5 Tips to Manage Business Credit Card Debt

Managing business credit card debt is essential to your success in the long run. Businesses that do not manage debt appropriately will end up facing bankruptcy if sales do not come through. To keep your debt in line, use the good judgement you would apply to a personal loan.

#1 Manage Your Interest Rate

Your interest rate will end up costing you thousands of dollars a year on a large credit line. If your rate is adjustable, as most credit card rates are, you should be vigilant of your current rate and any changes. If your credit card company raises your rate, you should immediately question this and determine if you can have the rate lowered again. Accepting high rates will throw your profits out the window.

#2 Pay Down Your Balance

Individual households should not have a balance each month, so why do businesses? In fact, many businesses operate on a debt cycle. They have to purchase supplies prior to filling an order, and they may see delays in payment for that order. A small amount of debt is expected, but you should still aim to pay down your balances with your accounts receivable each month. If your balance begins to exceed 10% of your total limits you should question whether your spending is in line with your profits.

#3 Check up Regularly

Do not simply trust that your credit is in order. You should be aware of your statement, even if your accountant or another department in the company is actually handling the bills. As a business owner, you are the one assuming the risk if the loan goes into default. You must accept responsibility by being vigilant about charges and debt you are incurring each month.

#4 Question Charges

Paying attention to the details will save you from unnecessary charges. This means, first, requesting receipts from any employee who has a company credit card. You should share with your employees your exact expectations of when a card may be used and be sure that they are using the card only in appropriate times. If you suspect an employee of abusing this benefit you need to be proactive. Furthermore, you should be aware of fraudulent charges. Many thieves will attempt to make charges against businesses because they do not keep as close an eye on the expenses as individuals do. If you see a fraudulent charge you should immediately report it to your company.

#5 Seek Modification

Some businesses may find it is too late to implement these goals because they are already in too much credit card debt. If this describes your situation, the time to start rectifying your debt is now. First, do not avoid your lenders. Instead, address the issue head on, letting them know you are aware of the problem and would like to seek a resolution. The company may offer you a payment plan or the chance to settle the debt for a lump sum. When these options do not work, consider a balance transfer to get a better interest rate and buy some time.