How a Middle Market Interior Design Firm Leveraged Payment Cards to Drive Efficiencies, Cut Costs and Earn Cash

The design firm’s accounts payable team started by contacting every vendor on its roster and simply asking whether they accepted credit cards. To Paul’s surprise, about 70% did — and many even preferred the faster payment cycle and cashflow advantages that come with credit card payments.

“I think a lot of people assume their vendors won’t take credit cards. That was me. But it turns out many do,” Paul says. “Talk to your vendors. Look at your volume. And if it makes dollars and sense, go for it. It’s really a painless process.”

Not surprisingly, around a third of the design firm’s vendors charged a processing fee (roughly 3%) to take credit card payments, something Tom Stringer Design Partners was not immediately willing to incur. Even removing these vendors, the company was left with a significant list of existing suppliers willing to take a card payment in lieu of a check, making the switch to cards well worth exploring and setting the firm on the path to finding the right program for its purchasing needs.

Tom Stringer Design Partners already used American Express cards for its ancillary expenses, such as travel, meals and office supplies. Company leadership enjoyed earning the points and using them to help finance the partners’ and company’s travel expenses. However, the prospect of getting cash back through a rebate program instead of points was very meaningful to the company. The COO wanted to find out if such programs existed.

“When you think of a purchasing card program, you think of a Fortune 100 or 500 company with purchase volumes in the hundreds of millions of dollars,” Paul recalls. “I didn’t think anyone would be interested in working with our volume of $3 million to $5 million in purchases a year. That’s when I had this ‘aha’ moment: There are banks that service companies of our size. They want us to grow, and they want us to grow with them.”

Paul began talking with U.S. Bank, an organization with a reputation for working well with middle market companies, to explain its business model and purchasing needs and to discuss what a program could look like, including a cash-back rebate program. While rebates and credit limits were key points of discussion, the COO and AP teams also wanted to understand the bank’s technology platforms that support the card program. “Digital platform needs for mid-market companies are very different from large corporate needs,” says Paul. “You need to not only understand what your credit line will be but also consider the software platform and see how user friendly it is.”

Ultimately, the company landed on a Visa-branded U.S. Bank commercial card program with flexible terms, a tailored digital platform and — most importantly — a rebate program with cash-back incentives. “Earning a dollar is very different than earning 100 points,” Paul says. “Points are a nice perk, but dollars are cash in the bank.”

With U.S. Bank’s help, Tom Stringer Design Partners enjoyed a seamless transition to its new payment method. The bank helped the design firm set employee credit limits and configure spending controls to help safeguard against card usage for unapproved expenses. Employees put their new cards to use right away and enjoy no longer needing to wait for reimbursement from the company for their out-of-pocket business expenditures.

The AP team looked for opportunities to streamline processes by putting its new credit card information on file with vendors to expedite purchasing and by setting up autopay for recurring expenses, such as utilities, insurance and supplies. The company also worked with the bank and its ERP software partner to integrate transaction data with its accounting systems and ERP. Custom reporting fields and seamless data uploads help eliminate error-prone manual data entry and significantly expedite the month-end reconciliation process and financial reporting efforts.

Initially, the company’s credit limit was lower than it liked, but that has increased over time. The AP team has learned to strategically make multiple payments in a month and to pay balances early to keep its credit line open and maximize its rebate. At the same time, firm leaders enjoy the flexibility to carry revolving credit debt if needed, if cashflow ever becomes tighter in the future. 

Moving forward, the company plans to explore automating expense coding to map credit card payments to the general ledger, introducing additional efficiencies to its workflow. The team will also more thoroughly analyze the cost of credit card processing fees for its vendors that charge them and determine if the benefits of card usage offset those costs.

In hindsight, as pleased as Tom Stringer Design Partners is with its purchasing program, Paul says it would have been worth considering other banks’ offerings more closely and to compare and contrast services and rebate programs before making a decision. Especially as more banks look to better serve middle market companies, doing due diligence to understand the options and regularly review what else might be available to give your company an advantage is always a smart business move.