The credit card has long been a financial staple for many businesses. Whether used to stock up on stationery and other supplies, pay for ad hoc services or entertain clients, it’s a reliable and fast source of funds.
For all the advantages business credit cards offer, they also have limitations. And as many Australian businesses now look towards other forms of credit — like trade finance products and more holistic digital wallets — these limitations become even more apparent.
We spoke to Octet’s Head of Marketing, Duncan Khoury, about the future of the business credit card and why digital wallets and tailored working capital solutions are poised to become the norm for today’s companies.
The current landscape of business credit cards
As one of the earliest personal finance solutions, credit cards have a long history of providing fast and straightforward access to money. But it wasn’t until the 1970s that businesses started seeing their value too. After realising the credit card’s potential, the corporate credit card for company expenses was born.
“The business credit card was commonly used for menial things, like weekly office shopping or buying stationery,” Duncan explains. “Today, small-to medium-sized businesses can use them for more meaningful expenses, like monthly advertising on channels such as Google and Meta.”
While they remain an intelligent solution for business purchasing of this nature, business credit cards have limitations. Let’s explore some pros and cons.
The pros:
- cost-effective, if paying the account on time
- allow purchases to be traceable
- maintain control over business equity
- unlike other lines of credit, there is generally no security needed
- earn rewards points for your business through purchases
The cons:
- potentially damage personal/cardholder credit rating
- higher interest rates than other forms of credit
- possible merging of business with personal expenses in smaller businesses
- insufficient funding lines for larger purchases
Today’s complex and agile businesses need more than simple credit cards. They require simplified, consolidated access to finance that allows them to make substantial purchases along their supply chain. So, what’s the solution?
Seeking a better solution
If your business is considering moving away from physical credit cards in favour of more holistic working capital solutions, then you’re not alone.
Working with Octet, leading research group RFI found Australian businesses today were less likely to use credit cards than other forms of credit. Companies with a turnover of between $10 million and $700 million were more likely to use a business operating account or trade finance product instead.
“The gap was also particularly substantial where businesses had some revenue from online channels and digital sales,” says Duncan.
Digital wallets have become an increasingly popular finance product for businesses, with an ability to fill the gaps that credit cards can’t. But what do they do exactly? Duncan explains.
“A digital wallet is a financial transaction application that runs on any device. It connects both your own and external payment sources such as supply chain finance facilities, allowing you to make transactions and track payment histories — all in one digital location.”
It’s no surprise that digital wallets are the answer for many businesses seeking efficient and less restricted finance solutions.
The Octet digital wallet difference
Octet’s digital wallet is a default offering within our supply chain management platform. As such, all trade finance and receivables finance customers can access it.
“Octet working capital solutions are built around the supply chain, including our digital wallet,” says Duncan. “The key features and benefits have been tailored for the cyclical nature of business conditions, and can be tailored to your specific business and supply chain requirements.”
The Octet digital wallet gives you oversight of all cash coming in and out of your connected business accounts, leveraging your finance solutions with a simple and consolidated approach.
“Businesses can pay with existing funding sources, including credit and debit cards. It also allows you to bring your own FX contracts and plug them straight in, so you can continue using your current exchange rate with certainty.”
Importantly, Octet provides a secure online environment for its customers. With certified information systems and verifications at every step, businesses can feel safe using Octet’s platform. We verify all trade partners with processes including anti-money laundering, counter-terrorism financing and know your customer, so there’s less risk for all parties.
Octet’s digital wallet — and other working capital solutions — give businesses a modern, simplified and bespoke approach to their finances.
Simplify your finances with Octet
A business can only operate as effectively as its finance solutions and cash flow position allow. Speak to Octet about the difference a digital wallet, including tailored supply chain finance can make for your business.
Disclaimer: The following comments are only our views and should not be construed as advice. You should act using your own information and judgment. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgment as at the date of publication and are subject to change without notice.
