Are you about to start a new Business ?

If you are poised to start a new venture then this article, short though it is, is a must pound

A few weeks before I my own first business start up I heard someone briefly mention this subject on the radio and thought nothing much about it. By the time that I realised how much it could help me I was already running my own small business and it was difficult to get cards. Even though I was employed by my own Limited Company and I know that self employed businesses will find it a lot harder.

So please think carefully about what I am about to say.

The advice is somewhat controversial and should be discussed with your accountant before you go ahead ( I always have to add that bit ) but the advice is simple. before you stop working in your paid job and set up your new business, you must:

Get yourself a few Credit Cards

Don’t panic I’m not about to recommend that you setup a business using credit card borrowing but I have a very sound reason to say this. Business credit cards even if they are in  your personal name have advantages.

  1. There will be times when you will need short term finance
  2. Once you leave your current job you probably won’t get a credit card for some considerable time, especially if you are self employed so do it now!
  3. Careful use of the credit cards can give you 60 days to pay for any products or services. that’s a boost to the old cash flow.

Take care how you use them

Cards can not replace the normal finance such as a bank overdraft, loan or investor capital. They can however get you out of a tight spot caused by unexpected costs or late payments.

the main thing is to remember to schedule their repayment into your business plan and cash flow predictions. Don’t fall victim to notching up large unaffordable card bills.

60 Days Credit

As part of your normal business you will usually get 30 days to pay any invoice that is sent to you. By paying with a credit card, who give you at least 30 days before requiring payment, you can get this up to a minimum of 60 days altogether.

During the early life of your card when you are receiving a no interest period of six to twelve months you can take longer but build repayment into your plans.

As business startups are increasingly purchasing from the net this results in payment being required immediately so that you lose your 30 day invoice period. When this happens the card can give you time to get your clients payment before you have to shell out for the goods or services.

No backsliding

As soon as you make any business payment by your credit card enter it in a log. This is important firstly to remind you how much you have spent and are ultimately owed by the business and secondly the information will be needed by your accountant come year end to balance the books.

Used wisely credit cards are a valuable asset and when you your business is better established you will probably be able to get a company card. Of course if you have a vast amount of money in your bank account, and I hope that you do, you will never need a card.

I hope that this helps



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