Is a chainsaw a help or a danger? The answer always depends on how you use it. In the hands of an experienced landscaper, a chainsaw is a powerful tool that can save time, produce professional results, and take on jobs that other tools can’t help with. On the other hand, the same tool can be hazardous when used by someone inexperienced or when used incorrectly.

Lines of credit and business credit cards are similar. There’s no need to swear off using them for fear of hurting your business’s finances. At the same time, learning how to manage them is essential. Smart entrepreneurs can turn a business line of credit into a powerful ally for growing revenue.

The Wrong Way to Use Lines of Credit

It’s not difficult to learn how to manage a line of credit successfully. Everything comes down to your point of view. A casual view of business credit can easily get you in trouble. On the other hand, if you’re the type of business owner who thinks about purchases ahead of time, you can have amazing results with this powerful funding source.

One of the biggest mistakes to avoid is using a line of credit for everyday expenses. The same thing goes for credit cards as well. You should never rely on short-term financing as a support pillar for your business’s cash flow. Instead, credit should be a supplementary source of funds that helps smooth out your available working capital.

Is it good or bad to use a line of credit for payroll? That depends on the reason you’re using it. If it’s because you’re not making enough sales to cover your business’s operating expenses, there’s a deeper problem you need to resolve. On the other hand, if it’s to simply payments or cover expenses for a few weeks until your clients pay you, using a line of credit is a good thing.

The Right Way to Unleash Your Finances

Business lines of credit shine when you use them to supercharge your company’s money-making abilities. Flexible capital can be amazing for seizing valuable opportunities. Does your supplier have a seasonal sale that would save you thousands of dollars on inventory purchases? With a line of credit, you can channel enough funds to buy in bulk, save money and improve your profit margins considerably.

Qualifying for business credit isn’t difficult. How you use the funds afterward shows your money management expertise.

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