From the Bridge: Yachts mix it up with cash, cards, wires, apps
Nov 12, 2019 by Dorie Cox
From the Bridge: by Dorie Cox
It’s the same on every boat: Money makes the yacht go ’round. Yet, surprisingly, the way money is handled varies a lot in the yachting industry.
“From the veggie-stand ladies to the dockmaster and harbormaster, we need cash,” a captain said. In an increasingly cashless world, green dollars, colorful euros and Caribbean bills are still useful, according to several captains at this month's Triton From the Bridge discussion lunch.
“It’s the exact opposite on our boat,” a captain said from the other side of the table. His boat uses wire transfers for most all transactions. In the middle of cash and wires are credit/debit cards and mobile money transfer apps.
Such diversity stems from different levels of yacht owner participation, whether the yacht is private or charter, and the size of the yacht program. Add to that a diverse group, from veteran to new-to-the-industry captains, each with unique angles on what at first seemed to be a clear-cut topic.
Even so, the captains quickly found a common component – most want to maintain control of finances on board, while each one dislikes the tasks involved.
“It’s my least favorite part of the job,” one captain said. “It’s the last thing I want to do.”
“Budgeting I like, but handling I hate,” another captain said. “It gets in the way of my job.”
Employment-seeking yacht crew can take advantage of this dislike. As everyone in the group keeps some sort of spreadsheet, either Microsoft Excel or Quickbooks, a captain said financial literacy can lift a crew member’s resume to the top of the pile. He met a stew who thought her previous career in accounting was a detriment.
Oh no, put that at the top of your CV, he advised.
“I definitely look for it on a CV,” another captain added. Several captains would like to have a purser on the team.
Computers, internet and mobile devices have had a hand in changing the way money moves, said a captain who recalled a transaction about 10 years ago in St. Maarten. He remembered the nerve-wracking car ride when he picked up more than $100,000 in cash from the charter guests for the Advanced Provisioning Allowance (APA).
“I put it in a black bag and drove to the French side [of the island] to put it in the safe,” the captain said. “I’m so happy that this is gone.”
Some agents and charter guests have the APA wired to a yacht account, but one captain said he still gets the APA in cash. Then he puts that in the yacht’s cash fund to save a trip to the bank when cash replenishment is needed.
Such a transaction steered the conversation to how record keeping is key for all financial transactions. A couple of captains said the yacht’s financial transactions are written in a paper ledger or logbook, while most of them keep track with a computer program. Receipts are usually required for cash purchases and kept in a cash-in/cash-out log.
“If no receipt, then no repayment,” a captain said.
One captain found that once the yacht owner became comfortable with the expenditures, he no longer required receipts. Similarly, as another owner saw sensible purchases and understood the captain’s procedures, he more closely met the captain’s yacht budget request.
“We need a minimum balance, a credit card with a certain limit, and then it [the limit] goes up,” the captain said.
Most every crew member requires preapproval by the captain or department head for yacht purchases, and the majority of this group’s daily yacht financial transactions are done with credit cards and money transfer apps on mobile devices, including Venmo, Zelle and Cash App.
“We have two credit cards, a big one and a small one,” a captain said.
One captain said the yacht owner likes to track the transactions on his smartphone. Most owners, or yacht managers, also follow expenditures through bank and credit card online registers and statements.
As many of the yachts transition to less cash, they cite less incidents of bribery and more transparency with finances.
But this doesn’t completely make the process smooth; both money transfer apps and credit cards are laden with issues. One of the problems with mobile apps is a built-in limit on the amount of each transaction and the number of purchases allowed in certain time periods. One app also has a service charge for some transactions.
Another concern is that mobile apps are usually connected to a personal phone number and that often means the yacht money runs through the captain’s account. When the time comes to disperse the charter tip, one captain sends it to each crew member through a mobile app in his phone. Several captains have dealt with tax issues when boat money is connected to personal accounts.
“Then they ask you where that money came from in your account,” a captain said.
With a collective groan from all around the table, we found another consensus.
“No personal money anymore,” a captain said. It turns out that every captain at the table has dipped into his own money for a yacht expenditure.
“Do it once and they will expect it all the time,” another captain said. “I’m still waiting to get paid.”
“And everyone needs a bank account to work on a boat,” a captain added. “If you don’t have a checking account, you’re not on my boat.”
Another issue with credit cards is that yacht business purchasing patterns can trigger false fraud alerts. Shopping during charter turnarounds is an example of high-volume expenditures that get a red flag from credit card companies, a captain said.
“After using the card 10 times, the card is blocked,” he said.
Half the group has had a fraudulent expenditure on a yacht credit card that resulted in canceled and denied cards, but the good news is that credit card companies work with customers to resolve such situations.
“Credit cards are good for [dealing with] scams. It’s happened six times,” one of those captains said.
That brought up an issue that most all of the group struggles with.
“The biggest problem is that I can’t call the bank,” a captain said in reference to a common setup in which the top level of financial account access is restricted to the yacht owner or corporate managers.
The group marvelled at the authorization granted to one of the captains by the yacht owner.
“When he first bought the yacht, he brought me and the secretary into the bank to sign for access on the account,” he said.
“God, that’s great,” a captain said, as the others agreed. Without complete access, several factors cause problems.
“I run out of money and don’t know it’s going to happen,” a captain said of unexpected use by other people of the yacht’s credit or debit card.
A captain recalled driving to a grocery store to bring the stew another credit card. She was still in line with bags and boxes of provisions and an over-the-limit credit card. Another said a crew member using a card in the captain’s name can present identification and security issues at some stores.
Without full permissions, credit card maintenance can be a challenge. Even though they can be pre-set for travel dates to help prevent fraud alerts or blocked cards, the yacht schedule is not always updated, or managers or owners often don’t follow through, several captains said.
“Online shopping is the hardest,” a captain said. The bank calls because crew purchase from several different locations and the account gets flagged.
These issues could be solved easily, a captain said.
“The department heads should each have their own debit card with a set total,” he said. “That could help compartmentalize expenditures. Right now, we have one card. The stew has to go shop with the chef.”
Out of the eight captains in the group, just one captain writes checks regularly. These paper checks are primarily to vendors, he said. Everyone at the table uses wire transfers and most use them to pay the crew.
“Unless it’s under $600,” a captain said, and added that day workers are paid in cash.
This topic of how money is handled on a yacht is so important, several of the captains insisted it be discussed with the yacht owner at hiring time.
“A yacht has to have a clear financial plan and you need to know that at the start, in the interview,” one of the captains said. “There’s no waiting. There needs to be a system in place.”
“If they can’t do that, you already have trouble,” another captain said.
“Yes, you will have issues coming down the pike,” a third said.
Another procedural concern that must be addressed early are late payments and intermittent shortages with fractional yacht ownership, a captain said.
The need for open communication with the yacht owner was a clear consensus in the group. Apparently several captains had learned the importance of that the hard way. One captain cautioned young or inexperienced captains not be afraid to broach the subject of finances with the yacht owner.
“Sit the boss down,” he said. “If you have fears about how the system will work, tell him.”
With an array of options from cash, cards and wire transfers to mobile apps, everyone agreed that how each yacht’s finances will be handled cannot be taken for granted.
Dorie Cox is editor of The Triton. Comments on this story are welcome below.