Pay your bills with VISA

Tom_35

How many companies are paying their monthly bills with VISA, MasterCard, or Discover? We have been doing this for over 11 years and have used the airline miles to attend conventions, ACCA, ComfortTech, and vacations.

Paul Rohrs was discussing in the Viessmann thread about being able to collect from customers. When I first approached my suppliers, they all said no, as they did not want to lose the percentage of the sale to the card companies. I asked them how many of the contractors ran past the 30, 60, 90 days and ones that didn't pay at all. If they could get their money when due, and pay only 1.5-2%, that was far better than waiting, and waiting, and then???

They thought about it, put it in place, and then started telling all the contractors that they now accepted charge cards. Their receivables went down, cash flow was much better, and they made more money.

What did it do for me? I got 3-4 week cash flow improvements and a slug of miles. We have not paid for an airline ticket in years. Have also used the miles for hotels, car rental. Last year I took care of 2 trips for my pastor and another man to go on a mission trip to Hong Kong---and they got to fly business class (neither had ever flown up front and they were amazed at the comfort).

If you run a business that does a lot of volume, you need to see what the maximum amount of miles you can earn each year. Once you max out (usually 100,000 miles), go to another card. CitiBank and American have a card that I use that has unlimited miles. We generally earn between 800,000 and 1,000,000 miles per year, and work from 6 different cards.

Do NOT let the statements run past the due date. The interest rate will eat up what you have earned quickly.

Using charge cards helps the suppliers and the contractors win.

Tom A.

Jimmy Gillies

Ton of bricks.

Tom,
What does the IRS think of this? here in the UK 'Inland Revenue' would jump on you like a 'ton of bricks'.
I remember a number of years ago, one of our suppliers would give away Air Miles, but the UK 'IR' put a stop to it.

Who was it that said? ''the only thing you can be sure of is tax and death''
Regards.
Jimmy Gillies Scotland.

Leo G_99

Jimmy,

here in Canada, the companies that "gift" get away with it by including a statement that all applicable taxes are up to the user to pay. Sp far, our governments have not made a big deal of it yet.

Leo G

Jimmy Gillies

Cheap suit.

Yes Leo,
That may also be the case here? but Inspectors here are all over us like a 'cheap suit'.
Our employees can't even take a van home, as that's deemed to be a perk (that you pay tax on ofcourse).
I think all the tax we pay here in UK is due to our 'safety net' society. Please don't get me wrong, I'm very much in favor of helping my fellow man..........but working from January until June just to pay tax, that hurts!!
Thanks for reading.
Jimmy Gillies.

hydronicsmike

wouldn't surprise me, having to pay...

Income Tax on Air Miles in Europe. They pay for Rain Water.
How long will it be before we have to (maybe already have to, don't know)??

Mike

eleft_4

Tax everything

Hey,

535 notable, I can get away with anything comb-over dapper self serving out of touch elected officials, vote them selves a raise as the most important issue concerning our nations business first and as quick as they finished the Pledge of Allegiance.

Because they can!!! wonder why taxes are such an issue?

Are the foxes guarding the Hen house?

al

Jack Ennis Martin

Visa to pay wholesalers

This is a timely topic for us in Manitoba. Some of the biggest contractors here have issued thier employees credit cards for the purchase of material. It would seem that the idea "caught on" due to two reasons { I am sure there are more]. The first one was that the serviceman did not have to phone the shop for a order number for each and every purchase and it effectively did away with " extras for the home renovations ". The card by its nature requires each and every item purchased to be recorded. Each card is dedicated to one person and no one else. So, you cannot slip in some extras for personal use as everything is recorded and you have to sign for the purchase. I have talked to some of the service people who have this system and they really like it. The perception is that you have in effect more freedom from the shop and it speeds up the wholesale purchasing.I realize we all like to have a coffee and conversation when time permits:but, when you have a call at the end of the day and you want to finish up and call it quits it speeds up material purchasing time --especailly if the person who issues the order numbers has gone home for the day.
Jack Ennis Martin

Tom_35

VISA remarks

Jimmy, when we first started doing this, I asked the CPA firm that does our year end audits about the tax consequences. That said that there were none, so we have never shown anything on our tax forms when we were completing our year end numbers.

Concerning issuing cards to techs, we don't do it that way. We issue the PO# for materials needed and go through our billing period exactly as we would if we were going to cut a check for payment. On the 10th of the month, we fax a re-cap sheet to the supplier for the amount due, less the discount for paying by the 10th, and the supplier then enters it into their system and gets their money.

If the card is hit when the tech makes the initial purchase, you don't get as much float on your money, as it is being processed on the day of the purchase as opposed to the end of the month.

All of the card companies have areas that you can donate your miles to people that need flights for medical reasons, missions, etc, so I think that it would really open up a can of worms trying to decypher which miles were deductible and which ones were taxable. The IRS has enought troubles now as it is.

Start doing this now and you can have your ISH trips free in the future.

Tom A

Robert O'Connor_7

Beatles....

Be thankful I don't take it all.........TAX-MAN!...Robert O'Connor/NJ

Boiler Guy

Jack

I agree using a CC can improve a tech's effectivness if they have the inclination to make it work for them. However it does require some objective training in procedures and a willingness of management to trust and support their employees. I've been on both sides of the issue and like the added freedom of using a CC. I have also dealt with a control freak that insisted on using a cumbersome parralel policy because he felt he couldn't trust his staff. I still have my card but use it very little just for that reason. Can you spell COUNTER PRODUCTIVE ! MHO

Wethead7

Credit Card

We currently issue a CC to all service personel. The construction staff have some, but not all the staff. We have a open book system with our service staff{constructin also but more limited}. The openness results in the tech's giving each other hard times for low profit, no profit, a loss, poor service, call back's, and low production. The trusting of tech's with a CC is part of the program, if we can not trust them with a CC, should we be trusrting them with our customers home and lifes. The service side requires us to purchase parts from mant different suppliers. The CC alllows us to not have thirty or fourty different suppler statements at the end of the month. The office staff has enough stuff to do, without checking each item on multiable invoices in five 5 days. The CC aloows us to space them out over time. The CC statment are internet accessable. We can balance each account when it is a good time for us. The float on the money is not an issue for us. The limited number of accounts that are not pay at time of service make float not inportant to us. The part are purchased, billed , and collected on the same day.

Mike

S Ebels

Not to mention the fact.........

You can write one check instead of 100, thereby vastly reducing the labor, postage and materials required to handle your AP.

Jimmy Gillies

Thanks Tom

You know it's funny, but a lot of our purchases are now with CC to mail order/on-line suppliers. Perhaps it's the way things will go? But I'm a wee bit concerned as to what will happen to all these trade counters, that we all visit for a cup of tea/coffee and a chat. I think they are real people that need our continued support.

Thanks again Tom and all, the posts have been very informative.

Kind regards.
Jimmy Gillies.

Tom_35

Jimmy,

Jimmy,

Over 90% of our purchases are still with local suppliers, and with using the credit cards. We use places like Office Depot for our office supplies, but for materials for jobs, it's the local guys.

Believe me, they like the credit card payment. We've always paid our bills by the 10th, but a large percentage of the contractors didn't. Now our suppliers don't really care if those guys are 30-90 days with the card companies---because they have their money.

Tom

Dale

Cards

We went to cards about 5 years ago because it cost an average of $12 to process a PO. The only pain is keeping track of when state taxes need to be paid.

Jimmy Gillies

Tom.

I'm sure your suppliers like the CC payments, it must save them a fortune in credit control alone. I agree with you it looks like the way to go.
I have a pal who is the sales director with one of our big suppliers. I'm going to talk to him about your post and mail order sales - which I'm sure would reduce their overheads.
Thanks very much for all your info.
Kind regards.
Jimmy.

Paul Rohrs_2

Cash Sale Account

Out of 1100 accounts, our "Cash Sale" account is #8. We do use it to the best of our ability. Also, it is still contractor only here, so don't think we are servicing some weekend warriors with that account.

On HotRods advice, I am looking into organizing a "business basics" course and working with my city inspectors and codes office to see if I can get that qualified as "Continuing Education" hours which they need each year to renew their masters liscence.

Great Thread.

Regards,

PR