Today we will be discussing some advanced techniques for using business lines of credit and business credit cards. Both function in very much the same way. Upon approval you will not be given funds immediately, but instead have an amount that you are approved to borrow. In the event that you need additional funds, you can use this line of credit to pay for things you need, and then repay the loan to have the funds available to you again. We will discuss the three best things you can do in today’s article.
The most powerful thing you can do with business lines of credit is nothing. That’s right, simply get a credit line and keep it active without doing anything with it. On the surface, this may sound almost insane. However, should an emergency come along, instead of frantically trying to locate some kind of loan or funding, you will be able to rely on your unused line of credit. Keep in mind, you will want to make sure your line of credit or credit card doesn’t include a yearly maintenance fee.
The second most powerful thing you can do runs contrary to our first point, however I believe both ideas merit mentioning here. In daily business there can be fluctuations in daily cash flow, as a result, it can be very stressful at bill paying time. Using your business line of credit to pay all of your monthly expenses can help to reduce some of that stress. Then when your monthly statement comes for your line of credit, pay the bill in full each time. In the meantime you’ll have a solid accounting record of all your transactions and you’ll improve your businesses credit score at the same time.
Finally, I encourage you to use the grace period to your advantage, when needed. As you use your line of credit or business credit card for any expenses, be sure to pay your bill in full each month, and don’t forget that there is typically a grace period between the due date and when interest will be attached to your balance. If you cannot pay the bill by the due date, you can take advantage of the grace period to give you a few extra days to make your payment.