Whether you operate your business with cash or debt, having credit will allow for several advantages for your business. Finding the right credit is important to the growth of your business when you utilize that credit. If that credit can provide you with rewards, it is a definite bonus. If that credit can also help to organize the expenses in your business, that is another major bonus.
There are two credit cards that help with all of this and are perfect for construction contractors in the utilization of the credit, the rewards, and the ability to organize your expenses.
Best Business Credit Card for Contractors
Choosing to find credit for your business starts with working to build that credit score for your business. Because yourself and your business are separate entities, your personal credit score will likely not factor into getting credit for your business. If you are just starting out in business and do not have a credit score, you may have to put down money for a credit card to build that score.
The sooner you can start to build credit in your business the better so that when you do actually need the capital to borrow, that score is already built for you to get that capital. However, you need to be responsible with your credit and ensure that you pay it off in full and keep your utilization low on the credit card to ensure your score is not hurt.
There are also better ways of getting credit than credit cards. An operating line of credit can be very beneficial and it can reduce the amount of interest you would be paying. You can also seek out business loans for your business. All of this does start with having a business bank account for your business. The sooner that you can do all of this, the sooner you can organize all of your purchases on business cards and accounts rather than using your personal accounts for your business. Doing so will help come tax time and if you were ever to be audited.
A credit card is a convenient way to begin building credit in your business and keep those purchases in a separate account. It will also improve your cashflow as you have longer to pay off your expenses that you purchase from your suppliers. If your suppliers offer credit accounts with payment terms as well as using your credit card to pay off your credit account, you can really extend the time you have to utilize cash to pay your bills down. Just do not let this get out of control that you are spending money that you do not have. Use credit as a tool and not to finance your lifestyle.
Another benefit of using a credit card is that it will give you rewards when you use it. These rewards can be incredibly beneficial especially when you are spending significant money on your card for expenses and materials. Though maybe not the number one factor to look at when looking for a credit card, but it could be a determining factor swaying you in a direction of a specific card. These rewards could be partner discounts, points, or cashback.
Though the number one factor to look at when looking for a business credit card would be the interest rate. Though most are similar, you may want to opt for a lower interest rate. However, if you pay off your account in full before the due dates this also may not be a determining factor.
Finally, credit cards are becoming more intriguing these days with credit cards targeted at businesses to organize expenses on the back end and to track employee spending. There are definitely new options for business owners when it comes to credit cards. You no longer need to rely on where you bank for credit cards.
Best Credit Card for Construction Business
The easiest way to find a credit card for your business would be through where you bank. Depending on how much you bank with them, the money coming in and out of your account, and your credit score, they may also even offer you a credit card or line of credit for your business. These are worth checking out if you are thinking of utilizing credit in your business. Especially if there are offers to go along with these.
However, there are two credit card companies specifically for business owners that offer more than just a credit card and rewards for your spending. These are especially helpful in your business where you want to track your expenses and organize them.
Divvy Credit Card Review
Divvy offers a credit card and spend management platform with real-time visibility and control over company spending and expenses. Divvy has a lot of built in features in their spend management platform that are relevant to a construction contractor or other small businesses that are project-based.
Budgeting is one such feature that helps you limit spend on a project for material expenses or other expenses that you want to track. Set a single budget across your entire business or set a budget by department, team, or project with the ability to add or remove people. Those that have permissions to the budget and approve or deny requests with push notifications that get sent straight to their phone and you can see up-to-date spending against budgets. Get reports for you budgets, review and forecast those budgets by the period, assign permissions to those budgets, set spending limits, and automate approvals into your budgets. This is no doubt a useful feature especially if you plan to have employees of various crews to control the spending with their own company Divvy card.
You are able to track fuel, food, repairs, and other expenses by employee and using the integration with QuickBooks Online, you will be able to save time with tracking these expenses, billing, and reconciliation.
The best part about Divvy is that it is completely free, there are no annual or initiation fees for the cards or for the software. That includes as many virtual or physical cards that your business needs.
This saves you in annual fees or costs for additional cards that other credit card companies may charge, the added cost of a software to track your expenses from your credit card, and the time required to manually manage your expenses.
Divvy has an excellent rewards program, but there is some fine print that you need to be aware of. First, the more frequent you payoff your card, the more reward points you receive. Weekly payoff yields 7x the points for restaurant spend, 5x on hotels, 2x on recurring software subscriptions, and 1.5x on everything else. Whereas paying off your card monthly yields 2x on restaurants, 2x on hotels, 1.5x on recurring software subscriptions, and 1x on everything else. This multiplier applies to the dollar amount that is spent in each of these categories to provide the number of points you earn.
However, you need to spend at least 30% of your credit line in a given month otherwise you will forfeit your points. You also need to remain a customer at the end of the initial 12-month period and cannot spend less than $5,000 in each of the final three months of that period. At the end of this 12-month period you will have accrued rewards points that you can now redeem as long as you have more than 5,000 points which is also the minimum you can redeem.
You can then redeem these points for cash back, gift cards, a statement credit, or travel. 1,000 points equals $10 in travel and $5 in gift cards, statement credit, and cash back. These amounts do vary as more points are accrued.
Ramp Credit Card Review
Ramp is a corporate credit card and spend management platform. Using the Ramp credit card and platform allows companies to track their expenses, follow up with employees, and close their books much faster with real-time visibility into company spending. This also includes automated expense reporting and advanced insights into ways to cut spending.
Along with the unlimited corporate cards that they offer, they also have a spend management platform similar to that of Divvy. They have receipt matching and verification, multi-level approvals, enforcement of expense policies, bill payments, a single dashboard for company expenses, savings insights, real-time visibility into data, and integration into QuickBooks and other similar software.
Ramp, much like Divvy, offers unlimited virtual and physical cards and rewards to go along with their platform all for the low price of FREE.
Their rewards program is much easier to follow with a straight-forward 1.5% cash back on every transaction and no hidden terms.
Ramp vs Divvy
The big question is Divvy vs Ramp, which one do you choose?
First off, you need to weigh the pros and cons of both platforms. That being said, the future of this space is promising with the idea of AI being able to help organize your company expenses and provide insights into your business. Additionally, with technology improving on a continuous basis there will no doubt be more competitors entering the market.
When it comes to reviews between Divvy and Ramp, the overall consensus is that Ramp is slightly easier to use, set up, and administer and an equal level of support and assistance. However, a slightly larger percentage of construction companies prefer to use Divvy over Ramp. Ramp is also only available in the United States at the time of writing this.
That being said, these are two very comparable platforms when it comes to the features, rewards, and solutions that they offer. Ramp does not have the same KPIs, benchmarks, or budgeting that Divvy does have. However, Ramp’s easy rewards program is more than likely going to pay off better in terms of rewards in comparison to Divvy’s rewards program.