Best of both worlds
Rewards programs can make for good business ... and pleasure
As soon as Matt Pierrot established his online custom screen and T-shirt printing business (www.getbold.com), the first order of the day was setting himself up with a business credit card. “I actually started out in the music industry and learned quickly about the importance of having a credit card for business,” says the founder of Bold Merchandise in Vancouver.
Having a business card from the get-go was an obvious choice for a lot of reasons, he says. “I don’t understand why everyone wouldn’t have a business credit card simply because it’s like someone doing your accounting for you for free and takes a lot less time each month. Rather than writing a cheque for every invoice, you have a single account that’s up to date all the time.”
From an accounting standpoint, the biggest advantage for Pierrot is the monthly statement that outlines all his expenditures. “It’s easy to go back and see what I spent and where without having to go through piles of paperwork to find receipts.”
Now that he is in his 13th year of operations, Pierrot has also learned about the added value of a business travel rewards card. That’s why today he uses the RBC Visa Business Platinum Avion in order to get the most out of his credit card purchases.
He estimates he spends about $70,000 a month on the card on average, and uses the points he collects for trips to Hawaii and other rewards.
But trips to Hawaii aren’t the only way he likes to spend his points. “They do accumulate quite quickly. In fact I get more than I can spend personally, so I’ve been able to give many a nice trip to others.” Not only has he cashed in points for international excursions for his own family, he sent one member of his staff
It’s easy to go back and see what I spent and where without having to
go through piles of paperwork
and his wife to Hawaii. At one point he used his points to fly a cash-strapped friend who was nominated for a Juno Award from New York to Toronto to attend the presentation. “The great thing was, they won.”
Trips are just one of several ways employers can use their points. They can be converted into a wide range of perks for employees and customers alike, from merchandise and gift cards to travel and entertainment and more.
In order to maximize rewards and facilitate accounting, Pierrot’s card is tied to his bank account so payments can be transferred quickly. “It helps to have a really good relationship with your bank. If purchases are over the card limit, I can use my line of credit for the balance.”
He is also disciplined when it comes to prompt payment. “Every other day I pay it down to zero. Otherwise carrying a balance won’t help you much. And it’s especially nice knowing you can get a free flight when you do it.”
When used correctly, credit cards can serve as a payment tool as well as a form of finan- cing, says Richard Thomas, head of business credit cards, RBC, in Toronto.
He stresses, however, that businesses should ensure that they maximize the benefits by being strategic with when and how they use them, and always staying current with their payments. They can also be more effective and efficient if they use their points in conjunction with a line of credit.
“A separate business card is a great way to manage cash flow because you have clearly delineated reporting and insight into what you are spending on your business,” he adds. “Having that clear line of sight definitely helps at tax time.”
Cardholders can gain even more advantages on the rewards side by combining their personal and business rewards. One key advantage with points programs like RBC Avion, for example, is that business owners can maintain separate personal and business cards, but are allowed to combine the points into a single, larger pool for redemption.
“It’s a great way to maximize the value of the rewards and very simple to do. And if you carry both, the annual fees are discounted on one of them,” Thomas explains.
Where employees have additional business cards, employers also have the option of applying all points accumulated into a central pool, or allowing individual users to keep them as a company perk.
The more comprehensive the rewards the better, Thomas says. The best programs are those that carry no airline or travel time restrictions, and offer a wide range of redemption options such as merchandise or gift cards.
Ultimately, the flexibility of rewards are what matter most. “Business customers want the same types of experiences as personal card holders: opportunities to earn points and simple redemption options.”