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7 business expenses you should be putting on your card

Posted: 4 July 2019 8:00 am

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How to get the most out of your business card.

With a number of traditional banks continuing to tighten their lending practices, the business card has emerged as an effective alternative for managing cash flow and fuelling business growth.

You can use a business card to pay for a range of business-related expenses, but knowing what expenses to cover can be tricky. As a general rule, it's important to keep your business expenses and personal expenses as separate as possible to avoid potential tax complications and to make the reporting process easier.

If you plan on seeking business finance in the future, a lender may ask for your card statements, and the presence of personal expenses on your business card may adversely affect your chances of approval.

We've outlined seven expenses you should be putting on your business card, and the reasons to do so, below.

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1. Business travel

It may be obvious, but business travel costs are a logical expense to cover on your card. Many cards offer complimentary travel and liability insurance, and you may even benefit from additional reward points by booking with specific airlines.

Some providers extend the perks to include hotel upgrades, complimentary lounge access, fraud protection and smartphone screen insurance, to help make your trip as comfortable and hassle-free as possible. For instance, the American Express Platinum Card offers access to 1,200 airport lounges, a handy option for recharging your devices and relaxing.

You can then use the points for business-specific rewards, such as concierge services, that can help arrange future travel.

2. Utilities and telecoms

Given the relative predictability of utilities such as power and water, and the stability of Internet and phone bills, it may be a good idea to cover these recurring business expenses using your business card.

As with other expenses, some card providers may offer reward points on utility bills. Some American Express Cards offer complimentary smartphone insurance, which can help cut business costs.

3. ATO bills

Some business cards offer the ability to pay tax bills and even to earn points. However, it's important to ensure that the value of any potential reward points outweigh the cost of the ATO's card payment fee. Depending on the size of your tax bill, it may make more financial sense to simply buy the points or to earn them another way.

In some instances, the card payment fee may also be tax deductible, and this is another consideration worth taking into account.

4. Equipment

Using your business card to cover equipment costs may be a good idea, provided the equipment purchases do not have an overly negative effect on your business cash flow.

By putting large one-off purchases on your card, you can give yourself additional time to cover their cost by making the purchase at the start of a statement cycle or if your provider offers interest-free periods.

5. Business meals and entertainment

Like business travel, business meals and client entertainment are a logical expense to cover using your business card. Many card providers may offer access to exclusive events or pre-sale tickets, making them a handy option when looking for a way to entertain your clients (American Express Experiences is one example). As with most card purchases, buying tickets to an event may also offer additional reward points that can then be directed back into the business.

However, in keeping with the idea of separating business and personal expenses, it's important to limit your card use to meals that have a justifiable business purpose. This makes it easier to monitor your ongoing business expenses, simplify your tax reporting and minimise any adverse complications if applying for finance in future.

6. Suppliers and invoices

A business card is an effective way to manage business cash flow, and this is especially apparent when it comes to invoicing. By syncing your accounts payable with your card statement cycle, you could improve your business cash flow. Many business cards offer interest-free periods, meaning you can give your business additional time to pay off any outstanding invoices and free up capital in the meantime.

Even if your supplier doesn't accept your card, there are ways to get around it. Providers such as American Express offer a platform that lets businesses make domestic and international payments to suppliers that don't accept business cards, though a service fee will generally apply.

7. Employee spending and expenses

Most business cards allow you to add additional cardholders, meaning they can be an effective way to cover employee expenses. By providing employees with their own cards, you can easily manage and monitor their expenses and install spending limits on specific cards.

Using a business card also helps avoid the need for petty cash or reimbursements, and makes the expense-reporting process relatively straightforward come tax time. By putting the majority of your employee expenses on card, you can also potentially grow your reward points, and then use them to put back into the business.

Disclaimer: This advice is general and does not take into account your objectives, financial situation or needs. Before applying for any products mentioned, please read the product terms and conditions and consider whether that product is right for you.

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