Can a business credit card help your SME through an economic downturn?

When there’s economic uncertainty, it’s natural for a business to look at ways to boost its financial resilience. While it might not seem like an obvious solution at first, a business credit card could offer valuable flexibility and help you manage cash flow more effectively when revenue becomes unpredictable. But is it the best choice for your business during an economic downturn? 

Here’s a closer look at how a credit card could support your business through challenging times.

Keep your business spending simple and organised

A business credit card can help simplify how you manage your expenses. It separates company costs from your personal spending, meaning your financial admin is less complicated and you may also reduce time spent on bookkeeping. 

Many business credit cards offer detailed monthly statements and integration with accounting software, so you can track spending easily and stay organised. Having clearer oversight can help when it comes to making better-informed financial decisions, especially during times when budgets might be tighter.

Strengthen your business credit profile

Using a business credit card responsibly could help you build a strong credit history for your company. A solid credit profile may increase your chances of securing favourable terms on future financing, such as business loans or asset finance. 

Being able to show you’re reliable through making on-time, regular repayments could also reassure potential lenders that your SME can handle financial commitments, even during tougher economic times. It will set you up during a downturn but also put you on the right track when the economy improves. 

Access additional benefits and savings

Many business credit cards offer valuable perks, such as cashback on everyday business purchases or discounts with selected suppliers. These rewards can help you reduce some of your ongoing costs and make those day-to-day expenses more manageable. 

Taking advantage of these benefits can give your SME a chance to stretch budgets further and ease financial pressures during periods of economic uncertainty. Take Funding Circle’s Cashback business credit card, which gives you 2% cashback on all purchases for the first 6 months (up to £2,000) and 1% uncapped thereafter. 

Gain more control with flexible payments

When cash flow becomes unpredictable, having flexible payment options can make all the difference. FlexiPay from Funding Circle offers a line of credit that allows you to pay suppliers, bills or other expenses upfront, then choose to repay over 1, 3, 6, 9, or 12 months. The added flexibility can help you manage your outgoings in a way that suits your business’s cash flow. 

With FlexiPay, you can make payments by card or transfer funds directly to a supplier or your business bank account. Each transaction comes with a simple flat fee, with no interest or annual charges for more clarity and predictability over your repayments.

It’s an approach that can be particularly useful during economic downturns, when maintaining liquidity is so important. You can keep your operations running smoothly without putting undue strain on your cash reserves by spreading the cost of significant expenses.

FlexiPay is designed to give you more control over your business finances and help you navigate challenging times with greater confidence.

Protect your business finances with added security

Financial security is especially important during challenging economic periods. Business credit cards often come with enhanced protection against fraud and unauthorised transactions and help safeguard your company’s finances. Using a dedicated credit card for business expenses can help you benefit from built-in security features, reducing your risk and providing peace of mind.

Fraud protection

Business credit cards typically include fraud monitoring, alerting you quickly to suspicious activity. If there’s an unusual transaction, it can be flagged promptly and help to minimise potential losses.

Zero-liability assurance

Many business credit cards offer zero-liability policies, so your business won’t be held financially responsible for any fraudulent or unauthorised charges. An extra layer of security can prove vital during uncertain times, giving you confidence to continue operating securely.

Is a business credit card right for your SME?

Business credit cards can be helpful in navigating economic uncertainty, but it’s important to check they’re a good fit for your business. Before applying, consider the following points carefully:

• Understand the costs involved: Be clear about any interest rates or fees.
• Check repayment options: Think about how repayments align with your typical cash flow.
• Consider your credit limit: Choose a limit that suits your business spending without overstretching.
• Look at additional benefits: Make sure any rewards or perks match your usual expenses.

Taking these factors into account will help you decide if a business credit card makes sense for your SME, especially when finances might feel stretched.

Navigate uncertainty with more financial confidence

When facing economic challenges, having flexible financial options to hand can make a significant difference. A business credit card can offer greater financial agility while simplifying expense management and even providing cost-saving benefits. Considering your specific needs means your business may just have a better chance of staying resilient and ready for future opportunities.

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.