How Category 5 uses Melio to boost cash flow and turn business expenses into first-class travel
Meet Category 5 Window & Door
Founded in 2019 by Ryan Melnick, Category 5 is a premier window and door company serving Central Florida. With three full-time employees and a network of up to 20 1099 subcontractors, Category 5 manages projects for clients such as Disney, Marriott, and the Ritz-Carlton. Ryan also founded First Class Advisors, a consultancy that builds on his success with Melio, where he helps other business owners optimize cash flow and credit card rewards.
The challenge
Before discovering Melio, Category 5 faced significant challenges in managing payments in the construction industry, where most vendors and subcontractors only accepted checks or ACH payments. Ryan describes the process as a “nightmare” that involved chasing credit card authorization forms, verifying bank details, and tracking physical checks.
“Even if you have somebody that only does AP and AR, they’re going to be chasing their tail trying to make those payments all day long,” Ryan said. At the time, Category 5 was only able to use credit cards for about a quarter of its bills, missing out on valuable float and rewards.
“Being able to pay suppliers and contractors with a credit card through Melio saves me and my business a combined six figures every year.”
The solution
In early 2024, Ryan realized that optimizing credit card usage through Melio offered a far better return than traditional bank lines of credit. “I was actually talking to my bank about a line of credit because cash flow in construction can be really difficult,” Ryan said. “You don’t get paid on time ever.”
The net cost of paying with a card, once you take into account the fee and the cash back, is much cheaper than a credit line and enables Ryan to collect points he can use on vacations instead of cash. Melio allows Category 5 to pay its 1099 subcontractors and international suppliers via credit card, while the vendors get paid by ACH or check. This strategy provides the business with 45 to 50 days of additional float on each payment, while also getting additional business benefits such as tax write-offs and rewards.
“Let’s say we’re doing a large custom home and the subcontractor’s pay on it is $12,000 and they want to get a check or an ACH. With Melio, they get paid the same day or the next and I get the extra 45 to 50 days to float that $12,000,” Ryan said. “I’m going to also get a return on those funds and be able to write off the fee for my taxes. It’s really a grand slam.”
Category 5 processes 75 transactions per month through Melio, totaling an estimated $2.5 million in spend over the past two years. The company uses the platform for everything from local labor and rent to international payments for overseas manufacturing.
Ryan has since set up another company, First Class Advisors, to advise other business owners on the advantages of paying with credit cards, not only to improve cash flow and help grow the business, but also to earn returns through travel and cash back.
Since adopting Melio, Category 5 has seen transformative results:
- Cost Savings: By replacing expensive bank lines of credit (which can cost $90,000 annually in interest and fees for a monthly balance of $100,00) with Melio’s credit card fee, Ryan estimates the business saves $50,000 per year.
- Administrative Efficiency: The company saves approximately 25 hours per month in administrative work. “The more you can take off of email, the better. This is one of the tools that allows us to do that because we have all those transactions in one singular place,” says Ryan. “Melio is an AP organizational software.”
- Tax Advantages: Ryan notes that Melio’s fee is tax-deductible, making it a “no-brainer” for the business.
- Six-Figure Travel Benefits: By funneling millions in business spend through business credit cards via Melio, Ryan funds family vacations. He recently booked a $48,000 Singapore Airlines first-class suite for just $500 in taxes and points.
“The fee is non-existent to me personally because any sort of valuation that you assess to this small percentage you pay is going to be four to five times the value you see from that, and that’s not even including the ability to hold onto your cash,” Ryan said.
