It does not matter what sort of business you run; you need to make sure that you manage your finances effectively. Many businesses have run into trouble due to cash flow issues. To make sure that this does not happen to you, you need to carefully explore the different financial solutions that are available to you.
One of the options that you may want to consider is a credit cash back card. There are both personal and business cashback cards available. While they are similar in the way in which they work, it is important to select a business credit cashback card, such as the Juni card, as they have been designed to accommodate large business purchases.
With that being said, below, we will explain everything you need to know about credit cash back cards, explaining what they are and how they work.
What is cashback?
Cashback is a kind of company credit card reward that will enable you to earn back a small percentage of every purchase you make.
Cash back accumulates and can be redeemed in a number of different ways depending on the type of card you have and the card issuer. It tends to be offered as a statement credit.
How do cash back business credit cards work?
In order to earn cash back, the credit card you select needs to be used for eligible corporate transactions.
Here are the steps that you will need to follow to use a cash-back business credit card:
1. Make a purchase
When a cash-back business card is utilized for making an eligible purchase, the card issuer will repay the cardholder a small amount of the transaction. This is basically the equivalent of earning a small rebate whenever you use the card.
Business cash back percentages are typically somewhere between 1.5 and 2 percent, depending on who has issued your card. However, there are some business credit cards that will offer different percentage rates based on the purchases you make. So, always check out the terms and conditions before making a purchase.
2. Build cash back
Unlike when you receive a discount, which is typically applied straight away, cashback is not available in this manner.
Instead, you will typically generate cash back on a monthly basis, and it will appear on your monthly statement for your business credit card until you redeem it.
3. Redeem cash back
How to redeem cashback on a business credit card depends on who has issued the card. For instance, some card issuers may apply cash back automatically to your monthly balance as a statement credit. This can be a simple and effective way of cutting your business costs every month.
Other card issuers will give card users the ability to save up their cash back over a period of time, which they can then decide to use toward specific purchases, such as travel or gift cards, or toward statement credits.
Are credit cash back cards worth it for your business?
There are many different types of business credit cards available on the market today, each of which has different purposes and benefits. Therefore, you need to carefully consider which type of card is going to be best for your company.
When it comes to credit cash back cards, these cards are ideal for a whole host of different businesses. Ultimately, it comes down to whether or not you make a lot of business purchases. If you do, a credit cash back card can ensure that you are receiving a great deal of cash back each and every month.
When you use a credit cash back card, you can then enjoy better cash flow. This means that you can speed up your payments to suppliers, which will lower your overall expenses and increase your margins.
Every business wants to improve its margins. This means you are going to be running your company with more profit. If you have an extra 1 or 2 percent added to your bottom line every month, how much of a difference will it make? This is the question that you need to ask yourself when determining whether or not a credit cash back card is right for you.
Making the most of credit cash back cards
We hope that you now have a better understanding of what credit cash back cards are and how they work. They are pretty simple to understand.
These cards tend to offer a degree of simplicity that a lot of points reward credit cards don’t provide. For instance, if you go down the route of choosing a credit card with a points system, you have to spend some time understanding what is going to be the most effective way of redeeming the points, as not all redemption methods are the same in value. However, with a cash-back credit card, a dollar is a dollar.
However, there are some different ways that you can ensure your business makes the most of credit cash cards. So, here are some tips:
Pay on time and pay in full
When you do not pay your statements in full every month, interest will start to gather. Credit card yearly percentage rates, known as APRs, can be high, meaning interest can start to add up very quickly. However, you can avoid paying any interest at all if you pay off the statement in full on time.
Make sure you use your cash back business credit card on all eligible purchases
The more you utilize your cash back business credit card on eligible purchases, the more money you are going to accumulate. So, make sure that you do not forget to use this type of card whenever you are able to.
Select a cashback card that is in line with your business expenses
One of the greatest advantages of a business cash back card is that you will be rewarded for the purchases that your business is already making.
If you run a business and you do not spend a lot more on any one or two specific categories of products, it is a wise idea to select a flat-rate card, meaning you will earn the same percentage on every purchase equally.
However, if you spend a lot of money in a specific area, for example, supplies, utilities, or dining, it may be better for you to select a card that has bonus spending categories.
Read the fine print very carefully
Last but not least, it is vital to read the fine print carefully when taking out any type of credit card, and a cash-back credit card is no different.
There are a lot of terms and conditions associated with business credit cards, and it is always in your best interest to make sure you understand each and every one of them.
Some of the key stipulations to consider are as follows:
- Expiration dates – Most of the time, there are not any expiration dates on cash back rewards, which means you can save them up over an extended period of time and spend them when it suits you. However, never simply assume that this is the case. Check the terms and conditions to ensure that there are not any expiry dates.
- Redemption methods – It is a good idea to look for a credit card that is going to enable you to redeem cash back in a manner that aligns with the needs of your business. For instance, if you want to use the cash back to pay for gift cards to give to your workers, you will need a card that enables you to do this. Alternatively, if you simply want to use the cashback to get money off purchases in the future, you need a cashback card that operates in this way.
- Annual fee – Some credit cards have yearly fees; others do not. For the ones that do have annual fees, they can range from $45 to around $595 per year, so this is something that you need to look for when reading the terms and conditions. No one likes an unexpected cost.
- Rewards caps – Finally, some corporate cash back cards have caps on spending, which means you will only get a higher percentage on cash back if you spend up to a certain limit per year. For instance, if you spend $10,000, you may get a cashback rate of 2 percent, yet if you spend less than this, the percentage may only be 1 percent.
Final words on credit cash back cards for your business
We hope that this has given you a better understanding of credit cash back cards, how they work, and whether or not they make sense for your business. Of course, every business is different; however, there are clearly a lot of benefits that are associated with business credit cash back cards.
Kerry Leigh Harrison has over 11+ years of experience as a content writer. She graduated from university with a First Class Hons Degree in Multimedia Journalism. In her spare time, she enjoys attending sports and music events.