In January 2005, Rebecca Schreiber took a gamble. After a career working in a steady job at the Department of Commerce she followed her passion for financial planning, and put out a shingle as an independent financial planner after earning her certification. There was a lot at stake in this decision: she wanted to represent young professionals at reasonable hourly fees, not well-heeled clients who were interested in managing their wealth. The model wasn't typical, she says, recalling the days in her early 20s when she was looking for advice from a financial planner and was told that she needed at least $300,000 in assets to get representation.
Yet her business spread like wildfire through word-of-mouth; it was sweet vindication that the concept was sound. Once business began to roll in, Schreiber, based in Silver Springs, Maryland, decided to sign up for an American Express card. "I started my business right after buying a home, and I didn't want to carry a balance," she says. "What I really like about the card is that it is so easy to pay. I just go online, click on my account and I am done."
While choosing a card for your business may seem like a simple decision, you do want to consider how the major card companies distinguish themselves when it comes to benefits, features, and customer service. What can your card do for you? That's a question worth asking of a card company before you choose to use them to help run your business. For many small business owners, being able to extend payments by using the AMEX card is helpful for cash flow. But that's not the only financial benefit.
For Schreiber the first bonus was the $150 promotional cash rebate she received after made her first purchase. The fact that the card has no annual fees saves her money. And, she earns rebates with every $100 that she spends, which she figures has added up to around a few hundred dollars in cash back over the last couple of years.
Beyond that, a credit card should have features and services to help you be a better accountant for your business without spending much time doing it. Like many small businesses, Schreiber needs to be organized when it comes to managing cash flow. By primarily using her AMEX for business, she says she can more easily track her money because all her expenses are in one statement. While that's true for any credit card, Eric Blum, a Philadelphia-based franchise partner with1-800-GOT-JUNK, particularly likes the reporting features American Express offers through his accounts.
"Their reporting features help me find transactions quickly if I can't find it fast in (Intuit) QuickBooks," he says. "You can run reports on AMEX's site by vendor, category, across all cards that you own. These reports allow you to see where you are spending money quickly." And if you have employees using company AMEX cards like Blum does, that's even more important. Blum also likes the fact that he can have different cards for different needs: he uses the Gold card for large recurring purchases due to the no-limit feature, and the Blue card for daily purchases. "They are all connected to the rewards program which I love to use for free travel," he adds.
These days, security is also a critical feature. Schreiber, Blum, and Charlotte, North Carolina-based Web designer Ted Hessing all agree that AMEX protections are top-notch. "The best thing that my Business American Express has given me is peace of mind," says Hessing, who works for Charlotte Web Development. "Their customer service is superb and I feel that my purchases are protected."
As well, Schreiber says that if someone doesn't deliver on a product or service that she purchases using her AMEX card, she's confident that the credit card company will back her up. To be extra careful, she also keeps close tabs on her account to ensure that no one has compromised her information to make fraudulent purchases.
As an extra step in that regard, Blum uses the AMEX Credit Secure program. "It helps me track my company and personal credit reports for only $22 a month."
When selecting a credit card company, it's nice to feel good about the people that you're dealing with: managing money is stressful by nature. All three sources for this article remarked that AMEX customer service put them at ease. "When I call customer service and I get a human being it gives me a feeling of relief," Schreiber says.
At the end of the day, however, no card is a silver bullet for financial management, Schreiber warns, and, you may be putting yourself at particular risk by running your business on the card. "A lot of business owners don't realize that they are using their personal social security number, not their business ID, to open the card," she explains. "They may think that if a business closes the debt goes away, but that's not the case. It becomes a personal debt. And, if you develop a bad personal credit file you won't be able to get that line of credit that you need."
So no matter what card you choose, make sure to apply sound financial practices around collections and billing, cash flow, expenses and investments. If you play your cards right, a credit card with an excellent rewards program could be your ticket to a much-needed vacation, remarks Hessing: "Perhaps the best is yet to come, my rewards flight in first class to a new country I always wanted to visit!