Improve year-end cash flow using your commercial card

Wrapping up a year of fast growth may bring concerns about runway—a critical metric for venture-backed companies and PE-backed firms. While you wait on customer receivables, you'll want cash flow strategies to meet immediate needs. Your commercial card can be a valuable lever to improve year-end cash management.

Use card float as a funding bridge for year-end cash flow optimization

If your commercial card offers extended payment terms, you can take advantage of that float. For example, SVB gives clients an additional 25 days to pay the card balance. It’s a key opportunity to shift vendors paid by check or ACH to accept your card. For a growth-stage company spending $500K each month, having up to 55-day payment terms (instead of the usual 30) could mean having an extra month of $500K in available runway.

This approach repositions your Days Payable Outstanding (DPO) from just an Accounts Payable (AP) operations metric into a cash management strategy to optimize your monthly burn rate. It doesn’t change how much you’re spending overall. But we’ve seen clients extend DPO from 30 to 55 days, with a nice lift in their average monthly cash balance. It can help put you in a stronger position to close out this year and head into the next.

Negotiate better payment terms with vendor virtual cards

Issuing customized virtual cards for specific vendors makes it easier to track, control and reconcile that spend. This commercial card strategy also serves as a powerful negotiation tool with your vendor relationships and supply chain partners. For instance, you might offer vendors immediate card payment in exchange for a 2-5% discount. They get funds in just a few days instead of waiting 30-45 days. And your company gets the discount, plus the extended float.

This can work well with smaller vendors who benefit most from faster payment. It gives you a two-pronged method to improve year-end cash flow, while strengthening supplier relationships.

Q4 action items for year-end cash flow optimization

1. Conduct a spend analysis. Analyze your card spend and segment vendors by transaction frequency and payment volume to see where you spend the most. Also review high-spend categories and vendors you pay via ACH, check and wire transfers.
2. Prioritize engagement with top-tier suppliers that represent 80% of your spend volume to negotiate early payment discounts (initially target 2-3% savings).
3. Transition vendors paid by check or ACH into your commercial card program to capture float benefits, cash back rewards, and potential discounts.

Increase rewards velocity to improve year-end cash flow

When looking at ways to improve year-end cash management, remember that your corporate card can also be a revenue generator. Card rewards can be redeemed as cash back statement credit. And Q4 is an ideal time to use that benefit to reduce the cost of annual SaaS contracts or stock up on supplies. You could accelerate rewards or revenue share income and boost year-end cash flow.

The Bottom Line: Float buys you time. Virtual cards buy you leverage. Card rewards buy you cash. For year-end cash optimization, these commercial card strategies can give you more power to keep driving growth.

Learn how SVB commercial cards and AI-powered spend management can help technology companies and life sciences firms optimize finances today and for the years ahead.

Frequently Asked Questions

How can commercial cards improve year-end cash flow for growth companies? 

Commercial cards (like the SVB Innovator Card) provide an extra 25 days of payment float, enabling venture-backed companies to defer year-end payments and finish out Q4 in a stronger cash position. Also, shifting Q4 vendor payments from ACH or checks to cards helps further improve cash flow. 

How can virtual cards help us negotiate better payment terms?

Using virtual cards, companies can offer vendors immediate payment in exchange for early-pay discounts. This strategy helps businesses capture year-end expense deductions, lock in vendor discounts, and still manage card float for year-end cash optimization.

How can growth companies manage Q4 expenses to improve year-end runway?

Using commercial cards, fast-growth companies can strategically time large vendor payments for late Q4. For example, pay annual SaaS subscriptions and Q1 inventory orders in November or December. It enables a business to improve year-end cash flow management. At the same time, these card payments generate cash back rewards or revenue share that can benefit the company.