Cashflow squeeze < Charge card
Using an AMEX charge card to take the cashflow cycle from 30 days to 85+ days and getting win-win outcomes for our suppliers.
Using a charge card to extend your monthly business cash flow is an easy and simple way to take the week 3.5 squeeze out of your monthly business life. As a business owner with 140 employees, I live and breathe by the adage my father has repeatedly pounded into me via repetition, his wise words…. “Revenue is vanity, profit is sanity, but cash is king”.
Only recently I have managed to warm my very conservative father (as he is a shareholder in the family business) to use short-term debt to reduce our imitate stress, and sometimes present cashflow crunch. The product I pitched him was the American Express Platinum Business charge card, which here in Australia comes with the following fees & benefits:
Annual Fee: A$1,750.
Annual Employee Card Fee: No fee for up to 99 Employee Card
Charge Card: Enjoy no pre-set spending limit and up to 55 days to pay for purchases.
MR Points: Earn up to 2.25 points per A$1 spent
and a lot more
A charge card can be beneficial for any business owner who needs more time to pay back a purchase(s), but you do have to pay it all back by the end of the statement period (about 55 days on the AMEX Platinum). Some cards offer 0% interest for extended periods of time or no interest at all, which can help give you more time to make payments while also getting the added value and benefits that come with the large spending business tend to have.
Furthermore, most business credit and charge cards offer rewards point(s) for each dollar spent (2.25 points for each AUD dollar of spend with the platinum), which can lead to free travel, cash discounts or unique experiences etc. all for doing nothing more than you would have already.
Points and holidays aside the real benefit is using the additional days to extend your cashflow cycle and regain some sleep when things get tight. Our business operates on net 30 terms, meaning we pay our bills 30 days from the date of the supplier’s invoice. Now with the charge card in action, we are getting the original 30 days from invoice date + the 55 days until we need to cough up the cash not to our suppliers now but to AMEX, this brings us to grand total of 85 days per cycle!
With the additional days we continue to pay our suppliers in full via the charge card (at their terms eg.30 days) and we collect our monies owed all through the month(s) and more until we actually have to reach into our pocket and pay AMEX.
On top of leveraging AMEX's terms to assist our business to continue to humm along we find ourselves in the fortunate position to request an early payment discount from our current loyal and repeat suppliers. These are generally called a 2/15 discounts which mean we are asking for a 2% discount if we pay the invoice in full in 15 days. You might already have been offered these terms or similar as it’s common practice for utility companies to offer this.
Now having the ability to request a discount from our suppliers and hopefully getting it, will lead us to have surplus cash to reinvest into our business and increase the speed of our flywheel within our enterprise.
If you spend 100K a month on your American Express Platinum Business card and you get the 2% discount from your suppliers, this means you will have an additional $2,000.00 a month to redeploy, take that and increase your spend to $1,000,000.00 and you're talking serious money, again for doing no more than you are currently doing.
If you feel you might want an AMEX to use in the ways discussed, use this referral link for a 200k AMEX point kicker and head start😉 :
LINK: Referral Link