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small business in a big way
Hong Kong’s love affair with cash results in inefficient payment systems.
Wire transfers are hard to track and require additional administrative attention
Multi-currency credit-based payment solutions offers cost and time savings
Hong Kong is an international business center and tourists gush about our futuristic city of skyscrapers, but we’re hiding a little secret. Hong Kong has an old-fashioned attachment to cash — cold hard cash, the kind you fold into your wallet and slip into lai see packets.
Luxury shops and high-end restaurants may accept your credit cards and electronic payments, but most Hong Kongers still rely on cash to buy a bowl of noodles, pay the taxi driver and make other everyday purchases.
Many mid-sized Hong Kong businesses cling to the misconception that cash is the cheapest, safest payment option. In reality cash is costly, hard to track and transfer and it is a barrier to more efficient business practices. Closely linked to our attachment to cash is the prevalence of wire transfers over more effective methods of payment execution.
The system of wire transfers originated with the creation of telegraph companies in the mid 1800s. Digitization and improved telecommunications have done away with telegraph switchboards, but wire transfers are still an odd hold-out in a financial and technological world that has moved towards faster, more transparent and efficient methods of moving money. Delivery and processing times vary from bank to bank, but wire transfers are cumbersome compared to the alternatives available in the market, and their manual tracking provides only rudimentary information at a slow trickle. Data from transactions is hard to compile and analyze.
Wire transfers between businesses also require that you have the cash in hand — or in your bank account. You can’t make a wire transfer on credit. In today’s business environment, where cash flow is scarce and highly valued, this put additional strain on your company’s finances.
The alternative is to use multi-currency credit-based payment solutions. Effectively manag-ing imports and international payments on credit significantly improves cash flow, reduces unproductive tasks and ultimately reduces costs. American Express helps companies streamline every step of the international transaction process from sourcing and buying to billing, payment and expense reconciliation.
A big part of Hong Kong’s charm is its mix of old and new. While that may work for trams and temples, it doesn’t make sense for international payments. Wire transfers do not pro-vide the transparency and timeliness that today’s business requires. It is time that Hong Kong businesses catch up to global best practices and adopt more efficient electronic payment solutions.
Managing your company’s cash flow is a tricky balancing act between finding sources of affordable credit, building trust with your suppliers and closely monitoring the relationship between your billing cycles and anticipated revenue.
More flexible credit card billing cycles can improve your company’s cash flow
American Express corporate credit cards allow up to 10 unique billing cycles per account
Effective management of your billing cycles can provide up to 51 days of credit
To put it simply, it comes down to collecting revenue as quickly as you can and delaying payments for a long as possible.
Restrictive corporate credit card billing cycles can be a part of the cash flow problem. While you may be able to choose your card’s monthly billing cut-off date, the schedule on which you order and pay for supplies from a variety of vendors is unlikely to perfectly coincide with your card’s billing cut-off date.
American Express Corporate Card has an answer to your billing cycle challenges. Our flexible statement billing options allow you to choose from to 10 different billing cycles per account. This means you can match your billing cut off dates with your supplier payment schedules for maximum cash flow.
For example, if a supplier requires you to pay them on the 15th of every month, you can set a billing cycle cut-off date of the 14th for the card, giving you one month of credit on each cycle. Another supplier may require payment on the 10th, you can choose to pay them with a different card, which has its billing cycle cut off on the 9th of every month, again you can enjoy a full month of credit before that card’s billing cycle cut off. With 10 different billing cycles to choose from, you will find a cut-off date that best fit your payment needs. You also have 21 days after cut-off date to pay the bill amount, which gives you up to 51 credit free days in total.
Your American Express representative will help you create the best cycle cut-off dates to suit your specific needs. For more information on American Express corporate credit cards contact us at 2277 3310.
American Express Small Business Card is designed to help small businesses grow by increasing purchasing power and improving cash flow with zero-interest credit. Our charge card comes without a pre-set spending limit — a tailor-made limit is set according to varies factors: a track record of consistent card usage and payment, along with a solid credit record, creates greater buying power for your small business. Watch the video below to learn how it works.
Alternative solutions to Hong Kong SMEs’ cash flow challenges
How Hong Kong SMEs can get greater transparency over International Payments
Big Buying Power for Small Businesses
Banks and regulatory bodies have been tightening the lending requirements since the global financial crisis. Maintaining a healthy cash flow has become the biggest challenge for small and medium-sized enterprises (SMEs). In the following video, Professor Raymond So, Dean of the School of Continuing Education of the Hong Kong Baptist University and Mr. Stephen Pendergast, Vice President and General Manager of Global Commercial Payments, Hong Kong and Taiwan of American Express have joined together to discuss how Hong Kong SMEs can leverage alternative payment solutions that are more flexible and efficient, to help meet their short term cash flow needs.
Transparency is crucial for companies, especially SMEs, that want to be more efficient. In the following video, Professor Raymond So, Dean of the School of Continuing Education of the Hong Kong Baptist University and Mr. Stephen Pendergast, Vice President and General Manager of Global Commercial Payments, Hong Kong and Taiwan of American Express have joined together to talk about the opportunities for local SMEs to settle international payments with effective payment tool. You can also find out how American Express can give SMEs better control and visibility over their international payments, helping to significantly reduce their costs.
Hong Kong’s small businesses need to improve their cash flow in order to grow
American Express Business Cards provide up to 51 days of credit
Our cards come without preset limits and they include valuable rewards program
Hong Kong’s small independent business owners have run into a brick wall in their search for the extra cash flow that is so crucial to running and expanding their companies. Getting your bank to extend a line of credit to your business can take up to six months — if they say yes. Lack of cash flow may have robbed you of new business opportunities and increased the stress of operating your own company.
Many small businesses are instead turning to charge cards. Some small business owners simply use their personal credit card for business purposes. That works, but it’s not ideal. Having a charge card in your company’s name is better for your company’s image, and it makes it easier on your accountant when tax season comes around.
American Express Business Cards provide your small company with up to 51-day credit free days1 that can have a significant impact on your company’s cash flow. Our cards are popular among small Hong Kong businesses that need to make big purchases but don’t have the necessary cash flow. American Express increases their purchasing power, which in turn allows them to operate more freely during peak demand seasons and expand their business.
Our clients include antique or art dealers that make large auction purchases in foreign currencies in addition to considerable international travel — all of which can be paid for using their American Express. Other small businesses include restaurants and retail shops that place large orders to keep their shelves stocked. We’ve also seen our cards benefit new businesses, allowing them to quickly ramp up production or distribution without having to worry about cash flow. However, companies must have two years of trading records in order to be eligible for the card.
One of the key features of American Express Business Cards is that there is no preset spending limit2. We extend credit to you based on your spending and payment behaviors, so if you make big purchases and always your full bill pay on time, there is no limit to the impact our cards can have on your business.
Another benefit is our rewards program, which usually benefit the business owner directly. As an owner, you can also collect rewards on cards issued to your employees, enhancing the benefits of our payment solution.
American Express offers a range of cards suitable for small Hong Kong businesses, each with unique rewards programs, credit offerings and other services.
Contact us at 2277 3310 or CLICK HERE to find out which payment solution best suits your business needs.
1 - Actual credit-free period will vary based on the date of charge and the billing cycle cut-off date
2 - No pre-set spending limit does not mean unlimited spending. Your purchases are approved based on a variety of factors, including current spending patterns, your payment history, credit records and financial resources known to us.
How SMEs can save money and boost transparency for international supplier payments
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5 Advantages of a business card:
How small businesses benefit when they graduate to a commercial payment solution
International payments can be complex, and transparency is essential for efficiency, especially for SMEs. American Express can help SMEs have better control and visibility over their international payments while significantly reducing their administrative costs.
"Hong Kong SMEs conduct a large proportion of business outside of Hong Kong. With a high number of foreign currency transactions, it can be difficult and time-consuming for business to deal with all the administrative and regulatory hurdles.
“Traditional banking methods mean high handling charges and lots of paper work. There are options in the market to help SMEs reduce costs,” said Professor Raymond So Wai-man, Dean of the School of Continuing Education at the Hong Kong Baptist University.
Advanced payment solutions improve not only cost efficiency, but also streamline the administrative efforts for companies. This is especially important for SMEs when they are relatively having tighter resources and manpower — but so far Hong Kong SMEs are hanging onto their old ways.
"American Express commissioned East & Partners to conduct a survey of Hong Kong business on their cross border payment practices to Mainland China suppliers. The survey, titled “Navigating China’s Cross-Border Payments”*, found that companies are still clinging to traditional payment methods for cross-border transactions, with telegraphic transfers (89%), cheques (67%) and bankers draft (61%) being most popular.
The lack of flexibility and transparency of these traditional payments can hinder a company’s cash flow. There are alternatives in the market readily available to solve these problems for SMEs – such as digitized commercial payment solutions.
“There’s a generational hand-over occurring in Hong Kong SMEs, and the younger generation taking over these businesses can see right away that cheques or wire transfers are not the most efficient way to make payments,” said Professor So. “They know that electronic payments drive transparency and better enable regulatory compliance; and they’re more efficient.”"
"The ‘Navigating China’s Cross-Border Payments’ survey found that almost 64% of SMEs still use manual communication methods such as fax and hard copy invoices in the payment approval process, while larger companies are rapidly embracing more technologically advanced internet-based payment solutions.
A global commercial payment service provider like American Express, can give SMEs better control and visibility over their international payments.
“In fact, there are already alternative payment solutions available to SMEs. Working with American Express, SMEs can get even greater advantages by tapping into our global network and unparalleled product solutions,” said Mr. Stephen Pendergast, Vice President and General Manager of Global Commercial Payments for Hong Kong and Taiwan at American Express.
“American Express offers a robust suite of international payment solutions that allows companies to save on expensive foreign exchange charges, and gain greater savings for their businesses when making regular payments to overseas suppliers.” continued Mr. Pendergast.
* The ‘Navigating China’s Cross-Border Payments’ survey was executed for American Express International, Inc. in Hong Kong by East & Partners Asia. The survey, included in-person or over-the-telephone interviews, was conducted in December 2016 with 454 Hong Kong enterprises with annual revenues between US$2 million to $120 million."
The imperative in 21st-century business is to act quickly, whether in adopting new technology, dealing with customer enquiries or seizing new opportunities. But speed has to be accompanied by accountability and control.
As Adil Husain, managing director of Asia-based business consultancy Emerging Strategy explains, corporate cards have become a key tool for companies to retain visibility of employee spending. He says, “In business culture in most parts of Asia, entertainment is a big expense category, so employers have been looking for ways to gain transparency and a better handle on what employees are engaged in. That has driven adoption of corporate cards.”
The Chinese government is also keen to promote the use of corporate cards in order to minimise corruption and increase transparency and compliance. In December 2011, the Chinese authorities announced that cash could no longer be used to pay for a wide range of government expenses, including travel payments, conference fees and “official hospitality.”
The Ministry of Finance argued that corporate cards “can boost fiscal transparency, contribute to anticorruption efforts, eliminate fraud and tighten financial control,” according to Emerging Strategy’s 2013 paper “Government Use of Credit Cards in China,” authored by Mr. Husain. “Government use of corporate cards is at the forefront of the development of China’s corporate bank-card industry, since it promotes the use of non-cash payment instruments, reduced cash handling and more transparent and accountable financial transactions,” says Mr. Husain.
Click here to download the full article brought to you by American Express and Wall Street Journal Custom Studios.
Many small Hong Kong businesses use personal credit cards rather than graduating to a commercial payment solution. However, American Express commercial payment solutions are suitable for all businesses, big and small, and they have significant advantages over a personal payment card.
You are the founder of a small business, and your personal American Express card has played a big role in your start-up. It’s a source of easy credit, makes international payments a simple task, and the rewards have helped you travel around the world to secure new clients, suppliers and build your business networks.
But now your company has reached a critical point of growth. You’ve hired more employees, you no longer do your accounting at the kitchen table, and you are embarking upon an ambitious expansion plan. Your employees are using their own personal credit cards for business, and the out of pocket claims are a burden on them. The growing volume of business demands higher credit limits. Still, you’ve never considered a commercial payment solution because you always thought they were only available to large corporations.
American Express commercial payment solutions are as well suited for small businesses as they are for large ones, creating better value, efficiency and control over spending that can help your company reach the next level.
Our payment solution portal @ Work® includes a powerful suite of data on your company’s spending habits. You can use that data to make your operations more efficient. This information also strengthens your bargaining position when you negotiate deals with regular suppliers, hotels, etc. @ Work also provides transparency on each transaction, giving you better control over your growing business.
Your company has grown beyond your personal financial liability, and therefore it no longer makes sense for you to personally carry the liability for card payments made on behalf of the business. A business card provides corporate liability or combined liability, where your employees are held liable for non-authorised purchases, creating greater security for you, your employees and your business.
We help small businesses grow by providing the short-term credit they need to meet cash flow requirements. As your company grows, so do your credit limit, and our business card grants much higher credit limits than personal cards do. It provides up to 51 days* of free credit, based on the unique billing cycles that you can dictate.
* Actual credit-free period will vary based on the date of charge and the billing cycle cut-off date.
It also provides greater flexibility in how you can use the rewards points earned with every purchase. With the American Express business card you can use your points to build loyalty with regular suppliers, hotels and your travel management company, helping you to grow.
American Express commercial account managers are experts on small business management in Hong Kong. They understand your challenges, and can help you find ways to improve your business processes. Our account managers are always available to provide a solution to your business needs.
Mid-sized companies are struggling to find the short term credit they need to maintain cash flow and grow their businesses. Whether it’s filling a big customer order with a factory in Mainland China or importing the products you need to keep your retail business at full capacity, short term credit is crucial to business.
Tight lending market has created cash-flow problems for Hong Kong companies
There are many alternative sources of working capital, each with unique benefits and costs
American Express Corporate Card Programme offer up to 51 days of interest-free credit
Cash-flow is regularly undermined by common business challenges, such as outstanding and overdue invoices or inefficient and costly payment systems. However, most businesses will cite Hong Kong’s tight bank-lending market when they talk about their cash flow woes. For many mid-sized businesses, obtaining a bank loan remains difficult, costly and time-consuming. The regular forms of short-term credit, such unsecured loans, asset-conversion, revolving lines of credit, bridge and term financing have all become harder to obtain.
Recent years have seen a wave of efficiency enhancements among Hong Kong businesses as they scramble to improve cash flow. These include trimming operating costs, chasing late payments and negotiating new payment terms with vendors.
Their next avenue of help is alternative sources of working capital, all of which come with benefits and draw backs. Here’s a breakdown of the options available to businesses who need more working capital. Download the full table to understand the detailed pros and cons of each options available.
Many Hong Kong companies see dramatic seasonal swings in their business, from a dip in production during Lunar New Year to a spike in demand just ahead of Christmas. Perhaps you are a travel agency that sees the most in demand for your services during the summer holiday season, or your product targets to a niche market that is only active for a few months a year.
Tight cash flow means Hong Kong companies struggle to find working capital during peak trade season
Study your cash flow history to identify and quantify your seasonal trends
American Express’ corporate program provides up to 51 days of credit on purchases made with our cards
Each rise and fall in activity has a closely correlated impact on your cash flow that can make month-to-month operations a nightmare. Manufacturing and shipping products to Europe or North America can take months, which means you may be ordering supplies just when cash flow is at its lowest. Combine that with investing in your growth, meeting unexpected capital costs and coping with an unpredictable foreign exchange market and your company may be facing serious cash flow challenges.
Seasonalities usually impact both your revenues and your costs. You place big orders ahead of peak season, draining your cash reserves, but your payday, when it comes, is significant, pushing aside all cash flow concerns until the next season. These extreme swings in cash flow are detrimental to your company’s long-term growth and operations, and they need to be addressed.
The first step is to closely examine your cash flow history and then identify and quantify your seasonal trends. Do some peak seasons hurt your cash flow more than others? How predictable is the timing of these changes? It’s important to have a full picture, with all the metrics you can generate, to find an effective solution. Taking a hard look at the past is often the best way to predict the future.
You must also find internal ways to increase cash flow during your low season, which can be done with discounts to increase sales or incentives to encourage early payment. Look at all the stages of your cash flow, from receivables to payables and inventory, and identify all inefficiencies and potential sources of cash flow.Identify which expenditures can be better timed to more closely match your cash flow seasonalities.
Look at your working capital holistically including all of your finance options, from banks to credit cards, billing cycles to invoice habits. How fast after a sale do you issue your invoice? Just as timing is at the root of your problem, it can also be the source of a solution. Familiarise yourself with the billing terms of your credit cards and your supplier’s billing cycles. Initiatives on adjusting billing cycles, customer terms and prepayment amounts can go a long way to addressing your problems.
Managing your company’s cash flow in a seasonal industry is a task that is just as important when cash flow is high than when it is low. Do not ignore or push this issue aside with a temporary emergency has past. The best time to solve these problems is when you are not under extreme pressure to do so.
Bank loans and credit lines can help, but in today’s tight lending market mid-sized companies may struggle to get the help they need from the banking industry. Such facilitates can also take considerable time to arrange, and put a strain on your balance sheet once you have them.
American Express’ corporate program is another solution. We provide up to 51 days of credit on purchases made with our cards, allowing you to stock up on inventory ahead of predicted high demand. We also provide corporates with billing cycle options that can help you juggle seasonal fluctuations in your business.
The American Express Corporate Card Programme helps small companies grow by providing short-term credit and cash flow when they need it most. Our international payment solution gives small companies global reach, allowing them to source materials in multiple currencies with ease.
JustGreen is Hong Kong’s largest chain of healthy lifestyle convenience stores, and it has ambitious growth plans. It offers a carefully curated selection of more than 10,000 food products, creating a one-stop shop for heath-oriented products. JustGreen’s suppliers are spread around the globe, creating the need for an efficient payment solution to deal with multiple currencies in an automated, transparent manner. Strong demand for its products has created new opportunities, but expansion requires additional cash flow and short term credit.
JustGreen has accepted American Express at its shops from the very beginning, and later on it took a step up to adopt the card as its primary business-to-business payment solution. Now JustGreen pays international suppliers with American Express, and the card’s flexible statement billing options have helped maximise cash flow. This has allowed the company to capitalise on new growth opportunities.
The American Express Corporate Card Programme helps small companies make foreign currency transactions with greater efficiency and simplicity. When they use our online account management tool, American Express @ WorkSM, they gain better visibility over spending and accounts, further improving their businesses.
9GAG is one of the world’s most popular social entertainment platforms where users generate and share humorous content. They make regular investments in web hosting servers and software, and most of these transactions are with overseas companies, conducted in foreign currencies. That resulted in increased operational complexity and high foreign exchange costs
Although 9GAG is known for their humorous content, they are very professional and serious in improving their business, so they asked American Express for help. They implemented the American Express Corporate Card Programme for all of their overseas payments, which reduced their transaction and foreign exchange costs. Adopting American Express @WorkSM streamlined their payment processing, allowing the accounting team to focus on the more important task of growing the business. Now the company can make overseas payments quickly and economically while enjoying an efficient and transparent processing of all card payments.
American Express Corporate Cards can change how mid-sized companies do business by strengthening their purchasing power. Our cards can improve cash flow while delivering a multitude of other benefits and rewards.
Continental Global Services Limited & Buyippee, one of Hong Kong’s pioneering e-commerce companies, sources products from around the world and makes most of its payments in foreign currencies. Banks were unwilling to offer Continental suitable credit, making it hard for company founder Mr. Stanley Lee to expand his business or deal with contingencies.
Mr. Lee asked American Express for a payment solution that could handle international payments in a timely and cost-effective way and provide the credit his company needs for pre-payment services. American Express provided Continental with a corporate card solution to pay their individual overseas suppliers directly without incurring prohibitive foreign exchange charges while enjoying our 51-day credit-free payment terms.