Joshua Kennon

How the American Express Plum Card Helped Revolutionize Mount Olympus Awards

A few days ago, I mentioned in The Importance of Frugality in Building Wealth that one of the ways we were able to save money was by using the American Express plum card at all of my businesses.  The new product offering by American Express, which is probably most famously known for its Black Centurion and Platinum Cards, is completely unique in the financial services industry.  For business owners, the plum card is a truly awesome way to handle accounts payable and cost of goods sold.

Here are the basics of how the American Express plum card program works:

• Once your business is approved, if you spend more than a certain threshold (I believe it’s $5,000 or $10,000 per month), you qualify for 2% cash rebates for early payment on the account balance.  Anything below this is eligible for a 1% cash discount.  That is, if you charged $100,000 to your American Express plum card and paid the bill within a few days after the account statement closed, you would see a 2% cash discount on your next bill, or $2,000 in this case.  It would appear just as if you had made a payment by mailing in a check.  This money works as a reduction of your expenses, effectively earning you the opportunity to lower your cost on everything your business purchases.
• You have another option for your American Express plum card balance: Instead of paying off the balance early and taking the cash discount, you can pay only 10% of the balance and defer the rest for another billing cycle.
• You get access to the American Express OPEN forum for business owners, where you can connect with other business owners in the same situation, get advice based upon their experience, and share feedback about ideas.

The Two Ways Using the American Express Plum Card Can Drastically Improve Your Business

Managed well, the American Express Plum Card program can drastically improve your business in one of two ways depending upon if you want to maximize profits or cash flow:

1. Plum Card Profit Scenario: You buy $100,000 worth of inventory from a vendor, who gives you 30 day terms but a 2% discount if you pay early.  You pay early, and thus save $2,000 for a net charge of $98,000 to your American Express plum card.  You then get your plum card bill and pay early on it, saving an additional 2% of the $98,000 you charged, or $1,960.  Thus, for the $100,000 in wholesale inventory you acquired, it only cost you $96,040.  You saved $3,960 simply because of how you paid for your merchandise.

2. Plum Card Cash Flow Scenario: You buy $100,000 worth of inventory from a vendor, who gives you 30 day terms.  You decide to push the bill to the end of the 30 days, giving you time to get the merchandise in your store and selling it.  You then pay the bill using your American Express plum card, earning up to an additional 30 days before the statement balance is due if you time it correctly.  When the statement comes, you choose a 10% payment, or $10,000, and defer the remaining payment for an additional 30 days until the next plum card statement date.  At that time, you pay the remaining $90,000 balance.  The key, though, is that you got to keep the inventory in your store for nearly 90 days, giving you the opportunity to sell it all and pay the bill without tying up any of your own money.

Personally, I tend to use the plum card mostly for the profit scenario.  I like the early pay discount, but this is a function of the fact that most of our online businesses already collect payment up front so we already have the cash to pay the bill when we charge anything to the card.

With the American Express Plum Card Program, Is the American Express Platinum Card Still Worth Having?

Due to the substantial benefits of the plum card program, you cannot earn American Express reward points for charges to your plum card.  The plum card also doesn’t offer the travel and other “perks” of the Platinum or Centurion cards (that’s why we still use both types at my companies, for different purchasing needs).

At Mount Olympus Awards, one of the nation’s leading letterman jacket companies, we still use an array of the American Express plum cards, platinum cards, and gold cards.  We also have personal American Express cards as the owners.  I haven’t yet, and don’t plan on, giving this up for convenience reasons.  For instance, a few months ago, Aaron and I were traveling through Ohio in the middle of the night, driving through an area we didn’t know, and didn’t want to have to search for a hotel.  As we closed in on Dayton, we called the concierge for the American Express Platinum customers, explained what we needed, and within a few minutes, she had booked a room at a Marriott for us, had the keys waiting behind the desk so we wouldn’t even have to deal with the whole check-in routine, and had the staff waiting for us so when we pulled up, they would be able to take care of anything we needed.  Sure enough, we pull into the hotel, they knew who we were, and within a few seconds, we were on our way upstairs.

Another time, we had a massive tire blowout on the highway.  The American Express Platinum concierge had a tow truck delivered as part of our built-in roadside assistance coverage, took the car to a Bridgestone, and we were completely repaired and replaced within a few hours.  None of these benefits were possible with the American Express plum card.  That’s why we still use both (not to mention the huge bonus points we have accrued over the years through the Platinum program, if we ever get around to using them).

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