To survive and thrive, you need to constantly look at the way you operate to ensure you are equipped to adapt to changes effectively and efficiently.
Managing cashflow and working capital is a universal challenge for travel companies with the need to balance the monetary requirements of the business against the need to pay suppliers to agreed timelines.
Choosing the right method to pay suppliers can be critical in helping you simply and successfully manage these competing needs. While credit can be obtained from suppliers, negotiating extended payment terms may not be feasible with many firms now always requiring payment in advance or a short time after services are delivered.
Traditional supplier payment methods, such as corporate credit cards or lodge cards, bank transfers or cheque payments, rarely allow you to earn on payments made and can prove costly if you are paying international suppliers.
Credit-funded Virtual Payments or Virtual Card Numbers (VCNs) give you access to interest-free credit via trusted payment providers and allow you to pay suppliers straight away while only needing to settle your VCN account later. As well as allowing you to take advantage of early payment discounts where available, this gives your business much more flexibility regardless of whether you are awaiting payments from your customers or you want to invest cash into your business or assets.
- The right supplier payment strategy will allow you to take advantage of other benefits that help improve cashflow in a number of other ways:
- Earning money on payments that you are already making, giving your business access to an extra revenue stream to enhance working capital.
- Saving around 3% per transaction by avoiding FX rate mark ups and cross-currency fees when paying international suppliers.
- Avoiding fraud with a secure payment method that allows you to control and track the timing, recipient and exact amount of each payment.
- Customising the data that you capture around payments made and facilitating auto-reconciliation.
A payment strategy incorporating credit-funded VCNs is vital to ensuring that you have the ability to successfully manage the monetary requirements of your travel company amidst challenging market conditions.
