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Managing cash flow is often a challenge for small businesses, and in tight economic times many companies find themselves in a double bind: customers take longer to pay as they work to manage their own cash-flow, and at the same time suppliers demand payment more quickly, for the same reason.
Negotiating hard on trade terms is a good first step in addressing this squeeze. Common trade terms are “net 30″ or “net 60,” meaning that a business has 30 or 60 days from the invoice date to pay in full for the purchase. If you can persuade some of your vendors to accept more generous payment terms – or at least maintain the terms you already have – that can put more cash in your pocket. Sometimes suppliers will offer a discount on payments that are made right away, and if you selectively take advantage of this you can save money there too.
The Plum Card® from American Express OPEN can give you similar benefits, while saving you the time and trouble of negotiating with suppliers.
Specifically, the Plum Card charge card offers two special payment options that can help with your cashflow management.
- Deferred payment option: You can choose to pay your Plum Card bill on-time, or when cash-flow is tight, you can defer payment for up to 2 months with no interest as long as you pay 10% of your balance by your ”Please Pay By” date. OR
- Early payment discount: By paying your balance within 10 days of the statement closing date, you get a 1.5% discount on eligible purchases made that month. For example, if you make $10,000 in purchases, you can earn $150 in savings. You can even request monthly e-mail reminders to help you take advantage of the Early Pay Discount.
All businesses can have flexible payment due-dates: when you sign up for the card, you can choose when your payments are due – the beginning of the month, mid-month, or month’s end. This enables you to match your payment cycle to the cash-flow cycles of your business.
The Plum Card carries a number of other benefits that can help small businesses save time and money. The Plum Card Summary of Accounts and other expense management tools enable you to keep a close eye on your spending and avoid unpleasant surprises. You can cut your travel, shipping and other expenses via the OPEN Savings® program, which offers automatic discounts when you use the card to make purchases. Participating companies such as FedEx, Hyatt, Hertz, Constant Contact, and Epson help you save on some of those expenses that can really add up over time.
All of these features are designed to give you more flexibility with your accounts payable, while at the same time offering improved day-to-day oversight of how you’re spending your money. And that’s a double benefit to your bottom line: save money, and spend less time managing cash-flow and more time creating and selling great products and services.