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Flexible Payment Options Are Not Just Important to Consumers – SMBs Want Them Too

Payment flexibility has become increasingly important to consumers in 2020, as they try to purchase goods while experiencing the financial complications of the pandemic. But this isn’t only applicable to consumers; a new survey by American Express has found that 78% of small- and medium-sized businesses believe payment flexibility is important this holiday season.

American Express has been conducting its Trendex survey each month and for October, the payments company surveyed 500 SMB owners and financial decision makers. All companies had to be U.S.-based and with a revenue range between $300,000 and $3 million annually. The majority of the business owners reported that payment flexibility was important, as they look to spend on technology (56%), protecting equipment (40%) and office supplies (38%).

Cash flow has repeatedly been named as a leading concern for the retail market this year, due to challenges with inventory management and store closures; the AmEx Trendex found that 38% named cash flow as one of their biggest challenges. Other issues being faced include finding and acquiring new customers (40%) and adapting to new technologies (48%).

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For many merchants, the holiday season will be critical for making up sales revenue. In order to set themselves up for success, businesses are looking to make some smart investments. This is reflective in the anticipated spend categories of these companies in 2021: 59% report that they expect technology to be their biggest expense next year. But in order to make these investments and reap the rewards, merchants need access to cash or credit.

“We’ve long heard from our card members who are small business owners that increased payment flexibility is important to them,” said Brett Sussman, VP of global commercial card lending at American Express. “This is especially critical during these times of uncertainty. Pay Over Time is another step in our broader strategy to provide business owners the flexible solutions they need to easily and efficiently manage payments and cash flow.”

CREDIT: Courtesy of American Express

When surveyed, half of the business owners reported that flexible payment terms would be the most helpful benefit from a card. And this number increased when addressing cash flow specifically; 86% said these options would better help them manage their cash flow. Of those respondents, 44% would use this money to reinvest in their business, 43% would use it to cover a gap between incoming payments, and 38% would direct it towards keeping staff and customers safe during the pandemic.

In response to this need, American Express has launched a Pay Over Time function for all Green, Gold and Platinum Business Cards. Starting from Nov. 1, business owners will have the option to either carry a balance with interest on eligible purchases of $100 or more, or pay the balance in full. This was previously only offered as an opt-in function, but 55% of merchants utilized this service and requested it be available from the first day of use.

This access to additional cash flow and payment flexibility can be used for multiple business priorities, particularly unexpected issues that may arise due to the unpredictable nature of the pandemic. Looking ahead at 2021, the Trendex found that merchants planned to finance technology or IT equipment (57%); enhancing their online presence (45%), and marketing to attract new customers (42%).

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