How a Charge Card Is the Ultimate Asset For Small Businesses

To get the most out of a card with no pre-set spending limit, it's important to understand how the concept works.

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All small business owners know and understand the importance of cash flow. The fact is, cash is king, and cashflow can make—or break—a business.

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The reality is that many businesses struggle with cash inflow from time to time. However, a ‘charge’ card with no pre-set spending limit can help businesses and ABN holders access funds when opportunities arise. Selected banks and card providers including American Express offer this facility to support small businesses.

To get the most out of a card with no pre-set spending limit, it’s important to understand how the concept works. A ‘charge’ card with no pre-set spending offers no predetermined credit limit. This differs from a credit card which provides a ‘fixed’ credit limit.

Holding a card with no pre-set spending limit doesn’t mean that you’ll be able to spend whatever you like. Rather, you’ll be able to spend whatever the card provider thinks you can afford to pay off each month.

A card with no pre-set spending limit is different to a ‘credit’ card, which allows cardholders to carry a balance month to month, whilst incurring interest charges. And, unlike a credit card, a charge card needs to be paid off in full every month.

Used wisely, a card with no pre-set spending limit can unlock opportunities for businesses of any size. There are many reasons to choose a business charge card, including the ability to effectively manage monthly expenses and improve cash flow. Here are some of the key benefits.

Access up to $1 million of unsecured credit per annum

A card with no pre-set spending limit unlocks purchasing power for businesses when it’s needed.

How does this work in practice? The card provider will evaluate your financial stability and spending patterns on an ongoing basis, in order to determine your purchasing power. Many factors are taken into consideration. This includes income, payment history, spending habits and other financial records.

Some card providers can offer businesses an unsecured credit line of up to $1 million per annum, bypassing the need to jump through hoops to acquire a business banking loan.

Extend business cash flow by up to 55 days

A business charge card offers a set number of days from the time a purchase is made until the repayment is due. Extending business cash flow depends on when a purchase is made, the statement issue date and whether or not you are carrying forward a balance on your account from your previous statement period.

With some card providers, the cash flow cushion can be extended by as much as 55 days—just by getting your business card statement issued the day before your regular invoices are due. It’s a simple way for businesses to extend cash flow on large invoices or recurring bills, each and every month.

Flexible payment options to tide your business through unexpected circumstances

From time to time, businesses of all sizes experience cash flow problems. A card with no pre-set spending limit usually needs to be paid off in full every month, however some products offer support for unexpected circumstances.

Charge card providers are now rolling out flexible payment options to help business owners free up their cash flow with an instant line of credit on their charge card. Essentially, instead of paying off the balance in full each statement period, businesses can opt to pay it off over time.

However you choose to use it, it’s clear that a card with no pre-set spending limit can be a powerful tool for small business. Above and beyond freeing up cash flow, many card products offer additional benefits, including rewards points, business-focussed perks and streamlined financial reporting.

Adele Eliseo

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Adele Eliseo has a passion for travel, scouting tricks and hacks to earn frequent flyer points and using them to travel in style - without the hefty price tag. Whilst working full time in research and project management, she began a personal blog, offering her advice on how to navigate airline and hotel loyalty programs. When her blog, The Champagne Mile began attracting large numbers of followers and corporate partners, Adele gave up the day job and now works on the site full time, helping thousands of Australians to enjoy luxury travel for less.