Background
The American Express Company is the leading card issuer in the world based on its volume of different card categories. Such categories of cards encompass corporate cards, small business cards, prepaid cards, and personal cards. These cards have smoothened the payment for traveling, expense management solutions, and buying or selling of goods and services. Despite the company’s name suggestion of only operating within the United States, this is not the case because American Express is a global or multinational company.The company has more than 59,000 employees (Owler, n.d.) . In fact, it is among the largest organizations that boost a large employee base.
Products and Services
The main activity undertaken by the company encompasses the processing of millions of transactions on a daily basis. Ideally, it acts as a premium network for those card members with high expenditures, helps in the expansion of small businesses by facilitating their purchasing power, provides expertise and commercial payment platforms for companies that wish to control their expenditure or save, and delivers marketing information to assist investors in decision making. Also, American Express provides merchants with various solutions and abilities that facilitate virtual and safe mobile and digital payments (Editorial, 2018) . The company, therefore, handles a lot of daily transactions with help of technology.
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Supply Chain
American Express announced in 2018 that it had launched the Early Pay supply chain which is a financial and discounting solution. The company indicated that this supply chain can enable eligible large companies in the U.S to smoothen their supplier payment process, create working capital and increase cash. On the other hand, the suppliers can conveniently utilize the easy-to-use digital platforms that facilitate the earlier payment of their eligible invoices (American Express, 2018). These payments are made on earlier dates than the original payment dates hence constituting the reasonably-priced early payment discount.
This supply chain works efficiently because of the financial support from American Express. Ideally, the company can finance the early discounted payments to the supplier on behalf of the buyer, hence enabling the buyer to maintain his or her payment terms, meet the working capital requirements, increase the flow of cash and minimize the costs of services and goods sold (MarketWatch, 2018). In return, the buyer will pay American Express on the original payment day. Early pay doesn’t charge setup fees, maintenance charges or implementation fees from the buyers who enroll for this option. The supply chain only allows buyers to select the manner in which they want to make early discounted payments to the suppliers during the implementation process. On the other hand, buyers can select the self-funded option (Aboutamericaexpress, n.d.). This option allows them to personally fund the early discounted payments to the suppliers. This option, thus, allows the buyers because they capitalize on the discounts and minimize the cost of services and goods sold. This early pay supply chain, therefore, is flexible enough because whether the buyers self-fund or the company funds on their behalf, they will still benefit from the early discounted payments.
This supply chain benefits the suppliers alike. Notably. Many suppliers are mid-sized or small firms with the critical challenge of inadequate working capital for running and expanding the business. Early Pay provides a simple digital solution to this problem by enabling the suppliers to choose from the offers available at the company on payment terms. Such terms may include the best payment time that will allow them to earn a discount with the main objective of lowering costs and improving the cash flow of their businesses. The suppliers can select the early payment day on which the payment is wired to their accounts by either the American Express or the buyer based on the instructions of the buyer. Another critical advantage of this supply chain involves the unavailability of signing extensive paperwork. Besides, there is neither payment of enrollment fee nor the requirement of being the company’s card-accepting merchant.
The Flow
First, there is the flow of goods or services from the suppliers to the buyers. After that, the flow of cash is determined by the Early Pay supply chain initiated by the American Express company. The two options of this supply chain which encompass the American Express funded and the buyer self-funded option determine how the finances reach the suppliers. In the American Express funded option, the cash flows from the company to the suppliers on an early payment date. Then, on the intended original date of payment, the cash will flow from the buyer to the company to pay the company for having made earlier discounted payments to the suppliers on behalf of the buyer ( PYMNTS, 2018 ). On the other hand, the second option involves the cash flowing from the buyer to the company then to the suppliers on the early day of payment.
Future Improvement
The company intends to launch an improved digital application for the customers with a preapproved loan offers of up to two-hundred and fifty thousand U.S dollars. This application will be completely digital. Also, the loans will be approved with a short time to facilitate the issuance of funds within the same business day.
Conclusion
The American Express Company is the leading card issuer in the world based on its volume of different card categories. In 2018 the company launched the Early Pay supply chain which is a financial and discounting solution that benefits both the suppliers and buyers. The flow summary involves the cash flow from the buyers through the company to the suppliers based on the two options provided by the Early Pay supply chain.
References
Aboutamericaexpress. American Express Early Pay Offers Flexible, Cost-Effective Supplier Payment Options | American Express. Retrieved 1 December 2019, from https://about.americanexpress.com/press-release/business-cards-solutions/american-express-early-pay-offers-flexible-cost-effective
American Express. (2018). American Express takes on supply chain finance bottlenecks with EarlyPay. Retrieved 1 December 2019, from https://www.finextra.com/pressarticle/75849/american-express-takes-on-supply-chain-finance-bottlenecks-with-earlypay
Editorial, R. (2018). AXP - American Express Company Profile | Reuters. Retrieved 1 December 2019, from https://www.reuters.com/companies/AXP
MarketWatch. (2018). American Express Early Pay Offers Flexible, Cost-Effective Supplier Payment Options. Retrieved 1 December 2019, from https://www.marketwatch.com/press-release/american-express-early-pay-offers-flexible-cost-effective-supplier-payment-options-2018-10-11
Owler. American Express's Competitors, Revenue, Number of Employees, Funding and Acquisitions. Retrieved 1 December 2019, from https://www.owler.com/company/americanexpress
PYMNTS. (2018). American Express Launches Early Pay | PYMNTS.com. Retrieved 1 December 2019, from https://www.pymnts.com/news/b2b-payments/2018/american-express-early-pay-buyer-supplier-invoice-discount/
