Note: Unfortunately Brex discontinued this offering in mid 2020. Hopefully they will start it again, as it was the best offering for eCommerce companies on the market!
eCommerce companies have some very special requirements. They’re not your usual startup or bootstrapped company. eCommerce companies are buying a ton of inventory on that credit card. They need a high limit. The higher the limit, the more inventory they can buy at one time. That’s helpful to everybody. The other thing they really care about is having a long float, so the best eCommerce credit cards have loooonnngggg float.
Now, float is measured in days. Typically it’s a 30 day float, but sometimes you can get 60 day floats. That’s really helpful because that means you don’t have to pay the balance down in just 30 days; you get an extra month to sell that inventory and get the cash back to pay off the balance. Very, very helpful. Another thing eCommerce companies should care about is having really nice rewards. Unlike many other early-stage companies, eCommerce companies tend to have very high non-personal expenses due to the inventory and online advertising purchases. And so they want to get the rewards that come with that, trips, hotels, airlines, or even cash back. Those can all be very valuable if you’re spending a lot of money on your credit card.
Now, something that’s not as important for an eCommerce company is employee spending limits. Typically, of course, they’re gonna want to have spending limits for some employees. But the vast majority of the credit card spend for an eCommerce company is gonna be on that inventory purchase and some online ad accounts. And so it’s kind of a nice to have instead of a must have. At least that’s our opinion at Kruze Consulting.
So let’s talk about the best credit cards for eCommerce companies. One of the ones we like the most is Brex. And the reason we like Brex is they have a 60 day float for eCommerce companies and their limit is pegged to the total amount of sales the companies do. That range is typically 25 to 50% of sales that are happening in a given month. And the bigger your company and the larger cash balance, obviously the less risky you are, the higher they can go up on that allocation. So an eCommerce company that’s just starting out, not a lot of cash in the bank, they’re probably gonna have a limit. That’s something like 25% of total sales. A big company that’s raised a ton of capital and that looks very safe will be something closer to 50% of sales. That range is actually really important. Brex also has good rewards and it works really well with an accounting system (another reason eCommerce accountants like us love them!) So Brex is a really great credit card for eCommerce companies.
Another one we’ll look at, is Capital One. Now, Capital One it’s not the most fun to work with if you’re an accountant. It’s really hard to get statements, it’s really hard to get integrated into QuickBooks. We don’t know why, it’s a mystery, but it could be a lot better on that front. However, they do have a very generous cash back rewards program. So a lot of eCommerce companies that use Capital One can get up to 2% cash back. Now, just think about that. A typical eCommerce company, it doesn’t have a really high margin. So getting 2% of your total margin back is really, really valuable. Again, it’s not the most fun for us to work with, but those rewards cash back are really, really valuable. However, as we’ve already mentioned, they do put personal liability onto the founder in many cases, so that is a possible deal breaker in our opinion.
Stripe has a really good credit card. Now, Stripes perk is that they give you a rebate on the transaction processing that you’re running through Stripe. So if you’re running revenue or sales through Stripe, you are charged a fee for every credit card and ACH that you run through Stripe. Stripe’s big perk is they actually just rebate you a big percentage of that transaction spend. Now, there’s some limits on that. They only go so high and the rebates only for so long, but it’s a really nice perk, especially if you’re just getting started.
Another credit card to look out for is Amex and Chase, really two credit cards. And I put them together because they’re kind of the old guard and they’re definitely trying to make improvements to their infrastructure. Amex in particular has made some major strides with the American Express Innovators Card, which my team reviews above. Historically, it’s been okay, not great, but Amex and Chase historically had very nice rewards. They partner with a lot of travel, hotel and airline companies. So those are some to look at. Again, there’s other credit cards we prefer more than those, but if you’re really focused on hotel and airline points, then those are the two best ones.
So again, to recap, eCommerce companies have some very special needs. They need a long float, they need a high limit and they really care about the rewards. So we’ve just gone through the best credit cards for eCommerce companies.
