Lancer Insurance
Friday, May 24, 2024

You asked for it and we listened. In this column, we ask operators of all sizes and from all walks of the industry a question about their business and report their answers so you can assess how your own company compares to your peers. If you would like to participate, please email Rob Smentek at for next issue’s question.

TOPIC: In the past five years, what percentage of your business has shifted from billing vs prepaid? What steps have you taken to transition your clients from billing to prepay/credit cards? Have you faced any hurdles or challenges?  For clients that are still paying via billing, what terms do you offer (e.g., net 30, net 60, etc.)?

Michael Callahan Over the past few years, we have successfully transitioned almost all of our accounts to credit card with little to no pushback from the client. Currently, we have less than 10 percent of our annual revenue coming from direct-bill clients. In the process, we found that almost all of the accounts preferred to have trips billed daily to the passenger’s credit card or a company card so that they could later expense the charges back to the company. From the feedback we’ve received in the process, they actually prefer it that way, as it allowed for better controls on their end.  For the handful of direct-bill accounts that remain, we bill them on the 1st and 15th of every month with 30-day terms.
Michael Callahan, President
Able Limousine in Hopkinton, Mass.

Mark DiChiara Over the years, we have transitioned to credit cards as our preferred payment method. Currently 80 percent of payments are made via credit card. The clients that remain as direct billing are given terms of net 30 day. This has been a slow transition, and the clients that remain as direct bill are grandfathered. New accounts are set up as credit card accounts, and we really have not experienced any resistance. As a matter of fact, I feel that most clients—both corporate and retail—prefer the credit card payment option due to rewards and tracking expenses.
Mark DiChiara, President
Gateway Limousine in Waterbury, Conn.

Jeff Greene We have probably had a 30-percent shift to prepay from billing. Since we service a lot of hotels, they pay through billing: Most rides are billed to the passenger’s room or to a group account. One-hundred percent of our individual travelers and corporate now use credit cards. Our accounts receivables have decreased about 35 percent.
Jeff Greene, President
Greene Worldwide Transportation in Atlanta, Ga.

Stefan Pabst For customers we haven’t worked with previously, we require them to use a credit card, though that only accounts for about 5 percent of our sales. More than 50 percent of our work is paid by invoice after the service. However, 85 percent of our international customers pay via credit cards. In these cases, exchange rate differences are excluded.
Stefan Pabst, Owner
globalmobility in Hanau, Germany

Chad Peterson We generally require full payment upon completion of the trip. Even with our mix of corporate clients growing, we are still 90 percent paid-in-full upon completion. Provided we have a credit card on file, we allow—and encourage—payment by check within 30 days of completion date to avoid processing fees. We have no accounts receivable beyond 30 days, and I’m not aware of ever failing to gain an account due to our payment terms.
Chad Peterson, President
Renee’s Limousines in Minneapolis, Minn.

Jason Ramsey Billing is a subject we all hate, but really needs to be discussed. Since I entered the industry in 2011, I have only let a select few accounts be on any type of net terms. Currently, I have only one affiliate on a net 30 (which is turning out to be more like net 60), and all others provide credit card information upfront with payment made before the vehicle leaves the garage. For vehicles larger than a van, I charge a 50 percent non-refundable reservation fee. I haven’t seen much pushback over the years as I mainly work with corporate clients who want the advantage of pre-paying for their executives, which always includes gratuity.
Jason Ramsey, President
Prestige Worldwide Transportation in Denver, Colo.

Stuart Rothstein Smart Cars’ ratio of prepaid (credit card) clients to those billed has actually remained steady over the past five years: 65 percent/35 percent, respectively. Those billed are very large corporate clients who, for the most part, dictate the terms. The average period is somewhere between 30 and 45 days, although we have been able to shorten this period when playing the “we are a small company that pays our payables quickly and thus would appreciate better and shorter terms” card.
Interestingly, some of our large corporate clients have offered to pay with credit cards, but without much analysis, this would be a losing choice for Smart Cars. First, the current probability of not being paid is ostensibly zero. Second, with the current interest rate structure, the break-even wait time as compared to our current all-in credit card percentage costs would work out to be a period of well over 24 months; thus, the net 30-45 day period is a winner and we support it.
One may ask “Why then do you not attempt to convert all of your credit card clients to the billed structure?”  This answer here is also intuitive. The time and, therefore, the cost associated with the billing process is not zero; but when it comes to companies providing six-figure business, it is a trivial cost per unit transaction (bill). To do the same for (a multitude of) clients whose annual revenues are considerably lower would result in costs that are significantly higher on a per-transaction basis.  In addition, the solo or small firm client generally appreciates the ease and simplicity of automatically paying with a credit card on file as they go. They also perceive the alternative of having to provide review(s) with each service as costly and time consuming.
Stuart Rothstein, President & CEO
SMARTCars in Chicago, Ill.

Douglas Schwartz Frankly, I’m surprised that the industry still has as much billing as it does. I can only think of a handful of businesses that do; even the local doctor’s office requires immediate payment when service is rendered. We have a few long-time relationships that we still bill, but their payments continuously get further and further apart. I advise taking a credit card and preauthorize prior to the trip—even the largest businesses can fold!
Douglas Schwartz
Executive Limousine in Bellmore, N.Y.

Mike Zappone Our billing vs. prepay policy has not changed over the years. Clients who spend less than a specific amount each month are required to prepay or use a credit card. For clients that exceed this threshold, we move them to billing. The reason for this is based on credit card fees vs. efficiency. For lower-volume accounts, the amount of labor needed to generate an invoice, mail it, follow up, receive payment, apply the payment, and bring it to the bank was counterproductive. Alternately, clients who are spending over the threshold, the amount we pay in credit card fees makes it more cost effective to invoice. For extremely high-dollar clients whose extended credit amounts or credit worthiness is a concern, we factor the invoice. The thinking behind this is two-part: One being cash flow and the other being reduction of risk.
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 and you just might see your query answered in a future issue. We look forward to your input!