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The unfortunate truth is that many people don’t view credit card spending in the same light when it’s for their business as opposed to their personal purchases. There is an amount of separation from the act of spending that often makes it easier to overspend on behalf of your business. But this can quickly land you in hot water, facing extreme debt and the prospect of losing your company in the process. With a few guidelines to follow, though, you should be able to curb credit spending and get back on track. Here are just a few suggestions to help small business owners use their credit cards appropriately.

1. Use cash first. Gone are the days when you were relegated to spending only the money in your pocket. These days you can apply for credit cards galore and have thousands of dollars in credit at your disposal in a heartbeat. But this is pretty dangerous because it’s all too easy to confuse credit with cash, and the two are not the same. Cash is cash. You spend it, it’s gone, and you have whatever you purchased in exchange. Your transaction is complete when the cash is out of your hand. But credit cards offer you a loan, and one that must be paid back, often with outrageous interest. Think about that every time you make a purchase that you don’t have enough cash for in the first place.
2. Weigh every purchase. Before you buy anything on credit you need to weigh the pros and cons. If you don’t have the money to pay for needed materials for your business because you are waiting on payments from clients, then it might be worth making the purchase on credit in order to keep your business going and take on new jobs, knowing that you’ll eventually receive payment from clients so that you can pay off the credit card debt. But if you’re spending on items you don’t need without any thought for whether or not your business can bear the expense, you’re digging your business into a hole from which you may not be able to dig your way out. You might want to consider using your cards only for certain purchases, like materials or business travel, or saving them for emergencies as a way to control your spending habits.
3. Check statements regularly. It is absolutely imperative that you maintain awareness of credit card purchases. “Out of sight, out of mind” is an adage that aptly describes the way many people spend on credit, but eventually you’re going to get a bill, and you might end up being shocked and dismayed by the tally. In order to avoid this and keep your business finances in good shape, make a habit of checking your credit card statement online daily. This constant reminder of what you owe should help you to avoid frivolous spending.
4. Don’t give cards to employees. If you enjoy the convenience of having employees take over financial tasks for you, like paying vendors or picking up supplies, or they are frequently called upon to travel for business, it can be tempting to offer them corporate cards. But there are other options. You can ask vendors to bill you, you can provide employees with petty cash for small purchases, and you can set up an account with a travel booking site so that approved hotel, airfare, and rental car charges are billed to your account. The major benefit is that you control all spending and you never have to take on the additional debt of interest associated with credit cards.
5. Don’t spend more than you can pay. This is just common sense, so it’s surprising how many business owners get in over their heads when using a business credit card. Even with the best credit card terms going for you, overspending can quickly throw your business off track. So take the time to figure out what you can reasonably afford to pay in any given month and use that number to limit your credit card spending. And if you simply can’t control yourself, lock up the card and pull it out only in cases of dire need.