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For nonprofits and SMBs, credit cards are a lifeline

A group of volunteers at a nonprofit sorting out donations.
Sarah Samuels
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When I worked for a small nonprofit in New York, we were hyper-aware of our spending. This is a typical situation for nonprofits, and one that’s also familiar to many small and medium businesses (SMBs). 

The organization I worked for convened civic engagement events, including talks by elected officials, panels with the city’s public and private sector leaders, fundraisers, and more. 

For these events, we would generally have to rent out venues. These hotel ballrooms or event spaces were expensive, sometimes running into the tens of thousands of dollars for larger events. In addition to the venues, we had to consider all the additional costs: catering (pro tip: always make sure you have enough coffee), branding assets, videographers, etc. 

In this article, I’ll discuss how using a credit card for business expenses helped our organization thrive.

How we let our credit card do our work for us

One of the best practices that we put in place was to charge all of the nonprofit’s expenses to our business credit card. 

At first, we chose to use cards because of how easy and quick it was to pay our vendors. But, the true significance of this strategy really hit home when we got a new CEO and had to transfer ownership of the corporate card. We realized then that we had upwards of 200,000 points, which translated into over $1,500 in gift cards! 

For a nonprofit organization on a tight budget, this extra cash was considerable. We used the gift cards towards company expenses, including purchasing snacks, giveaways, and tablecloths for events throughout the year. We were also able to address our office needs and buy pens, paper, and even new monitors.

This was essentially found money. Had we used any other payment method aside from a credit card, we would have covered our expenses but gone unrewarded.

Why this matters to SMBs

Nonprofit organizations and small businesses have a lot in common. 

Both types of entities generally have tight budgets and can struggle with cash flow. While nonprofits rely on various funding sources such as donations, corporate sponsorships, grants, and membership fees, small businesses make money from more traditional sources. However, they can still be subject to uneven revenue streams due to seasonal fluctuations, high operating expenses and overhead, or slow-paying customers. 

The majority of them operate with very small teams: over 70% of nonprofits have 19 or fewer employees, as do 96% of small businesses.

Due to their size, both SMBs and nonprofits don’t necessarily have a specific function for accounting or bookkeeping. This means that nonprofit executives and small business owners are the ones responsible for managing their organizations’ finances. 

Taking into account their similarly limited resources, cash flow challenges, and size, credit cards can be a lifeline for both SMBs and nonprofit organizations.

What you can do with rewards

Business credit card holders can use points for travel, trading them in for airfare or hotel points. For example, if you need to travel for an exposition or conference, you can use the points from your business credit card to cover the cost of the trip. 

Some cards also offer cashback as a reward, meaning that the cardholder gets a set percentage of their purchase credited back to their account. So, if your card is eligible for 2.5% cashback on office supplies and you buy $150 worth of notepads and mousepads, you’ll get $3.75 back. That may not sound like a lot, but it quickly adds up. It gets more exciting when you need to make a larger purchase like new computers or printers.

How to maximize your rewards

The first step is applying for a business credit card, if you don’t already have one. Remember that whether you’re paying by card or any other method, your business expenses must be kept separate from your personal ones

Here are a few additional methods you can use to make the most of your card.

Charge your day-to-day expenses

The key to maximizing your rewards isn’t to go on a random shopping spree. It’s to use your business credit card for things that you were going to buy anyway. This way, you’re racking up benefits without inflating your spending. 

Whether you’re a nonprofit employee or an SMB owner, there are no shortages of expenses. You can use the company credit card for larger expenses such as rent or smaller, everyday expenses, such as new business cards. 

If your vendor doesn’t accept credit cards, you can still use your card* to pay them through B2B payment platforms like Melio. They’ll get a paper check or an ACH bank transfer, whichever they prefer.

Collect on signup bonuses

Once you’ve set up your business credit card and started making payments, you will start earning rewards automatically. 

But, many cards also offer impressive signup bonuses for customers who spend over a certain amount in the first few months. Check the terms of your card to make sure you’re maximizing these bonuses.

Share with friends

What are friends for if not referral bonuses? Seriously, though, some cards will reward both you and your friends with thousands of points when they sign up for a card through your referral link.

Play your cards right

Take into account the cards you have and the specific benefits they offer for various items. Some cards may triple the points for every dollar spent on dining and others will give you five times the points for every dollar spent on travel. So choose wisely when you pull out your wallet.

Time your purchases

Different credit cards also offer time-sensitive special promotions. One credit card may give you 10% cashback when you purchase an office suite software while another offers $20 off an annual subscription for a file-hosting service.

So, if you’re planning on buying a product or service for your business, it’s worthwhile to check your specific card’s web portal to see if there are any promotions that suit your current needs. You can time your purchases to maximize your discounts and rewards. 

Credit where credit is due

I was able to see first-hand how using a business credit card can benefit nonprofit organizations. Credit card rewards were an unexpected, but welcome windfall to our tight budget. 

When these perks are considered alongside their convenience, speed, and implications for cash flow management, it’s clear that using business credit cards to pay for expenses and redeem points can help set up SMBs for success.

Looking for a way to pay all your vendors with a credit card? Sign up for Melio.

*This blog post is intended for informational purposes only and is not intended as financial advice.
**Melio does not provide legal, tax or accounting advice, and you should consult with a professional advisor before making any financial decisions.