This FAQ has everything you need to know.
Whatever your business, managing finances effectively is always high on the agenda. One tool that can help you do this is a business credit card. Providing increased cashflow, cashback or rewards, individual spend and card controls plus detailed reporting on transactions, they can make it easier to control spend and improve efficiency.
There’s lots of advantages but with so many options available, it can be hard to know where to start. Here, we answer some frequently asked questions to help you make an informed decision.
1. What can business credit cards be used for?
Generally speaking, almost all business spend from paying suppliers and buying stock to day-to-day running expenses. There may be some spend categories blacklisted (such as gambling) or functionality that restricts spend at certain places; for example the ability to pay for fuel on certain networks.
Allstar offers a unique ‘all-in-one’ card covering both fuel spend and all other business expenditure; plus an EV card is available specifically to cover the costs of charging hybrid and electric vehicles - even at home.
2. Is a business credit card better than a business loan or overdraft?
Overdrafts can be expensive and are not a long-term solution, while loans offer a cash injection for a specific purpose, have strict eligibility criteria and fixed payment schedules with interest charged on the full amount straightaway.
For a continuous line of credit to support business growth and day-to-day cash flow, business credit cards are a solid option. Most offer interest free periods and some offer the ability to make flexible payments. Cards like Allstar Plus also provide discounts on fuel too.
3. Why use a business credit card rather than Direct Debit or BACS?
Direct debits can be a simple and effective way to pay for regular costs such as utility bills yet what you gain in efficiency can be offset by missing out on rewards and cashflow flexibility that a business credit card can provide.
Many major utility providers (such as the main water suppliers) now accept business credit cards without any extra cost. Other bank-to-bank BACS payments can take 3-5 days to clear and may mean you miss out on preferential rates from suppliers wanting your payment quicker. Business credit cards like Allstar Plus are quick and convenient to use in any channel, 24/7, let you pay suppliers instantly and offer great protection against fraud. They also boost cashflow by giving you instant access to a line of credit.
4. How much control can you get over where and how a business credit card is used?
Some but not all cards have advanced features which lets authorised personnel set rules for each individual cards. This allows tailoring of the daily, weekly and monthly spend limits and also the type of spend (for example, allowing the card to be used to pay for hotels and rail but not for commerce). With Allstar, individual card controls can be set by approved administrators via an online portal.
5. What reporting and insights on transactions are available with a business credit card?
It’s important to know what your business is spending its money on. Many business credit cards come with online reporting tools to provide near real-time information and insights on every transaction with the ability to produce management reports. Having a full digital record of all transactions also supports HMRC’s Making Tax Digital requirements.
6. Who can access transactional data and is it secure?
Your business can assign authorised reviewers to access ID and password protected data and prepare customised reports. All cardholder data and transactions are data encrypted and PCIDSS compliant.
7. How can I integrate a business credit card with my accounting package?
Online reporting tools included with the card typically provide transaction reports in formats like Excel which can be easily imported to your accounting package. Some also offer integrated or additional cost expense management software so you can automatically sync with your accounts system such as Xero and Quickbooks to improve the speed and accuracy of data collection.
8. Can I get cashback or rewards from by spending on a business credit card?
It depends on the provider and it’s worth shopping around. Some providers, like Allstar, provide a % cashback on all purchases; others use spend categories (e.g. fuel, office supplies, utilities) to provide specific rewards and discounts. Some offer points (such as Avios) based on how much you spend that can be redeemed for rewards such as vouchers.
Remember, any rewards or cashback is meant for business use only rather than to be used by an individual. An Allstar Plus Card comes with cashback ranging from 0.5% to 1% depending on the value of spend as well as 2p per litre on all diesel fuel purchased through the Allstar fuel network.*
9. Do balances need to be paid in full and can you transfer a balance?
It depends on the type of card. A business charge card requires the balance to be paid off in full at the end of each agreed period (weekly/monthly etc) but is typically interest free whereas a Business Credit Card offers the ability to only pay a percentage of the balance in exchange for paying interest (in the form of %APR). Some business credit cards will also accept balance transfers from another card although watch out for balance transfer fees.
10. Are business credit cards accepted everywhere?
All Business Credit Cards are connected to a card network such as Visa, MasterCard or AMEX and can be used wherever these are accepted. There can be more restricted acceptance on AMEX so think about your individual needs for how you want to use your cards. Allstar business credit cards use the Visa network and can be used anywhere that accepts Visa. Now you’ve discovered how business credit cards can help your business, start reaping the rewards today with Allstar.
*Subject to status and full credit check. Rebate on monthly spend applies to all non-fuel business purchases made on the Allstar Visa Card from the date of account opening for 12 months. Level of rebate depends on monthly spend. Minimum spend £5,000 per month (subject to credit limit) to qualify. Allstar Expense had fuel purchases blocked to ensure customers with a fuel card continue to receive detailed invoicing to support HMRC VAT returns.
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