Barclays' new SMB perk offers cash flow, not rewards

Barclays has introduced an small and midsize business credit card with a very targeted perk: It extends the interest-free credit periods up to 116 days for payments made at popular trade retailers Travis Perkins and Toolstation.

By providing SMBs more time to collect payments, it eases their cash flow problems, giving SMBs more time to pay their invoices and expenses without incurring any financial penalties.

Luke MacGregor/Bloomberg

However, this product may also allow cash flow problems to go undetected for longer as debt piles up.

Is this the start of a new payment trend?

Last year, Barclaycard US and Uber launched a co-branded credit card. Rather than being focused on small business, it was directed at millennials. The card boasted rewards for purchases at restaurants, hotels and (of course) Uber rides.

“Demand has been really strong, particularly from the most loyal Uber riders,” Denny Nealon, Barclays’ head of U.S. partnerships, told PaymentsSource in May. “Uber is an app-driven business model, and that approach doesn’t work for a lot of other brands, so whether we try this elsewhere will depend on the partner."

Note that Barclaycard is not the first global financial body to commit to a co-branded business credit card. In June, American Express announced plans to launch a co-branded Amazon business credit card.

At the time of the announcement, both American Express and Amazon recorded an uptick in share valuation, though current volatility in the market has blurred subsequent market speculations.

The Barclays SMB card focuses on Travis Perkins and Toolstation, two strong brands in the trades and home improvement sector.

Travis Perkins plc is a U.K. builders' merchant and home improvement retailer, running 1,900 outlets across the United Kingdom and Ireland. Toolstation is U.K. supplier of tools, accessories and building supplies to tradespeople, home improvers and self-builders, with customers buying online or in one of hundreds of branches.

This co-branded card also can be used as a normal business credit card to make any purchase, though note that Barclaycard currently limits the interest-free payback period to 56 days.

This co-branded card's long interest-free period extends past the calendar quarter of three months, providing much appreciated breathing space for SMBs that may be experiencing cash flow difficulties.

In a recent Barclaycard survey, 20% of small businesses cited cash flow as one of their biggest day-to-day obstacles to business growth.

As more products like these come to market, the incentives are likely to vary, depending on the sector and the target audience within that sector. Other possible perks include analytics, discounts, points and longer interest-free payment periods.