Getting credit management right

  • SMEBiz
  • Monday, 09 Dec 2019

Trump card: A business credit card can help SMEs manage their business better.

BEING a business owner in this day and age can prove to be an uphill challenge, especially when the company is still in its infancy. As such, it has been a common practice among sole proprietors and small and medium enterprises (SMEs) to use personal credit cards for both business and private expenditures.

However, as the business expands and grows, it may be more prudent to switch to a business credit card and tap into its value-added benefits.

A key reason is to ensure visibility, as using a personal credit card for purchases of products and services for business and personal use can create confusion and lack of clarity when it comes to accounting for expenditure.

Using a business credit card would ensure statements for business and personal expenses are separate, helping save time in maintaining clear records and completing annual tax returns.

Smaller companies need to establish efficient cash flow management to ensure the sustainability of their businesses, be it to purchase raw materials, embrace a new business opportunity or for times of need.

A business credit card gives businesses the much needed flexibility and convenience. From inventory to ad-hoc spending, there are many areas that require emergency funds to keep the business running.

Business credit cards, with higher spending limits compared to personal credit cards, help enable occasional big business-related purchases, solving a major SME pain point by providing temporary financial breathing space for business owners.

In addition, because business credit cards can be much easier to obtain than a traditional loan, they can provide a simpler way to purchase the equipment, supplies, or inventory as and when needed.

Another major benefit of a business credit card is helping SMEs pave the way towards creating a strong credit history. Through responsible card usage, business owners can establish a reputable business history and credit score.

This would in turn assist business owners in obtaining loans or credit facilities in the future, but with one caveat: as with the use of a personal credit card, it is wholly dependent on consistent repayment of the card’s balance.

While turning a profit is key, a business must also minimise wastage and resource duplication for optimal cost management. Apart from the convenience of having a business card to manage cash flow, business owners can also easily track and control the amount used for each business card issued under the company. CIMB’s Platinum Business Card not only provides a monthly statement of the company, it also provides individual statements for each card member. With this, business owners can easily track where each cent has been utilised. Subsequently, record keeping and reconciliation becomes more efficient and convenient as well.

Any business owner – be it a hawker stall owner, a freelance artist or designer – will incur ongoing expenses to support their operations. That said, there is also a chance to earn valuable rewards at the same time.

The CIMB Platinum Business Card comes with a host of benefits as well.

Apart from exclusive dining and shopping privileges, users will also get to enjoy 0.5% cash rebate on local retail transactions and 1.25% cash rebate for overseas retail transactions.

At the same time, they will also be able to enjoy a RM50 annual cash rebate for 20 retail transactions performed within 12 months from the issuance or anniversary date of the card, subject to terms and conditions.

Moreover, the card also comes with travel insurance coverage of up to RM1mil, which is ideal for business owners who are constantly travelling and on-the-go.

When used responsibly, a business card can prove to be a worthy asset for any company and with CIMB’s newly enhanced Platinum Business Card, business owners can start enjoying its rewards and benefits, alongside the convenience of access to cash when needed.

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