subject: Three Questions You Should Ask Before Getting A Credit Card Financing [print this page] Many ascribe to the saying that when the going gets tough, the tough ought to get going. The recent financial crisis in the US proved many businesses chose to continue despite unfavorable economic climates, and eventually survived. Many financial experts agreed that businesses with marketable products and services surpassed the economic trial because these industries came prepared to face challenges.
As more businesses wanted to recover from the crisis, more businesses now look for additional funds. Business owners contemplate on using funds for expansion, product development and research to meet client demands. As an alternative source to traditional loans, many are now getting credit card financing because of the convenience it offers.
This type of financing buys a portion of a business credit card sales at a fixed percentage each month. The financing company will not charge late fees and card sales may fluctuate according to credit card sale without any penalties incurred. However, before you go to the nearest financing office, ask yourself these questions first.
How will my business pay off the financing?
Credit card financing will require payment eventually, so you have to think ahead. Since the financing company will be taking a portion of your credit card sales, you have to think about how to increase your credit sales now. Plan a strategy with a business partner or colleague so you know the concrete actions youll have to take.
Where will we use the added money?
You cant simply go for credit card financing without thinking where youll actually use the funds. If you do this, youll probably end up spending the cash on useless items, rather than improving your business. Think ahead and plan the funds allocation carefully. If youre thinking about investing it on renovations, make sure you know the costs it would entail. You might want to think about how the renovation will help your business pay off the financing scheme too.
What are the adjustments I have to make?
If youre getting credit card financing, chances are, you have to curb part of your business spending. Your business will be facing lower credit card sales because a percentage of these sales will go directly to the financing company. Lower sales will mean lower income for your business, so cutting back on expenses like utilities may be ideal.
