What is cashback for business?

Whether you’re considering a new business credit card or exploring alternative income opportunities, you might want to know a thing or two about cashback. It’s an increasingly popular feature offered by some financial products and services geared towards business owners and entrepreneurs.

How does it all work? Here, we’ve got all you need to know about cashback for business, from the fundamentals to potential pros and cons.

What is cashback? 

In simple terms, cashback refers to earning money back on certain business transactions and expenditures. For example, some banks and credit card companies will credit back a small percentage of the money you spend after opening a new account with them. 

You’ll be able to track how much cashback you’ve earned, and sometimes you have the choice of how to receive it. This is typically through account credits, cash value to spend or just a running cashback balance.

What does a common cashback offer look like?

Here’s one example of how a cashback program might work: A bank or credit card company launches a new business-to-business (B2B) financial account with an attractive cashback incentive. Let’s say you open this new B2B account, and you’re given the choice between two basic cashback structures:

• Cash value cashback: This classic option allows you to gain actual cash that’s loaded directly into your account to spend however you like.
• Account credit cashback: This structure involves your account being credited with a cashback balance that you can apply towards future purchases or payments, but you don’t actually receive cash.

The cashback percentage and earnings caps often vary, with the idea being that you’re earning a percentage of your expenditures back as an added perk.

Why do companies offer cashback? 

Ultimately, cashback programs are designed to incentivise customers to start and maintain relationships with financial institutions, card issuers or other companies. The cashback acts as a reward for your loyalty and ongoing business.

Types of business cashback programs 

While the structure can vary, most business cashback programs tend to fall into a few main categories:

Credit card cashback

This is one of the most common ways for businesses to earn cashback. By putting all expenses, invoices and bills on a cashback credit card, you’ll earn a percentage back on that spending. Cards may offer different cashback rates for certain spend categories like travel, shipping and advertising.

Bank account cashback

Some business bank accounts come with enticing cashback intro offers to encourage you to open an account and start using their services. That could be in the form of earning a high cashback rate on debit card purchases or qualify for cashback on specific revenue or deposits for a set period.

Merchant cashback

Certain retailers, suppliers and service providers may offer their own proprietary cashback programs directly to businesses. An office supply store could theoretically offer 1% back on all qualifying purchases made by small businesses.

Regardless of the program type, the basic premise is that your business is rewarded with a percentage of cash back for expenditures and transactions made through a particular merchant or financial institution.

Pros and Cons of Business Cashback 

Like most rewards programs, cashback for businesses has its advantages and considerations:

Advantages:

• Earn a percentage back on expenditures your business is already making
• Cashback can help offset operational costs and expenses
• Creates an additional revenue stream for your business
• Incentivises putting more expenses on whichever accounts or cards earn cashback
• Keeps your business’s funds relatively liquid if earning cash value cashback

Considerations:

• Cashback rates are usually capped, so there are limits to how much you can earn back
• Potential higher upfront costs if the cashback offer requires annual fees
• May encourage overspending to earn more cashback
• Account credits tend to be less flexible than true cash value earned
• Danger of becoming too loyal to one card or account and missing other offers

As long as you have a disciplined strategy, most businesses could arguably benefit from making the most cashback earnings wherever possible. The goal is choosing the right program(s) for how your particular business operates and spends money.

Take advantage of cashback with Funding Circle

Here at Funding Circle, we aim to be at the forefront of providing cashback opportunities for businesses through products like our Funding Circle Cashback credit card. It offers the ability to earn cashback not just on typical operational expenses, but on virtually any business payment you can think of, from inventory and supplier invoices to travel costs and entertaining.

Specifically, the Funding Circle Cashback card provides:

• 2% cashback on all purchases for the first 6 months, up to £2,000 cashback
• 1% unlimited cashback on purchases after that intro period
• 42-day interest-free period if the balance is paid in full
• No monthly or annual fees
• Ability to earn cashback wherever Visa is accepted
• Up to £250,000 credit limit

By making the Funding Circle Cashback card your go-to payment method across different business spend categories, you can boost lucrative cashback earnings on your bottom line. Much like a personal cashback card, this allows you to get paid back simply for covering the expenditures required to keep your business running and growing.

Learn more about Funding Circle’s Cashback card

Summing up: Getting something back

Cashback cards aren’t for every business, but thanks to being relatively low risk, you can earn while you spend with the right type of cashback card. It offers another way to boost revenue and get more value from every payment. Whether stocking up inventory, covering travel costs or paying bills, make sure you’re putting those essential expenses on a cashback card.

28/08/24: While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.