Revolving credit best practices

A few tricks to make sure your revolving credit’s working for you, and you’re not working for it.

  • Know your limit. All revolving credit products will have a cap on the amount of funds available to your business. It’s important to be mindful of not only your limit, but to also know your balance and what’s currently available to use. Know what you have to work with before trying to access it.
  • Use it for business and not personal expenses. You don't want to tie up your available business credit with personal expenses that probably won’t benefit your company. Plus, separating your personal and business financials will make things easier in the long run – especially at tax time.
  • Revolving credit and cash flow work hand in hand. Review your cash flow to understand how your cash ebbs and flows. At peak times when cash is coming in, it may be a good time to pay down your credit. When business is slower, you may need to tap into your revolving credit to handle day to day expenses or to build up your inventory in preparation for your busy season. Manage your revolving credit well and you can weather any storm.
  • Pay it down when you can. If your cash flow cycle allows, consider increasing your payments. This will reduce the amount of interest you pay overtime and the extra payments will increase the credit that you have available. So, if you want to jump on an opportunity or your business needs change you have the credit at your disposal.
  • Manage your business credit card wisely. Your business credit card is an important purchasing tool. It gives you instant access to your credit and makes transacting easy. Credit cards can however come with a high interest rate and if you don’t pay it off on a regular basis, you’ll be paying a ton of interest. Consider using your low-interest revolving credit to pay off your credit card balance. The more you pay it down, the less interest you pay and the more access you’ll have to your credit card limit.