{"id":221957,"date":"2019-07-23T16:39:13","date_gmt":"2019-07-23T15:39:13","guid":{"rendered":"https:\/\/www.finder.com\/uk\/?p=221957"},"modified":"2024-03-13T13:58:18","modified_gmt":"2024-03-13T13:58:18","slug":"how-to-use-a-business-card-to-better-manage-your-cash-flow","status":"publish","type":"post","link":"https:\/\/www.finder.com\/uk\/business-credit-cards\/how-to-use-a-business-card-to-better-manage-your-cash-flow","title":{"rendered":"How to use a business credit card to manage cash flow"},"content":{"rendered":"

If you make good use of interest-free days, it can be much easier to use a business credit card to manage your cash flow: read this guide to find out how and why.<\/p>

(A word of warning: if your business is really struggling with cash flow, and\/or if it\u2019s happening regularly, particularly if you have a small business, take a look at the sources of help listed on the government’s website<\/a> before you consider taking out a card.)<\/p>

What is cash flow exactly?<\/h3>

It\u2019s the difference between the money your company receives (receivables) and the money it spends (payables) in a set period of time. If you\u2019ve got more going out than coming in, that\u2019s a negative cash flow: and even if it\u2019s only in the short term, it can make it difficult to keep up with the costs of running your business, which could damage your good credit as well as your relationship with your customers and suppliers.<\/p>

How do I use a business credit card to manage cash flow?<\/h3>

These days, most business credit cards offer 45-day or 56-day billing cycles. In practice, this means that while your credit card statement still goes from the first to the last day of the month, you\u2019ll get an extra 14 or 25 days to pay it off before the balance starts accruing any interest.<\/p>

Let\u2019s say you make a purchase on the first day of the month: instead of having to pay forit within 30 days, you won\u2019t have to repay your card payments until almost 2 months later. That means you\u2019re freeing up some cash to use on something else, or simply to keep your account in the red.<\/p>

Generally speaking, this gives you more time and flexibility, but it\u2019s especially helpful when something goes wrong unexpectedly. Say, for example, one of your biggest clients is late in paying an invoice, or a piece of equipment breaks and you have to replace it.<\/p>

Ultimately, of course, you\u2019ll still have to pay the credit card bill. However, in the meantime, the longer billing cycle will give you more time to recover from this financial shock, and hopefully get that invoice you\u2019ve been waiting for. It\u2019ll also help you avoid more expensive forms of business finance.<\/p>

Bring your expenses together<\/h3>

The more expenses you can move to your credit card, the more cash you\u2019ll free up for day-to-day expenses. What\u2019s more, having your expenses all on the same credit card statement will make your life easier when it comes to budgeting and accounting.<\/p>

However, there are a couple of things to be aware of:<\/p>