As a business owner, you make countless purchases every month. Some are small, while others are large; some are one-time purchases, while others are recurring. While you might have access to multiple payment options, you may be left scratching your head when deciding which option to select. What's the most appropriate payment method? Is it best to use cash? Your business debit card or credit card? What about a loan or line of credit?

Convenient payment methods for everyday business purchases

For everyday business purchases — job supplies, office equipment, client lunches, and fuel for your business vehicle — you might consider using a debit or credit card. Here are the advantages:

  • You can easily track transactions with debit and credit cards, which can save on bookkeeping time.
  • Your debit and credit cards may provide security benefits that cash does not, such as purchase protections, warranty extensions, and fraud monitoring, including the monitoring of your business accounts to help prevent fraudulent use of your cards.
  • You may also be able to take advantage of rewards programs by using your credit card.
  • Cards are easy to keep in your wallet, potentially making it preferable to carrying around a checkbook or cash. You can even add your card to a digital wallet on your mobile device and make purchases on the go at participating merchants.

Other important considerations

For one-time or recurring payments, such as ordering supplies from a vendor or paying monthly bills like your Internet provider, you can tell your vendors to bill your business debit or credit card. When your vendor has your card information on file, you can quickly authorize payments and save time when monthly payments are due.

Doing so reduces the risk of forgetting to make payments. And even more important, you control when the payments come from your account. No more wondering when your vendor will cash your check.

While your business debit card allows you to use operating funds for your everyday purchases — without incurring credit card debt, if your business needs to build credit or if you have employees that make purchases or travel for the business, your business credit card is a good idea. And by paying it off in full each month, you may avoid paying interest.

Payment methods for large purchases

Sometimes you'll need to make large purchases for your business, such as when paying for expensive equipment, a vehicle, to boost your marketing, to open a new location, to purchase new technology or building renovations. Often you may need to rely on credit for these purchases. In such instances, you might consider a business loan or line of credit:

  • Business lines of credit may be a good option if you need to supplement cash flow and cover operating expenses that are spread out over time and don't need to access all the funds at once. With a revolving line of credit, you only take out what you need up to a predetermined amount, make payments based on how much you borrow, and have the flexibility to access funds again as needed.
  • Business loans could be a good option to finance fixed assets over a longer time period. With a business loan, you take out a fixed amount of money and pay either a monthly or weekly payment, typically based on a fixed interest rate, over a determined amount of time. At the end of your term, your loan is completely repaid.

By considering these factors, you can make the right decision about which payment method is best for each of your business purchases.

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