When it comes to company credit cards, many home improvement contractors take as their operating principle the old poker adage: “Trust everybody and always cut the cards.”
TRUST IS IMPORTANT, CONTROLS MORE SO “We maintain very tight control,” says John Schmotzer, owner of Metropolitan Window Co., in Pittsburgh. “Each card is given to an individual, a number designates the employee who has that particular card, and we monitor purchases monthly,” he says. Only he, the controller, and salespeople have company credit cards.
At Sound Glass, in Tacoma, Wash., only the president and vice president have company credit cards, says president Warren Willoughby. Production managers or crew chiefs carry cards from suppliers for fill-in purchases. “For each invoice, there has to be a corresponding purchase order so it can be tracked,” Willoughby adds.
CONTROLS IN PLACE For the most part, home improvement contractors do what the experts advise: Limit the number of cards. Set spending limits low. Require itemized receipts on purchases. Review charges every month. Have a written policy and make employees aware of it.
Those controls are essential, but there's more to managing business credit cards, says Bruno Perreault, group head of Global Small Business and Mid-Size Enterprises at MasterCard Worldwide.
Perreault recommends using just one credit card account for all company buying to simplify tracking and to more efficiently control spending. In addition, he says, make sure you have a specialized business card, not a consumer card.
Business cards generally offer “more back-end reporting, which provides control in terms of where the money was spent and for what,” Perreault says. Detailed line-item information from thousands of vendors, including The Home Depot and Lowe's, is available with some MasterCard accounts — online as well as in print form. Business cards from other large issuers can provide similar data.
SPENDING OPTIONS Business cards offer a range of other options as well. “Depending on the [credit card] product you use, the industry, and the bank you use, there are different levels of sophistication,” Perreault says.
You can structure a card for use only at a limited number of vendors and choose the spending limits on the card, for example. You can get a card that gives cash back, or one that offers discounts on products or services such as car rentals. “There are a few questions you have to ask yourself,” Perreault adds, starting with: “What [card features] are most important to you?”