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Rich Preece, Europe VP and Managing Director of Intuit QuickBooks

It has been 50 years since the first British credit card was issued in the UK. In the half a century since, they have become a part of everyday life for most businesses, but are they being used for better or for worse? Let’s take a look at three different ways businesses are using the plastic…

1) Finding finance

Starting your own business can be challenging in today’s competitive and overcrowded market. Even if you have an original idea and a strong team to work with, getting access to and securing finance remains one of the biggest stumbling blocks to overcome. This leads to many companies using credit cards to grow or to overcome cash flow worries. According to Santander, personal credit facilities have been used by one in eight senior decision makers at SMEs for financing their firm over the past year. But, with far more suitable ways to secure financing out there, there’s really no need to rely on credit. Growing businesses and start-ups should instead investigate things like peer-to-peer lending, invoice financing, crowdfunding and government initiatives.

2) Accepting payments

In March 2016, £14.9bn was spent on credit cards in the UK, with a further £37.1bn spent on debit cards. The gradual shift from cash to card means that instead of spending time counting notes and depositing money at the bank, SMEs can concentrate on meeting customers, building their business and creating employment. They can also improve their customer service by offering fast, secure and reliable payments. Businesses need to make sure the shift towards debit and credit cards doesn’t lead to delays in getting paid, however. Healthy cash flow is critical to any business’ success, so companies must look for a payments processer that gives customers more ways to pay and helps businesses to get paid faster.

3) Paying out

There are always going to be day-to-day costs of running a business, from keeping a vehicle to buying clothing and equipment. Spending on a business credit card can offer a range of benefits including reward points or cashback, but companies need to be aware of interest rates, annual fees and the need for a good credit rating. However you choose to makes purchases – whether it’s by debit card, credit card, online payment or bank transfer – the important thing is to make sure you track business costs effectively. People using the same account for both business and personal use must also find an efficient way to untangle the two on an ongoing basis.

For fifty years, companies have used credit cards to help manage their finances. When used to make or accept secure payments they can be an invaluable asset to your business, however the reliance on credit cards to manage cash flow is worrying. Overcoming one of the root causes of the problem – late payments – should be the priority and companies should focus on making it as easy as possible for their customers to pay. There has been enormous innovation to help businesses get paid faster in recent years; by researching the options out there, more companies will be able to stop using credit cards for emergency financing and appreciate their benefits for buying and selling.