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Suggestions for a small business credit card

    • 3 posts
    August 24, 2006 7:02 AM EDT
    The thing I like about the Discover Biz Card is that they give you business
    checks you can use anyplace you can`t use the credit card. Like the smaller
    mom and pop places, my contractors, suppliers, utilitiees, gas company, etc.
    and the checks give you the same grace period, so you get the 25 or 28 day
    float. If I need to pay someone I hire out to, like a freelance writer or
    computer geek or a photographer who works out of their home, they sure
    aren`t going to take a credit card and I don`t want to pay them cash or write
    a personal check.

    ---
    "Whatever you can do or dream you can--begin it." Goethe

    • 25 posts
    August 16, 2006 10:35 AM EDT

    American Express Corporate card is fantastic.

    I do not believe I could have gotten to the point I am at today without that card.

    It has no preset spending limit.

    It has to be paid off every cycle. 

    You can get it in your company`s name (it wont affect your personal credit). 

    If you sign up for the rewards program (think its $75 a year) every dollar charged =1 point, trade points for stuff (my favorite is vactions). Go go vacations!  My wife and I went to Las Vegas for a week, round trip air, hotel, and car rental for ZERO out of pocket. Go go vacations!

    The customer service has been utterly fantastic every time I have had to deal with them.  I had my card # stolen 6 months ago, it took an entire 10 minutes on the phone over 2 seperate phone calls (they called me the first time to let me know, I called them at the end of the month to let them know which charges were bogus) to clear out $40,000 worth of charges and I had a new card in my hand the very next day (at no charge).

    I also have a business Capitol One card for the places I cannot use the AMEX, but I tend to not go back a 2nd time unless I cannot get whatever I need somewhere else.

    • 25 posts
    August 19, 2006 5:40 AM EDT
    Everyone takes MC and Visa. Most take American Express, signifigantly less take Discover.  Especially on the vendor side.
    • 25 posts
    August 19, 2006 8:09 AM EDT

    The problem with the Discover card and to a lesser extent AMEX is the sign-up process and fees that they charge the merchants.  Anyone opening up a merchant account can tell you that Visa/MC is a simple one step process for the pair, while Discover and AMEX both require seperate accounts and seperate sign-ups (and much higher fees), so the merchant ends up carrying 3 different accounts to process 4 different credit cards, you have 3 different merchant agreements, 3 or more different sets of fee structures (swiped vs non-swiped, validated vs non-validated, govt corporate cards or any other bulk corporate account) for each brand you carry.  Some of the merchant processing companies out there do a pretty good job of integrating it all into one BIG statement every month, but its far far easier to simply not accept the discover card and force the customer to use a Visa/MC (If they have a Discover, guaranteed they have Visa/MC).  AMEX works a little better because they tend to cater to the B2B crowd (though their fees are still higher than Visa/MC).

    If you do any regular amount of business with a small group of vendors, you can often coerce them into accepting the credit card you want to use (if they dont take it currently) by showing them how much of your buiness they are losing to X other company because they do take the card of your choice (worked for me anyway).

     

    Branching off topic just a bit... if Discover wants to make headway into the B2B market, their fees need to be lower than Visa/MC and they need to have better reporting and customer service than AMEX.

    • 25 posts
    August 29, 2006 11:06 AM EDT

    We are talking about small business, not personal credit card usage.

    Any business that deals with inventory is going to use some kind of debt (credit card, net 30, etc.) management to help manage their cash flow unless they have a nice pile of capital sitting around.

    My brick-n-mortar store goes through 15k-20k of inventory per month, and while I could probably prepay for most of my inventory now, I certainly couldnt do it within the first 3 years of being operational.

    Outside of running a 100% cash based payment due on the spot kinda thing (don`t we all wish we could) you are going to have float. I don`t know of many businesses doing B2B that will cut you a check on the spot when said product/service is delivered.  They are going to float you 30-45 days on average.  Have enough of those types of customers and you absolutely need to be able to float some of that debt yourself without severely impacting your cash flow.

    I`m certainly not an expert nor have I been doing this as long as other people have, but one thing I have learned is that cash flow is king, the money needs to flow in faster than it flows out.  I would be willing to bet a very very large portion of your business clients who come in to file bankruptcy had an enormous amount of monies in their  Accounts Receivable that was 90-120+ days past due.  When the monies are slow in coming in (perfect world everyone would pay when order is placed, but its just not realistic), and you continue to pay all your overhead, cost-of-goods-sold, payroll, etc. directly from your cash reserve, said reserve will be gone before you know it.

    Having the ability to float some of that debt until the accounts receivable empties out is a gigantic tool that can be used.

    I am a big fan of Dave Ramsey (of which your particular service is based around), used to listen to him on the radio every day until the stupid station switched to an all Disney format (uggh), but the envelope and debit card "system" he advocates isnt 100% realistic or feasible with every business model out there.

    The sooner people as a whole start taking responisbility for their own actions and choices, the people like Dave Ramsey will have to find a new line of work. 

    Poor personal spending habits or the inability to manage one`s own finances does not mean that using debt in a business model is a bad way to run a business.

     

     

    • 10 posts
    October 26, 2007 3:54 PM EDT

    I did a lot of research on business credit cards when I started my business a few years ago. Like a lot of people, I used credit to finance my start up.

    I wanted a card that would allow me to transfer some existing business-related debt (start-up expenses), charge a reasonable percentage on the debt I was carrying, and not gouge me for additional charges.

    The best one I found is from Advanta - I`m paying 2.99% on the transferred amount and 9.99% on additional expenses. It`s been a lifesaver.

    :) Jennifer

    ---
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    • 233 posts
    August 15, 2006 1:13 PM EDT
    I have two business cards. 

    One is from Capital One.  I especially like the annual expense listing provided at the end of each tax year with items broken out according to tax categories.

    The other is an American Express card.  It`s great for business travel and has a number of benefits and discounts - like a discount on Fedex shipping.

    However, I am considering trading the Capital  One card for one offered through my small business account at WaMu.

    - J.



     

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    Jeff Fisher | Jeff Fisher LogoMotives | Tweet! Tweet!

    • 233 posts
    August 19, 2006 6:29 AM EDT
    Everyone takes MC and Visa. Most take American Express, signifigantly less take Discover.  Especially on the vendor side.


    I`ve found that to be very true - especially when traveling.  I have a personal Discover card and originally got it due to the great rewards program (as mentioned by Rich).  Unfortunately, there has not been the mass acceptance of the card and I seldom use it.  The vendor/retailer acceptance of the Discover card would need to greatly increase for me to consider it as a business resource.

    - J.


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    Jeff Fisher | Jeff Fisher LogoMotives | Tweet! Tweet!

    • 20 posts
    August 19, 2006 3:13 AM EDT
    I only have a debit card.  I don`t answer to anyone I could ever be in debt to.  I operate out of cash only in the business and never have, never will owe money on it.  Even if it may be only for 1 month. 

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    www.LukasCoaching.com

    Low-cost website design, payroll processing, bill payment, bookkeeping and financial coaching for the distressed or well-off consumer or business.

    Full service coaching firm offering, career, financial, health & nutrition and business coaching.

    • 20 posts
    August 19, 2006 9:27 AM EDT

    one other note, as it relates to credit cards versus debit cards. debit cards don`t help you in establishing business credit - only credit cards do, so take that into account when you use plastic!

    rich



    That`s not a problem for me since I never have and never will borrow money for my business.  I prefer to do it the `old fassioned` way.  You know, like your grandparents would have done it.  If I don`t have cash, I don`t buy.  Sounds pretty simple, huh?

    Did you know that most small businesses will fail in the first 5 years?  Did you also know that those who make it those first 5 years will most likely fail in the second 5 years?  Do you also know that most of them had a lot of business debt?  It`s a lot easier to make it through the lean months if you`re not paying on loans and credit cards.

    Who cares about points?  Accoriding to recent studies, you`ll spend 12-18% more if you buy with credit than with cash.  So you`re spending 18% more just to get 1.5% back in cash or airline miles.  That math just doesn`t seem right to me.  I have a cheap calculator though, so maybe I`m not doing it right. 

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    www.LukasCoaching.com

    Low-cost website design, payroll processing, bill payment, bookkeeping and financial coaching for the distressed or well-off consumer or business.

    Full service coaching firm offering, career, financial, health & nutrition and business coaching.

    • 20 posts
    August 19, 2006 11:10 AM EDT
    I have benefited plenty without the use of credit.  I`m prospering in fact, and have not ever borrowed a dime.  I have no need.  So now you know one company who has prospered without business credit.  I don`t make payments, and you know what I have??? MONEY!

    Even if you pay your bills on time, you are no where close to a credit card company`s worst customer.  Their worst customers are the ones who don`t pay at all.  If you pay your bills on time the CC company still loves you because they still make money off of every purchase you make with your card.  They charge the vendor a small percentage.

    About the statistics... the National Federation of Independent Business` Education Foundation says this:

    "The NFIB estimates that over the lifetime of a business, 39% are profitable, 30% break even, and 30% lose money, with 1% falling in the "unable to determine" category."

    To me that sounds an awful lot like only 30% of small business ever make money.  I`d say that statistic is pretty reliable.  www.nfibonline.com

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    www.LukasCoaching.com

    Low-cost website design, payroll processing, bill payment, bookkeeping and financial coaching for the distressed or well-off consumer or business.

    Full service coaching firm offering, career, financial, health & nutrition and business coaching.

    • 20 posts
    August 29, 2006 9:08 AM EDT
    Sorry it took me so long to answer, I was out of town. 

    I`m simply saying that the folks I counsel (individual as well as small business) are usually at the end of their rope financially.  If you`ve ever sat and cried with someone because they think they need to file bankruptcy, you`d know what I`m talking about. 

    Regardless of wether or not the actual numbers make sense, it is still a very real problem.  My business is prospering without debt.  Why?  Because I help people every single day who have gotten into trouble by using debt as a `wealth-building`, `investement-building` or `business-growing` strategy.

    You can tell me all abou how many points and free t-shirts you earn every month, but the studies show that 70% of points go unredeemed.

    You can tell me all kinds of statistics on how credit is great for your business and I`m happy that you`re doing well.  If you knew the people that I see and work with every day (people just like you and probably a few people reading this post but who will never answer because of guilt and shame) you will have no problem seeing why debt is such a problem in personal and small business today.

    Credit is not meant to hurt your business.  The banks are there to lend money and make money in the process.  They don`t want to hurt you or your business because they may not get paid if they do (bankruptcy).

    In the end what it all comes down to is this.  I have no debt and thus I`ve eliminated all the risk that entails entirely.  If you want to use debt as a `tool` that`s fine with me.  I`ll be in a business for a long time helping people though and I`m happy to do it.

    ---
    www.LukasCoaching.com

    Low-cost website design, payroll processing, bill payment, bookkeeping and financial coaching for the distressed or well-off consumer or business.

    Full service coaching firm offering, career, financial, health & nutrition and business coaching.

    • 0 posts
    August 18, 2006 8:32 AM EDT

    All the considerations here are great. I just would like to add one other thing to be considered in the process of getting a cc for your business, the size of the expense account.

    Credit cards will give you great benefits, as you have been able to see the great examples here. However, you need to think about negotiating the best deal for your business. Dont forget to ask about no maintanance fee, best possible first six months APR, financial reports and anything else you may feel will help to keep your expenses down.

    Credit cards fees can be a hit if you have a very small maigin in your business and the business is not very large. Also consider focusing benefits on the charges and not on the gifts. Dont forget, there are no free lunches.

    I hope I was as helpful as the other folks here. Good luck.

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    jump! jump! jump!...didn`t it feel good!!!

    • 0 posts
    August 19, 2006 10:34 AM EDT

    Usage of credit card to pay for your bills can be a GREAT way to manage your business in many aspects of it. What you need to be is a good business manager, and you wont find yourself in trouble with credit cards. I have been paying all of my bills with cc and I take great advantage of the program. I never overspend, cause I know what my business need, and I make the purchase not based on credit, but need, and I never pay the bill a day late. I may just be their worst customers cause I never pay any interest.

    As for the numbers of new business failure, I`d like to challenge it. Read the Startup Nation book, the numbers are not the ones presented here. This seems more like the numbers shown in the E-Myth book, which was just taken out of old poorly done research.

    As far as doing business with Discover and Amex, I agree. They suck! You will accept them in your business only if you are forced to do it. I have been able to manage w/out them and I dont accept them in my place. People give us an Amex/Discover and politely we ask the customers for Mastercard/Visa. It works every time.

    I do love the idea of paying for your bills with cash, but you will never build credit for your business. So, the decision is, is credit important for your business? I havent seen a business that does not benefit from it.

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    jump! jump! jump!...didn`t it feel good!!!

    • 0 posts
    August 19, 2006 11:57 AM EDT

    Thanks for the feedback, jlukasavige, and congrats on being so prosperous on your business, that is why we are in business.

    I am bit confused, if you could help me:

    1- 69% (Profitable + Breakeven) - This is higher than 30% making money. I am sure you understand breakeven means making money, due to investment strategies.

    2- How does that relate to CC usage?

    3- These are the numbers I refered to as well, the same one used here. I was confused by "most business fail in 5 years," given that 69% are profitable + Breakeven. Most means more than 50%.

    Again, thanks for the discussion, I find it very healthy to exchange ideas.

    Bupulga2006-8-25 17:52:26

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    jump! jump! jump!...didn`t it feel good!!!

    • 0 posts
    August 25, 2006 12:51 PM EDT

    I have learned that, in order to run a business you have to be prudent and use every tool available to you out there. anika143 has given here a great example on how to be resourceful and engaging.

    Citi has a promotion where you get 20,000 miles on your first purchase over $250. A domestic ticket can be purchased for 25,000 to certain places at certain dates. Now, if you are going to a convention and buy your ticket with the miles, that is a saving, not an expense.

    Have a credit card, be smart about using it and you will be fine. I dont think the Sloans would be cutting a deal with Discover if they thought this kind of tool is out there with the solo purpose of hurting your business. 

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    jump! jump! jump!...didn`t it feel good!!!

    • 0 posts
    August 29, 2006 12:17 PM EDT

    Hey jlukesavige, welcome back from your trip. I hope it was enjoyable.

    I understand the nature of your comments now and I appreciate people like you, who want to help others and, in the process, see too many folks in trouble in a regular basis.

    However, I`d like for you to understand that negative comments based on wrong forecasts are just not welcome. There are many people right now toying with the idea of starting their own business. As they read wrong information saying that only 30% of businesses are making money, they become discourage. Because this kind of comment is discouraging and scary.  The reality is 70% of business are between making money and breakeven. Not to mention that research shows that a lot of business report loss because they dont report cash transactions to avoid taxes. These numbers are encouraging, uplifting, positive and they are real...very real.

    So, point taken. I agree that poor manegement of credit cards can be as distructive as anything else in business. Hondo makes a great point about cashflow and the benefits of using creadit cards. We need to be careful and responsible. Just dont start to spin the numbers in order to make a point that isnt real. Businesses are doing well, creadit card can help, and most of the times it does, otherwise there would be no credit cards cause everyone using it would be out of business. We need to pass a positive message, when the message is real.

    Thanks a lot again. 

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    jump! jump! jump!...didn`t it feel good!!!

    • 8 posts
    August 15, 2006 12:04 PM EDT
    Hi, I want to get a credit card for business only.  Does anyone have any suggestions or advice on which company is or has worked for them?

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    Monica McPartland
    Claddagh Weddings and Events.com

    • 8 posts
    August 15, 2006 2:55 PM EDT
    Thanks very much, I am going to look at them today!

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    Monica McPartland
    Claddagh Weddings and Events.com

    • 8 posts
    August 18, 2006 3:00 PM EDT
    Thanks everyone for the info and suggestions.  It was great to get advice from people who have been there, done that!  Take Care!

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    Monica McPartland
    Claddagh Weddings and Events.com

    • 8 posts
    August 19, 2006 5:26 AM EDT
    Good Point!  Thanks

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    Monica McPartland
    Claddagh Weddings and Events.com

    • 335 posts
    August 19, 2006 5:31 AM EDT

    monica,

    you`re going to start hearing jeff`s and my voices on the radio promoting the brand new Discover Card for Small Business. it`s got a great rewards program, great customer service, and some other bennies. they`re a newer entry into the business and have a lot of market share to gain so you can expect them to go the extra mile to impress users.

    one other note, as it relates to credit cards versus debit cards. debit cards don`t help you in establishing business credit - only credit cards do, so take that into account when you use plastic!

    rich

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    Rich Sloan , Co-Founder, Chief Startupologist, StartupNation

    • 335 posts
    August 19, 2006 6:36 AM EDT
    (i`ll make sure i carry this torch with our contacts at Discover)

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    Rich Sloan , Co-Founder, Chief Startupologist, StartupNation

    • 3 posts
    April 8, 2008 7:53 AM EDT
    I thought advanta was great as well, until they upped our interest rate from 7.99% to 25.99% with no options but to close our account.  No notice in the mail, no e-mail, no phone call; simply jack it up and wait until the customer noticed and calls in an outrage.  Very poor care of customer, which you can`t always expect superior support from credit card companies, but this was appalling.  We have never made a late payment and have great credit with other institutions.  I would stay away from Advanta all together.
    Best Regards,
    -Scott

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    Scott Mickelson - Owner/CEO
    Cari Mickelson - Admin. Assistant/Web Designer
    Syscom Digital Technologies, LLC.
    Missoula, MT
    Phone: (406)549-3171
    Primary e-mail: smickelson@syscomdt.com