As a small business owner, you’ll likely be tasked with the challenge of wearing many hats throughout your time in this position. Because of the nature of your job and the size of your business, you’ll often find yourself in the unique position of needing to make decisions and adjustments across multiple different departments spanning multiple areas of expertise.
With this can come a lot of stress, confusion, and self-directed research along the way, especially when it comes to finances and how money relates to your business. Keeping up with expenses, calculating deductions, who spent what, etc., can become overwhelming to handle on your own.
One of the most effective routes you may elect to go in order to begin simplifying this process is by choosing to utilize prepaid cards in your small business, which can bring about several benefits in comparison to other forms of financing.
The Benefits of Going with Prepaid Cards
Preferring a prepaid method of payment over a traditional debit or credit card can save you a lot of potential mishaps and credit report dings in the future, especially if this small business is in your name and using your credit to secure any borrowed amounts from lenders. If you would like to consider a prepaid card, you can find some of the top options for small business owners here: https://wealthylivingtoday.com/best-prepaid-cards/. If you would like a little more information, check out just some of the benefits of using a prepaid card below:
The use of prepaid cards allows the business owner to manage their own finances. This allows the owner to make decisions based on the needs and wants of the business. There is no need for the business to depend on others to provide the money needed, and this can help avoid credit card debt or hits on your personal credit utilization rate.
Instead, a business can maintain a budget without needing to rely on others. As a startup or small business, this presents a great opportunity to practice your budgeting skills and keep your business’ finances in line and tightly controlled, just like the rest of your personal assets.
Small businesses must keep track of their spending, even if they are utilizing cards with a prepaid amount on them. By keeping track of these expenses, you’ll be able to see exactly where the money has gone and what they should cut back, or even can expand on.
Using a prepaid card can help ensure your business prioritizes saving revenue as well, and not just perpetually reinvesting hoping to be bought out someday. Although this may be a viable option for certain companies in specific industries, for most it wouldn’t be ideal. By making purchases on a prepaid card sometimes, you’ll decrease the likelihood of overspending and enforce your budget more effectively.
Prepaid cards can also ensure that employees to whom you’ve granted permission to spend for approved purchases and needed supplies don’t go over or charge any unauthorized amounts to your company credit cards. With a prepaid limit, you prevent this from happening entirely and mitigate both your risk and stress.
Prepaid cards may not be right for every aspect of your business’s financials and not fit for every purchase because the future is uncertain and, sometimes, you’ll need to pay more than what you originally budgeted for the purchase. However, there are some positives to having this form of payment in your wallet too.
You can’t expect to be able to accurately predict the future, and subsequently you can’t absolutely predict your future finances either. Because of this, prepaid cards can serve as a safe haven payment option of sorts that protect you from overdraft fees and accruing interests on unconsented charges that could come unexpectedly from any aggressive collectors later.
As is with every specialized financial instrument, prepaid cards have their strengths and their weaknesses. When you’re debating your business’s financial infrastructure, it’s best to consider both the upsides and downsides of all your various payment options and what you should use for each purchase.
Different kinds of expenses require different amounts, frequency of payment, transaction types, and other variables that need to be taken into consideration. Some places don’t accept cards, some projects may require a line of credit or a larger limit, and some purchases may be just right for prepaid options. There’s a place for every form of payment, and prepaid cards are no exception.
Overall, consider using this form of payment for employees and contractors who are authorized to spend, but not quite as much so as you. Use them for smaller expenses and predictable, periodic ones as well. Reducing the chances of hurting your personal credit whilst also building trust with employees is a win-win situation.
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About Author: Chris Fraser
Chris has served as a business advisor to a big list of small and micro businesses; localized businesses and social enterprise in particular. Chris is also an avid reader and loves to stay updated about latest tech and innovation.