash flow backup. Unexpected expenses are par for the course when running a business, which could strain your cash flow. A business credit card can serve as a backup, giving you the financial wiggle room that you need when those unplanned costs arise.
  • It has relatively flexible terms. Cash flow rises and falls for businesses, sometimes unpredictably. Credit card issuers catering to businesses recognize that, so they tend to offer more flexible terms to businesses than they would for a personal credit card.
  • It recognizes and protects against fraud. Credit card companies provide customers with fraud protection. If your card is lost or stolen, you don’t have to worry about owing money for charges you didn’t make.
  • It makes accounting easier. Business credit cards can integrate with your back-office accounting systems. That makes tracking spending and managing cash flow easier, said Ted Rossman, industry analyst at CreditCards.com.
  • It separates business and personal expenses. A business credit card helps you keep your business and personal expenses separate. The commingling of expenses often gets business owners in trouble and may nullify limited liability protection. [Looking for a business credit card? Check out our recommendations.]

Cons of a business credit card

The pros of using a credit card tend to outweigh the cons, but it all boils down to how you use the credit card. If you carry a balance, there are some big negatives to consider.

  • You’ll incur interest and fees. The biggest drawback of using a business credit card is the interest you pay on purchases. If you carry a balance, a business credit card can get expensive very quickly. If you can’t keep a lid on the balance, you could run into financial trouble.
  • You bear personal responsibility for your business credit card debt.Even if the credit card is for your business, you could personally be on the hook if the debt goes unpaid. If there are late or missed payments, both your personal and business credit scores will take a hit.
  • The interest rate can increase. Credit card companies have the right to change the interest they charge, depending on how you’ve handled your account.

Should you use a business credit card?

Business credit cards have a lot of benefits, but whether you should use one to run your business comes down to your financial temperament. If you have the cash in the bank and you know you’ll pay off your balance in full each month, it makes sense. If you think you’ll charge more than you can afford to the card and/or carry a balance, you may want to reconsider.

Business debit card characteristics

Lots of business owners are averse to debt. They don’t want to get hit with interest and prefer to pay with the cash they have on hand. They’re the ones who use debit cards. Before you decide if you want to join this group, consider the pros and cons of business debit cards.

Pros of a business debit card

There are many reasons to like debit cards. The biggest one is the lack of debt you incur, but there are others to consider as well.

  • It’s easy to get. A business credit card requires you to have a certain credit score. That’s not the case with a debit card. Since it’s tied to your business checking account, it’s much easier to obtain. Often, all you have to do to get a business debit card is to open a business checking account.
  • It’s accepted everywhere. Debit cards are accepted by merchants the same way credit cards are and can be used at all the same places. You do have the added step of entering your PIN at checkout stands, though.
  • There’s no interest to pay. Debit cards don’t charge interest on payments like credit cards do. Sure, you may get hit with overdraft fees if you go over your balance, but there’s no interest compounding over the months and years. “People don’t realize how quickly interest rates compound when you use a credit card and carry a balance,” said Gillman.
  • There’s no room to overspend. A credit card may have a high limit, which means you could easily spend more than you have, which may get you in trouble. A debit card is linked to the cash you have in the bank, so as soon as that runs out, so does your buying power, meaning you won’t rack up debt on the card.

Cons of a business debit card

A debit card can help you avoid new debt, but it can also harm you financially. Here’s how:

  • It doesn’t build your credit score. Purchases you make with your debit card won’t be reported to the credit agencies like credit card transactions are. Since you’re using your own cash, there’s no need for the credit bureaus to track how you managed it, so there’s no direct way to boost your credit score with a debit card.
  • It’s harder to protect. If your debt card is lost or stolen and a transaction is made with it, it’s not as easy as disputing the charge. Money could have been stolen from the account already, requiring additional steps to recover it. It typically takes banks 10 days to investigate and restore your account when there’s fraud, and that time lag could hurt your cash flow and thus your operations.
  • Funds are limited. There’s no wiggle room with a debit card – your limit is the money in your account, which makes it ineffective as an emergency backup. If unexpected expenses arise, you may be forced to find alternative funding.

Should you use a business debit card?

If you’re looking to build your credit and want access to more money than you have in the bank, then a debit card isn’t for you. But if you prefer paying with cash and don’t care about getting cash back or other rewards, then a debit card is the way to go.

Ultimately, deciding between a debit card and a business credit card comes down to how you handle money. If you know you’ll pay it off every month, a credit card has a lot of perks. If you have self-control issues, a business debit card is the better bet.

“It comes down to willpower,” said Rossman. “In some circumstances, it might be better to stick with a debit card.”

Should You Use a Business Credit or Debit Card? [Business.com]

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Common Traps For Businesses 

Alex Charfen is an entrepreneur, author and speaker who has used his experiences to coach small business owners on gaining momentum and growing their businesses. Charfen has experienced both tremendous failures — like going bankrupt during the 2008 recession — and incredible successes — like launching a business and growing it to a revenue of more than $10 million per year.

In this interview at Click Funnels’ Funnel Hacking Live conference, Entrepreneur Network partner Emily Richett talks to Charfen about the importance of taking care of yourself, knowing your market, and building a team.

Charfen recommends these three things to build momentum:

Reduce the pressure and noise in your life

Charfen teaches fast-growth entrepreneurs about how to take care of themselves first with hydration, nutrition, breathing and what he calls “daily momentum planning.”

“If you have the earning potential of a multimillion dollar athlete, you should treat yourself as one,” Charfen says.

Charfen also says, “If there is pressure and noise anywhere in your life, it’s creating pressure and noise everywhere in your life.”

Be polarizing and attract true believers

Charfen highlights the fact that “of the 29 million businesses [in the United States], 22 million are under $100,000 in revenue.”

He attributes this to entrepreneurs’ tendencies to “try and make their product available to everybody.”

He says, “if you walk into a room of 100 people, you should be able to identify the two or three that are your market. If you walk into a room of 100 people and you think to yourself, ‘80 people could buy my product,’ you’re doing it wrong.”

Scale with the power of a team

Charfen validates what all of us entrepreneurs already know: It’s hard to ask for help, especially when we are used to wearing every hat in our businesses.

“Successfully starting a business conditions us to do everything,” he says, before going on to emphasize the importance of strategically trusting others to take some of the pressure and workload off your shoulders.

Many small business owners resist the idea that they need a team, arguing that managing other people would increase their responsibility and add strain.

Charfen counters by saying, “When you don’t have a team, you are as exposed as you possibly could be … When there’s no team, if something happens to you, everything stops.”

He encourages entrepreneurs that even if they don’t think they’re ready for a team, they likely are ready. “Do it before you think you should,” he advises. “Get that first person on board to help you.”

 

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Is Your Business Ready For Digital Payments?

Our world is becoming increasingly digital, and so is payment processing. Here are five digital payment methods that your business can use to process transactions.

Businesses and consumers alike are interested in faster, safer, and more convenient payment methods, as cash is becoming obsolete and, especially in the wake of COVID-19, contactless transactions are highly desired. Here are five trending digital payment methods consumers will prefer to use in the coming years.

What are digital payment services?

Digital payment services are forms of contactless, cashless and paperless payment methods. Technology has allowed the world to embrace these more convenient exchanges of payments through services like mobile apps and AI/machine learning. According to Statista, the number of digital payment users is projected to grow by 5.4% in 2020.

Types of digital payment methods

Various digital payment methods are trending today. Here are five of the most popular payment types to implement as a business:

1. Devices with biometric authentication

Customers are going digital with their payments, increasing the need for security. Biometric authentication is a form of verification that uses fingerprinting scanners, facial recognition, iris recognition, heartbeat analysis and vein mapping to prevent identity theft and fraud.

Currently, many phones with digital wallets like Apple Pay and Google Pay use fingerprint or facial recognition, but additional options are in the works. For instance, Visa is piloting a biometric payment card that will allow users to authenticate a transaction by touching a sensor on the card that can determine if the fingerprint is a match instead of entering a PIN code or signing a receipt.

By 2021, there is expected to be over 18 billion biometric transactions happening each year. As a business owner, it’s important to protect your data, as well as your customers’ information, and biometric authentication is a promising way to achieve both intents.

2. Mobile point of sales (mPOS)

Convenient payment processing should be a top priority for businesses today, since there will be 27.7 million mPOS devices by 2021, compared to 3.2 million in 2014. Mobile POS systems are tablets, smartphones or other wireless devices that use an app and a card reader to process payments as a cash register would.

This offers businesses the freedom to eliminate a central checkout area and accept payments from anywhere in their store, and even off-site. For example, you can bring your payment system to a trade show and other off-site locations without worrying about how you’ll carry out transactions. Customers can swipe their credit cards or debit cards using the card reader attached to your device and instantly make a purchase – it’s that simple.

3. Smart speakers

Voice commands are no longer a futuristic concept. Through smart speakers like Google Home, Apple HomePod and Amazon Echo, consumers can give a voice command to make an instant payment or purchase. In fact, 35% of users buy products like home care, groceries and clothing through their smart speakers.

Some consumers fear this isn’t the most secure method of making purchases. Still, this digital payment trend is projected to grow to 77.9 million users by 2022 (up from 18.4 million users in 2017). With this type of growth on the horizon, it will be important to optimize your online store for voice search so your business is easily recognizable through tools like smart speakers.

4. Contactless payment

There are various mobile payment apps that allow users to transfer money, purchase products, pay bills and complete virtually any other type of financial transaction, all with the tap of a finger. By creating an account and storing your payment details in it, purchasing goods and services using a mobile phone is quick and easy.

Examples of this technology include Venmo (which is also great for peer-to-peer payments), PayPal, Google Pay (previously known as Google Wallet), Apple Pay and Samsung Pay. Allowing customers to make electronic payments with their wallet app/digital wallet or other mobile payment apps offers a convenience that can’t be matched.

There are costs involved with contactless payment methods. First, you will need to purchase card terminals that are enabled with near-field communication technology. There’s no fee to accept Apple Pay and Google Pay, but just like all other credit card transactions, rates and fees do apply when consumers use a credit card to pay for goods or services in your store. (These transactions are considered card-present transactions.) You can check with your processor about these specific rates. [Read related article: Mobile Wallet Guide: Google Pay vs. Apple Pay vs. Samsung Pay]

Many consumers are turning to these methods because they feel that it’s a safer option and that it’s quicker than counting out cash or swiping a card. And, for the many consumers who perpetually have their phone in hand, it’s much easier to access.

Contactless payments aren’t limited to mobile wallets. New credit cards are also equipped with the RFID technology used for contactless payments. With a contactless credit card, customers simply hold the card close to the card reader – they no longer need to swipe their card, insert it into a card reader or even tap it against the terminal.

5. Social media payment options

Social media networks have expanded their reach to include payment solutions such as transferring money from one user to the next (P2P payments) or from consumers to retailers, directly within the network.

An overwhelming number of millennials turn to social media when looking to purchase. An Animoto study found that 75% of millennials’ purchasing decisionsare influenced by a brand’s presence on social media.

Facebook, Instagram and Pinterest all offer business accounts that allow brands to sell to consumers, with digital payment transactions conducted directly on the site for a small fee. According to a 2018 study from Avionos, 55% of online shoppers had made a purchase through a social media channel.

Changes in payment methods have been propelled forward by consumers. We will continue to see the rise of various alternative payment methods, such as those above, while the use of cash and credit cards, in particular, as the Avionos consumer survey illustrates, will continue to decline.

5 Trending Digital Payment Methods: Is Your Business Ready For Them? [Business.com]

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Advantages of AV Control Systems to Small Business

Having AV control systems and equipment in your business space demonstrates that your business is modern, tech-savvy and innovative. However, the actual value is the satisfaction and sense of fulfilment you derive when using these technological audio-visual systems. An effective AV control system ensures that engaging and informative content is displayed at the right time. And most small businesses need this approach as it is part of their marketing processes.

Saves time

For every company, time is valued, and anything valuable must be profitable as well. Whatever time and effort you spend during business working hours to handle inefficient things, are wasted, especially if it is related to technology. Therefore, to make a huge change, you must work with tools that can help you save time, effort and money. A perfectly working AV control systems allow activities to be done faster, better and with ease. 

Create an opportunity for unity

if you work with several people who are specialized in different areas and doing different things. Unity and oneness are critical, and the big question is, how can small business owners unite their employees. This is always challenging, but with the right knowledge and tool, it is easy to achieve. AV control systems like office contact phones, video conferencing tools can help create collaboration and unite team members.

Satisfy your clients with the right AV control system from Neets

As a business that wants to be successful and have the appropriate resources to thrive in the stiff competition in the market, you must consider a lot of things. AV control systems are one of the essential elements, you think your business does not need an AV system or you probably haven’t gotten to the stage? A soldier who is ready for a fight and sick victory won’t rely on a gun as his only weapon. Why you consider other things, take the burden of AV control systems off your back by visiting neets.io today!

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The benefits of an efficient meeting room booking system

Meetings are an important component in business management; they enable communication, information exchange, problem solving and teamwork. There are, however, reasons why meetings can fail to be productive and instead be problematic for business operations. These reasons range from having the wrong participants present at the meeting to having no clear purpose for the meeting. Furthermore, there tend to be inefficiencies with regard to the meeting room booking systems being used by the business or there is no clear system in use to begin with.

The right software can streamline the booking process and save the business valuable time and money. A modern meeting room booking system, such as Add-On’s Resource Central, allows employees to select and book rooms, invite participants, use Meeting Labels to describe the types of meetings being held and even order catering. Businesses that are using technology correctly to their advantage are using software, which is secure, accessible, and scalable. Add-On is a reliable option that is trusted by customers, from commercial giants to legal services, globally.

Meeting room booking software also provides managers with insight into how and how often rooms are being used by employees. Office planning can consequently be a more informed and organized process as there is increased space management transparency. Facilities can be renovated to adjust for specific needs. With the most optimized spaces, workforce productivity can also be optimized. 

Resource Central can eradicate conflicts over double-booked rooms and other such miscommunications. All employees can have some level of access to the software, so all meeting participants are updated on any changes. When a meeting starts off on the right foot it is more likely to succeed than a haphazardly organized session that had to be re-located at the last minute; employees can arrive on time and well prepared. This reduces the risk of meetings lowering employee morale and generating dysfunction in the workplace; accurate information exchange means lowered stress and increased productivity. 

Misallocation of resources and time is costly to businesses. Meetings can take up a large portion of an employees workday, so it is important for any unnecessary steps to be removed. Well-designed software interfaces can save businesses a great deal of time. 

Nonetheless, if the meeting itself is redundant in terms of content, the efficiency with which it was scheduled holds less relevance. While strategic scheduling provides the groundwork for a meeting to be smoothly run and the ripple effects that can be traced back to a meeting room booking system are greatly beneficial, it is still the responsibility of the employees to cooperate well. Meetings must have an objective that is measurable and specific to keep discussion and brainstorming on track. 

An efficient meeting room booking system eliminates booking conflicts, facilitates filtered searches for appropriate booking options and coordinates with catering and services as an easy-to-use software option. In turn, the booking system will benefit the productivity of employees and be the profitable choice for an organization.