Blog Post 3

Biggest changes coming to business credit cards in 2021

11 May 2021

Everyone knows the story: small businesses need access to credit to support business growth. The problem is, the banks aren’t coming to the party. Not for SMEs. Take corporate credit cards for example. Firstly, applying for a corporate credit card is inherently flawed. Business owner goes to the bank branch. Needs to be identified, as do their directors. Needs to supply bank statements for assessment. Beneficial owners also are required to be identified and screened, often on paper-based forms Bank takes weeks (or even months) with the process. Business owner gets a call: approved subject to personal guarantee over the debt. Business owner deems the process too hard; walks away.

What makes matters worse, is that the small business owner was seeking the corporate card to grow their business, not to add additional hours of work reconciling statements. Whether for liquidity or to support their team to spend money and manage expenses, acquiring a corporate credit card was a logical step. Then the bank got in the way.

Over the past few years, we’ve spoken to hundreds of small businesses owners who got started with a view to capitalising on a skill or expertise that they've developed and to have more ‘freedom’. Then, they grow their business to a point where they become victims of their own success: their rapid growth sees an increase in financial admin and need for short-term cash-flow, which ultimately takes them away from focusing on what they’re good at. Often, small business owners see corporate credit cards as a way to simplify financial admin, when in reality this is not the case with the products in-market today.

Why do big banks make it so hard for small businesses?

There’s a couple of reasons for this.

  1. Technology. Banks often don’t have the systems in place for easy onboarding, and to facilitate ‘corporate liability’ cards for small businesses. Commonly, larger banks will only have the systems in place for ‘personal liability’ cards when it comes to small businesses.
  2. Risk. Larger banks don’t make a lot of money on smaller businesses. Larger banks also see small businesses as naturally riskier than their big business clients. It makes sense then that the risk:reward ratio doesn’t quite support big investment in the space (we disagree).
  3. Business model. It is difficult for large banks to support a relationship model for small businesses given there are so many of them. Consequently, small businesses are pushed through poorly maintained automated systems to determine creditworthiness, often resulting in illogical credit decisions.
  4. Laziness. There hasn’t really been any competition in the small business corporate card space, so banks have been pretty comfortable with the processes in place today. Why fix something when your customers have no choice and can’t walk away?

What’s changing?

There’s huge change coming to the small business credit card space. As we’ve established, small businesses have been crying out for a better solution for decades. No doubt, what is on the market today doesn’t help small business owners - it only makes their lives harder.

Businesses like Archa are jumping on this opportunity to help small business owners grow faster, and get time back in their day. We want business owners to be able to focus on what they do best: running their business. The financial administrative overhead created by banks is absolutely massive, and importantly, it’s preventable.

When surveyed, almost two thirds of small business owners named collecting receipts and reconciling transactions as the most time consuming administrative task they deal with. Beyond collecting receipts and reconciling, there’s issuing cards, approving expenditure, monitoring accounts, briefing bookkeepers, and general accounting admin.

Archa: Empowering small business owners and their teams

We’ve built a business credit card program from the ground up, designed with a single goal in mind: turn the business credit card into an asset for small business owners, not a liability. To do this, we’ve focussed on a few key principles:

  1. Business credit cards should be easy to access - so we’ve built super fast onboarding and credit assessment. Get assessed, approved and onboarded in a matter of minutes, not weeks.
  2. Credit cards should do more than supply cash - so we’re building a suite of tools around the card program to ensure that business owners get the most out of their time. Think instant card issuance to team members, card controls, dynamic credit limits, automated reporting and integration with cloud accounting software
  3. Pricing should be simple - we’ve priced our product at a fixed fee per user, per month. No more interest rates, penalty fees, or card issuance fees. Why would we charge you to do what our cards are built for? Archa is priced as a fixed subscription fee so that it’s easy to understand, and scalable as your team grows.
  4. As the source of most transactions, business credit cards should help you understand your spending better than before - so we’re providing real-time transaction data, easy to digest analytics, and groundbreaking subscription management technology to not only make your life easier, but give you more control and oversight than ever before. Spend management is not a zero sum game: you can have better oversight and more control while also saving more time. Ultimately, we want to help small businesses grow. Starting a small business is one of the most challenging endeavours in life, so we’re doing everything we can to make sure those owners and operators are supported with great spend management technology. We want business owners to be able to focus on the reason they started their business - the unique skill or expertise that they do better than anyone else. We don’t want growth to be matched by an increase in financial admin. It doesn’t need to be, and on Archa it isn’t.

Join our beta program here to help us on our mission to help small businesses everywhere grow faster, and to give teams more time back in their day.

Some sources:

Smart Company
Inside Small Business

Corporate Credit