American Express Business Credit Cards

American Express is Australia’s leading provider of business and corporate credit cards and charge cards, with a wide range to choose from. They have decades of experience in business credit cards and not only offer attached benefits tailored for business needs (such as business travel insurance, airport lounge access, Membership Rewards points that can be transferred to many airline frequent flyer programs, or directly-earned Qantas or Velocity frequent flyer points) but also easy-to-use detailed expense reporting tools that are compatible with business accounting software.

You can use a personal card for your business if you wish, but it will make your business accounting more complicated. You will need to separate your business and personal expenses each month, and either make two distinct repayments of the balance – one from your personal bank account and one from your business bank account – or create a major headache for yourself at the end of the tax year.

Mixing your business and personal expenses may also leave the ATO unconvinced that your business expenses are truly only for business. It’s best to keep them completely distinct by charging them to a separate card, and if it’s a business card you should be able to claim the annual fee as a business expense.

You can be anything from a sole trader to a small business with several employees, or a larger business with up to 99 staff members requiring supplementary cards, but your business must have an ABN and be registered for GST. For most cards, your business must have an annual business revenue of at least $24,000. The major exception is the American Express Platinum Business Card, which requires an annual business revenue of at least $75,000.

Annual fees for a single card, including any rewards program enrolment fees, currently range from $189 to $1,750. Each card account can have up to 99 supplementary cardholders. For the more expensive cards, supplementary cards come free of charge, while for the less expensive cards there is an additional fee payable for each card.

Liability for the debt
American Express credit cards and charge cards for unincorporated businesses – sole traders and partnerships – are issued in the name of the principal(s) – the business owner(s) – and the business owner(s) and each supplementary cardholder are jointly and severally liable for the debt created by each card’s spending.

Where the business is incorporated, liability for repayments is shared between the company and the cardholder, if there is only one card issued. If supplementary cards are issued to employees, each employee also shares the liability with the business, but only for charges made with their individual card. (Corporate cards, issued to very large organisations, have a different arrangement: the corporation itself normally carries sole liability.)

Expense reporting
Monthly business card account statements will list the charges for each supplementary card separately, providing for ease of reconciliation with expense reports submitted by employees. The statement may also consolidate expense types regardless of which card incurred them, for example reporting total travel expenses or total entertainment expenses. This facilitates the transfer of the figures directly into your accounting system under the required headings.

Cost of supplementary cards
Each card account can have up to 99 supplementary cardholders. For the more expensive cards, supplementary cards come free of charge, while for the less expensive cards there is an additional fee payable for each card. Check the card details to find out if there is a charge for supplementary cards.

Individual credit limits
It will usually be possible to have individual credit limits placed on supplementary cards, rather than allowing supplementary cardholders unlimited access to the account’s global limit. Alternatively, internal business controls may be needed in order to set each employee’s credit limit.

A business credit card, just like a personal credit card, provides access to a revolving line of credit. This means that the business can use a credit facility up to an agreed amount, the card’s credit limit. At the end of the billing cycle, the balance may be paid in full if there are sufficient cash resources to hand. Otherwise, if there is a temporary lack of liquidity it is possible to make only a small part repayment and pay interest on the balance, provided the credit limit is not exceeded. American Express business credit cards provide up to 55 interest-free days on purchases.

A business charge card, however, is not a revolving line of credit. Although payment for incurred expenses is deferred until after the end of the monthly billing cycle when the payment due date arrives the balance must be paid in full. There is no provision for carrying over a balance and paying interest. Charge cards also have no fixed credit limit, which normally means that greater and more flexible spending power is granted. However, extremely large charges which far exceed the normal spending pattern and repayment capability of the business may be declined unless discussed in advance with the American Express customer service agent for your account. If repayment is late or not made at all, large late payment fees or liquidated damages may be incurred. American Express business charge cards allow up to 51 or 55 days to pay for purchases.

Both American Express business credit cards and business charge cards allow you to postpone payments until the end of the monthly billing cycle. You will get 51-55 days of free credit on your business purchases, depending on the terms applicable to the card you choose. This is much more beneficial than paying with cash, cheque, EFT or BPAY, because the cash resources of your business stay in your bank account for longer, potentially earning interest or reducing interest expense. It’s even preferable to negotiating credit terms with your suppliers, who may want to be paid within seven days and rarely grant more than 30 days’ credit before they start getting impatient.

You can achieve maximum benefit for your cash flow by arranging with your suppliers to have deliveries – and payments – made at the very beginning of the monthly billing cycle for your card. (Suppliers will probably jump at the chance of prompt payment, even though they will have to pay a merchant fee for accepting your card.) Alternatively, ask American Express to set your monthly billing cycle to begin on the day your suppliers normally expect to be paid.

American Express business credit cards have the additional feature of allowing you to postpone full repayment of your account balance in any month when your business finances are tight. Provided you are still within your credit limit and are prepared to pay interest charges (of between around 17% and 21% p.a., depending on the card) for a short period, you can smooth out the bumps in your cash flow.

American Express business charge cards don’t have this feature, requiring full repayment of the account balance every month. However, they do have the additional benefit of having no fixed credit limit. This does not mean unlimited credit – your card provider will have an implied limit recorded on your file based on your payment history, credit records and spending patterns – but it does provide more flexibility, especially if you discuss your fluctuating credit requirement pattern with your card account manager, and your implied spending limit is likely to grow as your business grows.

American Express business credit cards and charge cards also come with the added feature of AccessLine, to facilitate business payments to suppliers who do not normally accept payment by card, or who specifically do not accept payment by an American Express card.

AccessLine allows businesses to pay both domestic and international suppliers with their American Express Card, even suppliers who don’t accept card payments. Payments to suppliers you have registered with American Express are sent by bank transfer and charged to your American Express business credit card or charge card. As a result, you’re able to consolidate and control your supplier spending and benefit from the cash flow benefits of up to 51-55 days (depending on the card) to settle with American Express. You also earn rewards points on the transactions.

You can expect some or all of the following benefits to be built into your American Express business credit card or charge card:

Travel insurance tailored especially for business travel, although it usually covers personal travel too if it is paid for with the card
Special privileges aimed at business travellers, such as airport lounge access, airfare discounts, luxury hotel group membership and privileges, Financial Review subscription, a concierge service
Account statements and functionality designed to help the business keep track of expenditure
Waiver of the card account balance if the primary cardholder dies or suffers a serious illness or accident resulting in loss of income
American Express Membership Rewards program points or frequent flyer points
Bonus points for new card accounts
Ability to use AccessLine to pay suppliers who don’t accept payment by credit card
A customer service team dedicated to business cardholders

It’s entirely up to you. Even though you may issue supplementary cards to employees, they should only be using them for expenses related to your business, not for personal use. (You will need to have strict company rules in place to ensure this.)

For sole traders, partnerships or single-shareholder companies, since it’s your business, you may decide to keep for your personal use any rewards points generated by supplementary cardholders. But be aware that an excessive number of points (250,000+) earned by a business card in any one year may attract the notice of the tax man. In this case, the safest thing to do is to convert the rewards points into a cash offset against the card account, thus reducing business expenses rather than getting a personal gain. Another possibility is to utilise the accumulated points to reduce business expenses by using them for business travel or to purchase company assets.

Alternatively, a business owner or the directors of a company may decide to let individual employees keep the rewards points earned on their card. In this case it becomes a worthwhile staff incentive, and it shouldn’t have any FBT implications unless it is obvious that most of the expenses of the business are deliberately being directed through a particular employee’s card in order to create an incentive.