- BRW Lists
Published 14 December 2012 04:39, Updated 17 December 2012 00:00
LJ Hooker chief Georg Chmiel says using the company credit card for most purchases during his time as CFO of REA Group helped the business build up frequent flyer points to offset credit card costs. Photo: James Davies
When you’re an early-stage company, every dollar and every day counts. There are entrepreneurs who go for years with their credit cards maxed because of the opportunity cost of waiting for a loan to come through. Meeting the interest repayments can mean skimping on clothes, eating two-minute noodles and putting your social life on hold.
Not so for professionals like me. We take liberties with the printer. We share cabs a lot less than we should. And when times get tough we expect not only to keep our jobs but keep the conditions we negotiated in better times. Our futures are not staked to the company and if it folds we take our CVs elsewhere.
Maybe there is something for people in bigger companies to learn here, and it’s good to know some are paying attention. Yesterday I met with Georg Chmiel, now the chief executive of LJ Hooker after moving through a number of C-suite jobs. I’ve never seen a man get so excited about accounting. But it should be exciting – it’s about making the most of other people’s money.
He told me about some of the things he did to save money back when he was the chief financial officer at ASX-listed real estate advertising giant REA Group. The best one by far was using the company credit card for almost everything in order to build up frequent flyer points.
“We pulled out a calculator and asked what was the maximum merchant fee we can accept from Amex, and we grew our points astronomically,” Chmiel said. “We had a huge shift from electronic funds transfer into credit card payments.”
He used the company credit card to pay Telstra bills close to $1 million a year. Little things that really add up, like stationery and various licensing fees, were also all put on the card.
“We even considered paying our tax bill on the credit card, in $100,000 instalments. It would have taken forever because the tax bill at that stage was $10 million, and from that we would have got 10 million points. It was a very manual process, but there were hardly any merchant fees at that time so it was quite attractive to do it.
“You get points and you get two months of cash flow, because the credit card you only had to pay virtually two months later. So you had two advantages. It was fantastic!”
In the end the manual process, and the risk of someone siphoning off a sly $100,000 here and there without anyone noticing, forced them to draw a line at the tax bill idea.
The frequent flyer points went towards reducing the international flight bills of a global company. Or, admittedly, upgrading tired travellers to a more comfortable flight.
Kudos to the leaders of a big public company for counting pennies like that. Mind you, I’m sure Australia’s vibrant entrepreneur community could pass on plenty more nuggets of wisdom like this to willing listeners at the big end of town.