Published September 2004

Reap rewards for paying small-business bills

Dear BizBest: Like other small-business owners, I pay most monthly bills by check. But in this age of points, miles, discounts and other reward programs for payments by charge card, maybe I’m missing out on something. Is it smart for small businesses to pay routine expenses via credit card to reap more reward points? — Mileage Maven

Dear Maven: Welcome to the latest trend in small-business bill payment. Thousands of business owners nationwide are moving routine business expenses such as materials, wireless, long distance, shipping, insurance and computer services to reward-rich credit cards. In the process, they are discovering a hidden “profit center” in their accounts payable.

It makes perfect sense. The rewards they rack up are helping them reduce travel expenses, offer employee incentives, acquire merchandise and push cash to the bottom line. Better yet, most rewards are transferable and tax free. But beware. The pursuit of points for payments has pitfalls and requires planning and discipline.

Some business owners are able to accumulate huge point totals by funneling expenses to multiple credit cards and then paying them off quickly to avoid hitting credit limits. But if you exceed limits and don’t pay off the bills immediately, you can encounter fees and interest that will wipe out any advantages of earning the points.

Decide what type of rewards you are most interested in and sign up for the cards that provide what you want. You’ll need to keep track of multiple program numbers and passwords and a maze of redemption rules and restrictions. But that’s where outfits such as American Express, Visa, MasterCard, Award Planner and a new upstart called Zevez can help.

American Express, in particular, is aggressively promoting its fee-free automatic bill payment service for small business. Once established, the service pays your bills automatically on your card, saving you the trouble of writing checks and earning you valuable reward points for every dollar spent. Points can be redeemed for items such as air travel on 22 major airlines, flat-screen TVs, luggage and more.

Visa helps small-business owners identify vendors who accept bill payments by credit card, and MasterCard’s Business Bonuses reward program lets you earn a point for every dollar charged to a MasterCard business card.

Business cards from all three — Visa, MasterCard and American Express — offer a double-barreled deal. In addition to points earned, they get you immediate discounts on shipping services, office supplies, hotels and other items.

Zevez offers a new service called RewardWorks that helps businesses systematically capture credit card rewards on a massive new scale. You can pay for inventory, supplies, legal fees, advertising and many other expenses and reap rewards in the process.

Zevez helps identify vendors who accept card payments, provides software to track payments and rewards, and helps with the all-important process of converting points to cash, merchandise or real-world services you can use. The company’s hefty setup fee of $2,500, however, makes it most appropriate for businesses with at least several million in revenues. But you can request a free evaluation of your reward potential.

For more information:

• American Express, visit open.americanexpress.com/abp60.
• Visa USA, visit www.visa.com and click on “Small Business.”
• The MasterCard BusinessCard and BusinessBonuses programs, visit www.mastercard.com and click first on business and then select the “Small Business” section.
• Zevez, visit www.zevez.com or call 866-938-3901.
• Award Planner is a Web-based service that helps frequent travelers plan and book their award travel. Visit www.awardplanner.com.

BizBest publishes “The 100 Best Resources for Small Business” and other resource directories. Visit www.bizbest100.com. E-mail questions to dan@bizbest.com.

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