Credit cards: What you need for your business

Does your business need a credit card? Although I’ve definitely heard of many arguments against having a business credit card, I do think that one is helpful to have in today’s internet-based business world where buying online is fast and convenient. Between payroll, Paypal, and credit cards, I rarely need cash in my business… and it’s probably the same for many of you.

So, if you run a business, how can you find a good credit card to use? In an article posted at BusinessInsider.com, article writer Shira Levine gives 8 things to consider when you get a credit card for your business. It’s a good list, even if there are no surprises here. You should read the full article but basically she advises that you think about:

1. Reward programs
2. Fees
3. Fraud Protection
4. Time
5. Online Access
6. Credit Unions
7. Signature vs. PIN
8. Acceptance

From my own experience, I would also suggest the following:

• Look for just one credit card; don’t get a big stack of cards.
• Keep the credit limit low. A thousand might be sufficient for most businesses, or if you travel, maybe a couple thousand.
• Put a little money onto your card even if you don’t owe anything. A small “bank” of a couple hundred is sometimes a nice cushion to add during good times and can help out when things get tight.
• Don’t just use your personal credit card, even if you are a sole proprietor. Keep things nice and simple and separate. It’s easier to monitor.
• Schedule 5 minutes every month to double-check your purchases: Make sure you got what you paid for and make sure that it’s providing you the value you want it to provide.

Jessica Routier, IAC-EZ

Getting paid your due

Nothing is more frustrating than delivering a product or service and not seeing any money from your customers. Don’t they realize that you’re running a business! You’ve got mouths to feed. You’ve got bills to pay. You’d love to get your money.

Debt collection for small business is tricky: In many cases, you may not earn enough per customer to qualify for any kind of legal action. Even then, it might not be worth your time to collect. If you do earn enough from a customer to make it worth your effort to collect, the global nature of our business world, combined with laws that are a little toothless, don’t make it easy.

The best defense is a good offense, or so I’m told. So the two things you should do first is:

• Collect up-front from everyone. Some people won’t like it and will go somewhere else but most people (especially those who were expecting to pay anyway) will be okay with it. If a new customer isn’t sure that they can trust you, consider using an escrow service. If you can’t collect everything up front (perhaps because you bill by the hour and don’t know how many hours you’re going to work), collect a security deposit first.
• Set up a system. Create a system that has you sending out pre-written collections letters or making collections phone calls on specific dates (or some other trigger) from time to time. A collections system will rarely prompt the deadbeats to pay, but it’s useful for those good people who just simply forgot.

Here’s a great article about debt collection for a small business. It’s from New Zealand (so it there isn’t an across-the-board application of what has been written) but it’s still worth reading. It doesn’t address many of the collection problems that freelancers and entrepreneurs face if their dollar amounts are too low but it can help a small business owner in circumstances where they are owed a considerable amount. Read it here.

Jessica Routier, IAC-EZ