Is credit card debt running away with your business? Failing to keep financial records is the best way to give your creditors ownership of your business, especially in this current economy. This article provides three vital tips that show you how to keep credit card debt under control.
Business and money go together, particularly for the small business owner who has to watch every penny when starting out. It’s important to set up a system to keep track of daily spending to create financial success. However, you have a potential enemy to financial success right in your purse or wallet; the credit card.
Credit cards have the potential to be extremely useful in business and money matters. You might earn cashback, you earn miles, gift cards to your favorite store and have a convenient spending tool. In fact, many stores don’t even require you to sign a receipt anymore. All you have to do is swipe your card and you are done.
1. However, you have to be aware of the downsides to credit cards. For one thing, be absolutely sure you know the interest rates for each card. Some interest rates can be as high as 31% depending on your credit status. This can sneak up on you if you ever have one late payment. That late payment could just be that the bill you mailed got in late.
2. Pay off the balance each month if at all possible and never let that balance get out of hand. You will be paying interest on the balance each month which could add up to additional hundreds of credit card dollars. It is easy to lose track of how much you are spending because of monthly credit card debt that you didn’t directly create.
3. Also, keep track of every payment you make. It is easy to lose track of the small expenses that eventually add up. Think about the last $100 you spent on your credit card. What did you spend it on? What about the last $1000? It’s scary to realize you could have no idea where $1000 went, yet the rush of small business causes many owners to not remember these expenses. Even scarier is finding out at the end of the month that you’ve overspent, again. Paying off credit cards start to become a stressful event and you find your business budget totally out of sync.
Keeping financial records is a necessity for good business. Start from day one when you go into business to set up a money watch system to stay on track. Then you will be able to answer the question, where does the money go?