Can a business credit card improve your profit margins?

There are no prizes for guessing that managing profit margins is one of the biggest challenges that business owners face. And while most understandably focus on increasing sales or reducing overheads, there's a financial product that many overlook as a potential solution. That would be a business credit card, which, when used properly, can directly improve your bottom line through better cash flow management and cost reduction.

How? Let’s find out. 

Earn rewards back on everyday business spending

Business cashback cards offer a direct way to improve your bottom line by returning a percentage of what you spend as rewards. Unlike reward schemes that offer points or vouchers, cashback rewards put actual value back into your business account.

Consider a business that spends £20,000 annually on routine expenses like office supplies and professional services. One per cent cashback would generate £200 in rewards each year. These rewards flow directly to your profit margin without requiring any changes to your operations.

New customer offers can be particularly valuable too. Take Funding Circle’s Cashback business credit card. It offers 2% cashback for the first six months, up to £2,000. The goal is to apply cashback to expenses you would incur regardless. VAT payments, stock purchases, equipment costs and service invoices can all become opportunities to generate rewards.

Manage cash flow without compromising margins

 
Paying suppliers before your customers have settled their invoices can heap pressure on your margins. A business credit card offers some breathing room by helping you stay on top of operations without turning to expensive finance.

Businesses often face situations where constraints over cash flow can force them into expensive overdrafts. Or it might mean they miss out on profitable opportunities altogether. Having an interest-free period of up to 42 days – like the one offered by our Cashback business credit card – can help you make those all-important purchases while holding onto your cash reserves for when they’re needed.

Spreading costs over several months can also make a big difference when you're buying stock in bulk or investing in equipment. Some business credit cards offer such flexibility, helping you make smart decisions that support long-term growth without putting immediate strain on your cash flow.

Take advantage of supplier discounts and timing

Many suppliers offer appealing discounts when you place large orders or pay invoices early, but these opportunities don't always match up with your available cash flow. Having a business credit card means you can still capitalise on these margin-boosting deals when they're available.

For example, if a supplier gives you 10% off on orders over £5,000, that represents a significant saving. But it might require more cash than you have immediately available. Using credit to bridge the gap means the discount you secure typically outweighs any associated costs, all while directly improving your margins.

This same principle applies to seasonal pricing or end-of-quarter incentives. Access to credit often means you can jump on these beneficial prices, even if your cash flow isn't aligned at that exact moment.

Reduce administrative burden

Handling several different payment methods can quickly become complicated and costly. Using a single business credit card to consolidate your expenses simplifies financial management and cuts down the hours spent on bookkeeping.

Improved efficiency directly supports healthier profit margins, with less time managing finances and more time focusing on growing your business. With all your expenses in one place, it’s typically easier to identify spending patterns and areas to cut costs.

Monthly statements offer a clear overview of your spending, highlighting trends and pinpointing areas where you might be overspending. Having greater visibility can uncover unnecessary costs you can eliminate and directly lead to improved margins.

What to consider when using your business credit card

To get the most margin benefit from your business credit cards, choose ones offering the best cashback rates for your biggest expense areas, and make sure the credit limits align with your business needs.

Wherever possible, pay your balance in full within the interest-free period. That way, you capture the full rewards without incurring additional charges. Keep an eye on how much cashback you're receiving and factor this into your profit calculations, so you see the true benefit to your bottom line.

Above all, stick to using credit cards for expenses you've already planned. The aim is to boost your margins on essential spending rather than spend more chasing rewards.

Your margin advantage 

Business credit cards offer multiple ways to improve profit margins without requiring operational changes. From earning cashback on routine expenses to providing flexibility for capitalising on supplier discounts, the right approach to business credit can contribute meaningfully to your bottom line.

If your business wants to boost profitability through smarter financial management, a business credit card can be a genuine solution. It complements the way you already operate, meaning you won’t need to overhaul your processes to see the benefits.

While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.