Bending The Rules Of SMB Card Spend

For small businesses, the financial impact of a large cash outlay — say, for equipment, to cover an emergency or to bridge cash flow gaps — can be a knotty problem. Day-to-day cash flow may not be enough to cover the expense. And there may not be a comfortable level of cash in the corporate coffers to rely upon.

But what might be an expense purchase today can translate to an SMB’s benefit a bit further down the line. In a recent announcement, American Express unveiled its most recent card offering geared toward small businesses, dubbed the SimplyCash Plus Business Credit Card, with an eye on higher-value purchases.

In an interview with PYMNTS, Audrey Hendley, senior vice president and head of products and new product development at American Express, noted that the most likely early adopters of the card include smaller businesses with 100 employees or fewer and between $10 million to $20 million in sales.

The underlying impetus behind the new card’s launch, said Hendley, is “the fact that as businesses grow, their capital needs grow.”

For some firms, the ability to get larger purchases approved — with no limits, overdraft fees or annual fees — means the card can be used as a financial management tool. “This is a real pain point,” said Hendley, “making sure that there is financial control in place and that there is good cash flow control.”

As has been reported, the card lets businesses spend above the credit limits on their cards when they elect to make relatively bigger purchases. Asked about whether allowing business owners to spend above the limit might lead to increased credit risk, Hendley said that the company counters those concerns by mandating users repay at least the amount that was spent above that limit and it must be done in full every month. Responsible management of the account would help raise the credit profile of the firm.

Users can also elect to receive email alerts or text alerts that can offer real-time notifications of how much is being spent — and by whom (which again dovetails with the employee card option).

Hendley also pointed to the rewards system in place with SimplyCash, wherein cash-back scales, according to the type of purchase, mean that the rewards can function as an additional revenue stream or can go directly to a firm’s bottom line. That 1 percent back also extends to amounts that may be charged over the in-place card limits.

SimplyCash Plus also includes ReceiptMatch, which has been offered through American Express OPEN for a few years and which automatically logs receipts and purchases facilitated by the card.

Users take a photo of the receipt (through either iPhone or Android), and the expense is reconciled with the appropriate line item in the SMB’s online statement. Hendley offered a hypothetical situation in which a contractor has multiple employees on multiple jobs. With the corporate card in hand, those employees can “batch” receipts to particular jobs, which then get fed to QuickBooks in real time.

The flexibility beyond a standard card should also get SMBs to consider using a card beyond the traditional “T&E mindset,” where credit is used simply for certain types of expenses. With 5 percent cash back on office supply purchases and telecom products, purchasing managers (or sole proprietors) may find incentive to move to embrace charging other items.