Ramp is super interesting for brand builders. Think corporate card meets expense and travel management meets bill.com meets credit products. And sometime later this year they will add banking to the platform.
If you are looking for an alternative to Bill.com, then Ramp should be at the top of your consideration set. But for here, I am going to focus on their charge card and credit products.
Ramp offers a charge card which is pretty standard in terms of how it works. You get a spending limit based on your cash and cash generation - think somewhere in the 10% - 30% range. You spend and then you pay it off 30 days later. This is a traditional statement period card meaning that if you spend on it on the first day of the month, you get a full 30 days of float. But if you spend on Day 29, then that amount is due the next day.
Their bill pay product is also straightforward. As you process payables, you choose the payment method you want to use (i.e. wire, ACH etc) and among those choices is their bill pay. If you choose that option, you then choose if you want to pay Ramp back in 30, 60 or 90 days. They add a 1% fee for each 30 day period. So let’s say you have a $10,000 invoice and you choose 90 days. They add 3% and then you owe $10,300 in 90 days.
This delivers a cost of capital of around 12.7% to 12.9%. Ramp’s pricing is much better than similar products from lenders like Gynger. For example, the Gynger fee for 90 days is around 4.5% resulting in a cost of capital of 19.5% as compared to Ramp’s 3% fee resulting in a cost of capital of 12.7%.
Ramp is a big product and they are trying to win big chunks of your operations. But that breadth has advantages in that they can subsidize their lending products with fees from other parts of the business.
Definitely worth checking out.
Here’s the model I use to compare products:
