Boston Chauffeur Driven Show
Tuesday, December 10, 2019

TOPIC: What is your percentage of credit card vs. direct bill accounts (including affiliates), and how are you transitioning your customers/affiliates into using credit cards if that’s your goal?

Alan Candeub Our credit card/bill ratio is appropriately 60/40. Of that 60 percent, only 20 percent is charged at trip completion. The balance is paid at a predetermined future time (usually 30-60 days). We are not making a conscious effort to change this policy due to the fact that these are agreed-upon terms.

Alan Candeub, President
Park Avenue Limousine in Philadelphia, Pa.




Raymond Cheng Right now we’re 75 percent credit card and 25 percent direct bill, especially for some of our larger accounts. The trend over the next 12-18 months is for split payments—having multiple credit cards on one ticket. Other industries have adopted it and some corporate travelers prefer it. For our affiliates, we’re all credit cards. I think it offers more flexibility in pending charges and changes during the trip.

Raymond Cheng, President/Co-founder
Black Pearl Transportation in San Francisco, Calif.




Anne Daniells Overall, about 85 percent are on credit card. This is lower than it would be if we were to remove one large affiliate (who pays religiously every 15 days). Without them, it would be close to 99 percent. We prefer that all clients be on credit cards if possible and do not offer terms unless requested. Any client who either pays late consistently or whose volume drops below a certain threshold is asked to go on credit card.

Anne Daniells, President
Torrey Pines Transportation in San Diego, Calif.




Gary Day Large accounts still get billed to a safe discounted rate but most smaller accounts are credit card. We close accounts that are just once or twice a year and ask them to switch to credit card. Overall, credit cards are much cleaner and easier to do on a daily basis, and as guests get points and rewards, they are usually very happy to use them.

Gary Day, President/CEO
American Limousines in Baltimore, Md.




Kim Garner I try to avoid doing direct billing as much as possible. Even though credit card fees can be expensive, from a cash-flow perspective, it’s really nice to get the funds quicker. Right now, 52 percent of our overall revenue was charged via credit card. We do have several shuttle contracts that are large amounts of business and with those accounts we negotiated ACH transfer payment rather than credit card to help offset the lower rate. In fact, when we do have “direct bill” accounts, we try when possible to handle the collection of funds with ACH rather than traditional checks. We also use a lockbox service that any checks are sent to so that collection of funds is secure and fast.

Kim Garner, President/Co-owner
BEST Transportation of St. Louis in St. Louis, Mo.




Tara Grewal At this time our split is very close to 50/50 for credit card versus direct bill. Most affiliates with the exception of a few pay by credit card and almost all new accounts are on credit card. We do have a mix of clients and some will always be direct bill (such as hotels and DMCs) due to volume and preference.

Tara Grewal, Managing Partner
Griffin Transportation Worldwide Chauffeured Services in Vancouver, British Columbia




Matthew Johnston Our ratio is probably 50/50. Direct bill works well for us but we keep receivables under 30 days. If they break the terms, it depends on the client and relationship we have with them how we handle the situation. On the motorcoach side, it’s very common to see prepaid work. We encourage new customers toward using credit cards; affiliates are done on a case-by-case basis, although large affiliates will generally be direct bill while smaller affiliates will provide a credit card.

Matthew Johnston, President
AJL International Worldwide Chauffeured Transportation in Dallas, Texas




Renzo Ormsbee We are about 85 percent credit card and 15 percent direct bill. Credit cards make things quick and easy, especially with cash flow issues, but I’ve never been a fan of paying 3-5 percent fees, which annualizes to more than 35-50 percent interest over waiting for a check for 15-45 days. If you think about it, if you’re running at 10 percent net profit (round numbers), you can increase your profit margin by about 30 percent by reducing credit card fees. There aren’t many areas in the business where you can make that big of a profit impact! With that said, the points are a big plus and clients like and use them, so the cards aren’t going away and will remain a cost of doing business. Personally, with your biggest and most established clients, the best setup is an ACH agreement where the funds are deposited more quickly with a signed credit card authorization agreement as a backup.

Renzo Ormsbee, President
Elite Worldwide Transportation Solutions in Houston, Texas




Fred Rich Our ratio now is probably about 70/30. We’re trying to do more credit cards, especially with affiliates. The problem with having that much in receivables is that American Express will look at your financials and see your scale is way out of line. You’re a higher risk. That’s one of the reasons we were thinking of going to straight credit cards. Even though you’re paying that 3 percent for processing fees, it helps with your cash flow. I’ve mentioned it to a few of my clients and they seem fine with it.

Fred Rich, CEO
Olympus Worldwide Chauffeured Services in Atlanta, Ga.




Marcus Rosen Our direct bill clients represent 14 percent of our revenue. Direct bill accounts are primarily high-volume accounts with centralized billing departments. These accounts are generally fortune 500 companies, government agencies, sports teams, and close affiliates. We work closely with our clients to provide billing that suits their needs and accounting policies. In turn, we have no bad debt and timely payments. Most of our direct bill clients pay by EFT (electronic funds transfer), which is an efficient and timely method for receiving payments. Our affiliate book of business is primarily credit card for both inbound and outbound work; historically affiliate work has been more challenging to deal with for payments. We do, however, have our close circle of affiliates that we frequently work with both ways and for ease and efficiency we have direct bill accounts set up. Unless an account has been set up and fully vetted and approved by management, all other trips are prepay by credit card. With these policies in place, our bad debt line item has gone to virtually zero for the last few years.

Marcus Rosen, Owner
Hamilton Limousine in Hamilton, Ontario




Jason Sharenow Everybody in the business travel world works with credit cards today. Why should we be different? Build that 2 percent—or whatever the percent from credit card processing—into your rate. We’re probably 90/10 (credit card versus direct bill). Unless you have a relationship going back years with us, we will not take a direct bill from an affiliate. You have got to keep the wheels turning with cash flow. I can tell you conversely, though, we just bought a motorcoach company and they are probably 95 percent direct bill and 5 percent credit card. We do get deposits and checks ahead of time, but I’m billing school districts and town rec departments that don’t have credit cards. It’s a whole different world.

Jason Sharenow, COO/Director of Operations
Broadway Elite Chauffeured Services Worldwide in East Hanover, N.J.




Ron Stein We push everyone to use credit cards. That being said, when clientele absolutely needs direct bill we go through the process and allow it. We’re around 60 percent credit card now.

Ron Stein, President
Exclusive Sedan Services in North Hollywood, Calif.




Matthew Strack This is a timely question as it’s something we really feel at this point in our growth cycle.  We currently operate with 60 percent credit card payments and 40 percent direct bill. As we continue to grow our operation, we keep finding ourselves in a position to take on large accounts; however, they require direct billing. We need the cash flow to fuel our expansion of vehicles and infrastructure, so we’ve decided to focus on building market share on retail services such as weddings, nights out, etc. that are primarily credit card users.

Matthew Strack, CEO
Strack Premier Transportation in Los Angeles, Calif.




Barbara White We have direct bill with larger accounts, 30-day net in most cases. These accounts are about 75 percent of our total business with 25 percent payment collected on credit cards, which are pre-authorized 24 hours before service. As our affiliate network expands, I am sure we will see an increase in the credit card percentage.

Barbara White, Managing Director
VIP Transportation Group in Orlando, Fla.




Mike Zappone Our policy is that all affiliates’ work, regardless of volume, and any retail accounts that are billed under x per month are credit card. My reasoning is efficiency: We bill all credit card trips with a single click, no further actions are required, and clients receive receipts automatically. Direct bill accounts require the generation and delivery of an invoice, potentially a follow-up for payment, and a trip to the bank once the check is received. Overall, 99 percent of our accounts are credit card payment and 1 percent are invoiced. Another factor to consider is cash flow. In our company, 50 percent of the trip revenue is paid out within seven days. When on boarding a billed account we evaluate the cash required versus the revenue generated. Lower-margin, high-volume accounts that are invoiced require significant consideration.

Mike Zappone, CEO
All Transportation Network in Newburgh, N.Y.



We’ve loved hearing your answers to our benchmarking questions since debuting this interactive section—but we always welcome suggestions for future topics, too!

Have you wondered how others in the industry have tackled a concern you’re currently facing, handled a delicate issue, implemented a certain policy, or do you simply want to propose a topic for our consideration?

Send an email to rob@chauffeurdriven.com and you just might see your query answered in a future issue. We look forward to your input!


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