Top 4 payment habits eating into agency margins | eNett
August 9, 2016
Most executives would agree on the importance of change and constant evolution for businesses to remain competitive. Yet when it comes to supplier payments, methods are based on habits with little progression in the approach. With an ever-changing travel landscape, I thought it’d be useful to highlight some of the key bad habits that we see all day every day, that are undoubtedly costing travel companies money:
1. Using credit as the default form of payment
Credit is the default form of payment for many organisations. But in today’s increasingly regulated financial landscape with stricter controls on lending, access to credit with favourable terms is harder to come by. Travel companies often find themselves reaching credit limits, especially in peak season. Not only is this a nuisance, but also causes dynamic rates and immediate payment deals to be missed. It causes friction, disrupting the momentum or rhythm of the company. The less payments friction you have, the more transactions you can do – get rhythm, get scale!
2. Passing-through customer cards for payments
“Avoiding payment fees” by passing-through customers’ cards for payments to suppliers is still common practice. But think about it, when you pass-through customer cards, you’re also passing on the customer experience. What if the supplier misuses the card details, won’t the customer hold you accountable? And, separately charging fees for your services rather than bundling them with the costs of travel could be encouraging your customers to go direct next time, ultimately impacting your repeat business.
3. Viewing supplier payments as a necessary evil
Paying suppliers is often seen as a necessary evil and nothing more. But adopting innovative payments solutions can streamline processes for cost and time savings, and generate tangible rewards on transactions. Supplier payments can be transformed into a new revenue stream if travel companies are willing to break their habits and change their approach. According to our cost of payments calculator
, an OTA transacting US$100M could make savings of up to US$1.4M just by changing the way it pays.
4. Always doing what you’ve always done – the “can't be bothered” syndrome!
I hate the phrase ‘if it ain’t broke, don’t fix it’. Too many people get comfortable and become resistant to change, or just “can’t be bothered”. But making small changes can reap huge rewards. I have an OTA customer who was able to increase its business by a factor of 50 without having to take on additional accounts resource by simply automating its payments processing and reconciliation.
Supplier payments can be transformed into a new revenue stream if travel companies are willing to break their habits and change their approach.