If you're like many other small business owners, chances are you've used a credit card to help fund your business and ease cash flow. Whilst it’s true that there are a wide range of SME solutions currently available in the Australian market, the question remains: are you sure you're getting the best deal for your business?
SME finance is a topic that Andrew Boyd, co-founder of CreditCardCompare.com.au, is passionate about. His advice is that "Australian small business owners often miss out on the best offers because they stick with whoever they are banking with currently and fail to look at what is on the market. We have found that there is a common misconception that opening a new credit card also means switching who you do your banking, which simply is not true. And because most credit cards for businesses offer online account management, it's easy to keep current with payments regardless of who issues it."
The fact that applying or opening a new credit card is relatively easy does not merit on doing so alone. There are many reasons why a small business should shop around when looking to open a new SME credit card facility. "The banks need to attract new customers", and according to Boyd "they do that by offering new customers introductory offers on purchases and balance transfers, sometimes together, on top of reward programs and other perks like complimentary insurance and concierge services." What this means for the small business owner is the potential to get a credit card that saves them money because of lower interest rates, at least for a few months, but also provide travel insurance for whoever is travelling, airport lounge entry, etc.
If you are in the market and looking for a replacement card for your business, here are some of the more important features to focus on:
1. Get Interested in Interest
Before choosing an SME credit card, compare the promotional interest rates each card offers. Some of the banks will offer zero or low interest for a few months, but be sure to read the fine print and see how long each deal lasts. Also consider how much the rate will increase once the promotional period expires. Ideally, you'll find a card with a long interest rate and a reasonable standard rate following the trial offer.
2. Rewards Matter
Many business credit cards offer rewards programs, but they aren't all created equally: different rewards will make more sense for different businesses. Will your employees be flying or driving to their business contacts? If so, look for cards that offer miles or cash back for petrol purchases or frequent flyer points per dollar spent with your favoured airline. Planning on doing a lot of business over lunch? Some cards are aligned with hotels and restaurants, so research accordingly and choose the card that's best for your needs.
3. Travel Perks
In addition to rewards, some business credit card companies offer complimentary travel insurance coverage. Ideally, this coverage will handle both domestic and international travel, which is worth considering for business owners looking to grow their company's service area. As with any insurance policy, you need to be absolutely sure of what you are buying. For example, most credit card insurance policies are limited to travel either domestically or internationally. Most will only cover the cardholder, or the cardholder and a set number of people travelling on a ticket purchased using the cardholder's account. Some will offer insurance on lost or delayed luggage, others won't. You get the picture.
4. Customer Service
This may seem obvious to most savvy business owners, but strong customer service can, and should, make or break your decision. Does the company offer 24/7 customer service? What about online account management? Are you able to give your employees appropriate access to the account? How does the company handle card theft or account misuse? Any reputable company will take time to answer all of these questions and more, so don't feel shy about asking once you get a representative on the line.
5. Statement Access
Rewards and perks aside, be sure that you have clear, consistent access to the financial details of your transactions. Is the online interface easy to use? Can you securely export statements to your chosen financial software? Many credit card companies offer exportable statements to programs like Quicken or Excel, but if this is an important feature then you should check before applying. You'll also want to check if the card generates a BAS automatically or not.
Choosing an SME credit card is a major step that can offer increased flexibility and liquidity for your growing business, so be sure to give this process the time and care it deserves. Remember: You shouldn't feel stuck with your current bank. Instead, take time to look for competitive deals that truly serve your business.