Record billings, falling margin: finding the one category losing money and turning it profitable

−23 to +22 bps

contribution margin on a $1.2B spend category

$5.4M a year

in rewards expense removed by cutting the category’s rewards cost from 90 bps to 45 bps

$1.2B

category moved from loss to profit, earning the American Express President's Award

ORGANIZATION

American Express, Corporate Payments

ROLE

Global Transformation Leader, APAC Business Transformation team

WORKED WITH

Finance, the Executive Office, Marketing, Membership Rewards, and Legal

MARKET

Australia

AREA OF WORK

Operating leadership

The situation

Billings and discount revenue in the Australian Corporate Payments market had reached an all-time high. At the same time, contribution margin was falling, and net pretax income with it.

Finance's systems produced a single P&L for the Australia Corporate Payments market. With one blended view, the team had no way to see which part of the business was driving the decline.

What I did

1. Got to the raw data. Requested the raw data behind the monthly market reports. When I laid out the approach, the market President approved access. A background in FP&A meant I could work the numbers directly.

2. Built a P&L for every spend category. Rebuilt the single market P&L as 10 to 15 category-level P&Ls, with every expense line expressed in basis points and each category measured against target margin.

3. Found the one category losing money. American Express had recently begun accepting the card for tax payments to the Australian Taxation Office. That category had grown to $1.2B in annual charge volume, but it was earning Membership Rewards at 90 basis points and running a contribution margin of negative 23 basis points. It was the only category below zero, and the margin drop lined up exactly with when the new acceptance took off.

4. Built the case and aligned the functions. Worked with Finance, the Executive Office, Marketing, the Membership Rewards team, and Legal to reduce the rewards benefit on that category from 90 to 45 basis points.

The outcome

The category went from a contribution margin of negative 23 basis points to positive 22. Cutting its rewards expense in half removed about $5.4M a year in cost on $1.2B in annual charge volume. The work earned the American Express President's Award for strengthening unit economics in the Sydney market.

WHY IT TRAVELS

A blended P&L can hide a losing segment behind record revenue. Growth-stage companies see this often: the top line looks healthy until someone breaks margin down by customer, product, or channel. The work is building the view that shows where money is actually made and lost, then acting on it.