The New Card for Business: American Express Rolls Out Plum
"Coolness factor." "Drama." "Big excitement." Search the web for information on the new Plum Card from American Express and what surprises are the unlikely adjectives that keep getting attached by bloggers and online commentators to what in fact is a credit card specifically geared for small business. Their verdict is in: this is one hip card.
When was the last time you thought what is in your wallet is cool?
Maybe the Plum Card hits exactly that right spot, at least this is the hope of American Express, which officially launches the card in early November. "Small business owners have been using trade terms with their key suppliers and customers for decades. What they have lacked until now is the ability to get those terms automatically, and with such flexibility, everywhere they use their Card," says John Steward, Senior Vice President, American Express OPEN.
What's different about the card? Simple: it lets small businesses enjoy so-called "trade terms," which is either a two percent discount for early payment or the option to defer payment. It works like this: Spend $5,000 on stationery, business lunches, hotels, airfare, whatever, then pay the bill within 10 days of receiving it from American Express, and there's an instant $100 credit. You don't have the $5,000 just now? Pay just 10% of the balance within 30 days, the remaining balance within 60 days with no interest, and everybody is happy. The Plum card, which is designed to give a small business flexibility as well as control over how payables are handled.
Big businesses have long enjoyed trade terms - sometimes abbreviated 2% 10, net 60 - but the revolution built into the Plum card is that it extends these terms to all small businesses, which suddenly will find themselves with the same perks enjoyed by the big boys. Best guesses are that nowadays few small businesses enjoy trade terms on even a significant fraction of their purchases and what Plum does is give the business the power to differ payment or receive early paid discounts. "There's no need to negotiate with suppliers. The card lets the small business decide where it wants to access trade terms," says Steward. (The only exclusion is that Plum discounts are not available on cash advances, says Steward. Any other purchase qualifies.)
What makes the timing particularly exciting, says Steward, is that in many business segments, the use of checks is dwindling and in their place companies are paying for purchases with plastic. Many small businesses already are using plastic to buy goods that traditionally were invoiced and later paid by check - such as raw materials or inventory (such as wholesale lots to be sold at retail) - so the Plum Card gives those owners the ability to pay for these materials but also take a discount.
Which brings us to the pressing question: Why Plum? What is with that color? Steward responds: "At the end of the day, people prefer to refer to their cards by color. Platinum. Gold. Green. Now Plum. The color is very powerful. And Plum is very different. It is descriptive. It comes with a connotation - 'a plum job,' 'a plum assignment.' We like that association and, in our minds at American Express, we see the Plum Card as the new card for business - and as the new card that small business owners will very much want to have for themselves."
Get at the start of the line for the new Plum Card with a visit to www.plumcard.net. Request an application. "We will be making applications available in early November," says Steward. So be patient and know that a two percent discount may be in your everyday future.
Who Should Have A Plum Card?
The perfect candidate for the Plum Card, says Steward, "is the small business with high monthly operating expenses and highly variable cash flow." That means a business that puts a lot of expenses on a card and in some months it has the cash on hand to take the two percent discount, in other months it will be grateful for the opportunity to push out repayment to 60 days with no interest charges.
For the business that charges $9,500 in a year and pays it off within the 10-day window, the $200 in trade discounts would mean the Plum Card is free. (Actually, that hypothetical business would clear $5 on top of the fee.)
