Can you use a business credit card to manage cash flow?

Yes, credit cards can help businesses manage cash flow by providing short-term liquidity and covering temporary shortfalls between expenses and revenue.

Cash flow—the movement of money in and out of a business—determines financial stability. And for many businesses, credit cards can serve as a short-term cash flow tool by offering immediate purchasing power, deferred payments, and potential rewards. When used strategically, they help bridge financial gaps without accumulating unnecessary debt.

Keep reading to learn how cash flow and credit cards can work together.

What is cash flow?

Cash flow refers to the movement of money in and out of a business. It's a crucial measure of a company's financial health, indicating whether your company can generate enough revenue to cover its operating expenses.

Positive cash flow means that your business has more money coming in than going out, allowing it to pay bills, invest in growth, and provide a buffer against financial challenges. Negative cash flow, on the other hand, can signal financial trouble, making it difficult to sustain operations without external funding. Effective cash flow management is essential for making sure a business can avoid loan and credit card debt, meet its short-term obligations, and plan for long-term growth.

Are credit cards cash flow?

Credit cards can be used as a cash flow management tool, but they are not cash flow themselves.

Credit cards allow individuals and businesses to make purchases or cover expenses upfront while deferring actual payment until the billing cycle ends, which can help manage short-term cash flow by providing liquidity. However, it also creates a liability that must be repaid.

Properly used, credit cards can mitigate gaps between costs and income, but relying on them too heavily without a repayment plan can lead to debt and financial strain.

How to manage cash flow with a business credit card

A credit card can help sustain your small business during cash flow disruptions or economic uncertainty. Here are some ideas for how to manage cash flow in a small business.

Smooth out cash flow gaps

Using credit cards can help smooth out cash flow gaps by providing immediate access to funds when revenue is delayed or expenses are higher than anticipated. This can prevent disruptions in operations and allow your business to meet its financial obligations on time.

Track and categorize expenses

Some business credit cards offer detailed reporting and expense categorization. This can help you monitor your spending, identify cost-saving opportunities, and make more informed financial decisions. Effective tracking also simplifies your accounting and tax preparation.

Earn rewards and cashback

Business cards typically offer rewards programs that provide points, cashback or miles on purchases. These rewards can be used to offset business expenses, reducing your business’s overall costs and improving cash flow. Some cards also offer sign-up bonuses, which can provide an additional financial boost.

Improve your credit score to access financing options

By making timely credit card payments each billing cycle, you can build your business credit score, which can in turn help you access more financing options. A higher credit score typically leads to better interest rates on loan repayments and access to larger lines of credit, giving your business more flexibility in managing its cash flow.

Access to credit during emergencies

Business credit cards can serve as a financial safety net during emergencies or unexpected expenses. As a small business owner, having access to a line of credit ensures that your business can handle any sudden financial needs without resorting to more expensive or less flexible borrowing options.

Credit card grace periods

What is a grace period on a credit card? Most credit cards offer a grace period for regular purchases, but not typically for balance transfers. This interest-free window lasts from the date of your purchase until your payment due date, potentially giving you up to 60 days before interest applies.

Using your credit card grace period for cash flow management

Your credit card’s grace period can help manage cash flow by delaying payment without incurring interest.

If you're facing a short-term cash crunch, strategically using a card that just closed its billing cycle can extend your repayment timeline.

Are loans better than credit card debt?

Loans are generally better than credit card debt because they offer lower interest rates and fixed repayment terms, which makes them easier to manage.

Credit card debt tends to have higher interest rates and can quickly become costly if not paid off in full each month. They are better for short-term expenses and everyday purchases.

If you can pay off the balance quickly, a credit card may work, but for structured, long-term borrowing, a loan is usually the more affordable and structured option.

Manage cash flow with a Ramp Business Credit Card

The Ramp Business Credit Card is designed to help businesses manage cash flow. With real-time expense tracking and automated categorization, Ramp provides detailed insights into spending patterns, helping your business identify areas for cost savings.

Ramp's integrations with accounting software also simplify bookkeeping and ensure accurate financial reporting. By using Ramp, your business can gain better control over its finances, making it easier to navigate cash flow challenges and focus on growth.

Ramp offers higher credit limits than traditional credit cards, since our limits are determined based on revenue. All you need to qualify is a registered business with an EIN and $25,000 in a U.S. business bank account. See a demo to learn more about how Ramp can help your business.