Top strategies for optimising your payments | eNett

June 6, 2016

When asked to identify potential areas for efficiencies, payments might not be top of mind. But taking a deeper look into the cost of payments can unveil a huge opportunity for savings. 
A common error travel companies make is failing to look beyond the direct costs. The true total cost of payments should include indirect costs such as manual reconciliation and fraud risks. The most effective cost saving strategies are those that address both the indirect as well as direct costs. Having advised travel companies around the world on their payments strategy, I’ve put together my top tips for lowering costs and optimising your payments.
1. Reassess how you make cross-border payments 
For many travel companies, the costs of cross-border payments are exacerbated by exposure to FX fluctuations, fees and mark-ups, most of which are not transparent. Getting on the wrong side of foreign exchange could see your margins evaporate by the time it gets to settlement. It’s no wonder that our own analysis of bank fees and charges shows travel companies could be spending up to 3% more than they need to on each international transaction. 
There are innovative solutions available that provide a more cost-effective solution to traditional methods. Look for options that allow local funding and settlement to avoid surcharges and fees. But make sure you get clarity on how much mark-up your provider adds onto transactions. For FX, look for an option that gives you control of FX timings and rates, to best match the needs of your organisation. 
2. Automate payments processing and reconciliation 
Manually processing and reconciling transactions is time consuming, error-prone and costly. Our own estimates put the cost of manual processing and reconciliation of up to US$6,000 per week for some travel companies. With solutions out there to automate the payments process, it’s an easy win. But the level of automation, and therefore cost saving, is dependent on the level of integration. 
The best solutions are those that seamlessly integrate with back-end accounts and booking platforms, optimising efficiency by allowing payments within the workflow. And don’t settle for automated reconciliation, but reconciliation that comes with detailed reporting options for rich data and greater payments clarity. The cost and ease of implementation should also be included in your vendor assessment. Savings from low cost implementation may end up being wiped out if on-going support costs or more bespoke configuration is charged. And complex integration may cost you in terms of downtime disruption – there’s always an opportunity cost. 
3. Mininimise your fraud risks and protect yourself from supplier default 
The cost of fraud can be significant. In the airline industry alone, the cost of card fraud is estimated at US$1 billion a year1. And how costly is the loss of reputation and good will should a customer’s card be misused or details hacked? 
Demand more security from your method of payment. Ask your vendor if you can set payment parameters for greater control of payments. Look for solutions that provide payments guarantee, and chargebacks in the event of supplier default. Or why not chose a solution which eliminates the traditional physical card altogether? 
4. Choose a payments strategy that brings value to your business
Having funds tied up in bonds brings little benefit to your business. Choosing the right payment option can enable you to reduce the bonding requirement, unlocking cash to be used for growing the business. If dynamic rate discounts are an important part of your business strategy, choose a flexible immediate payment option that can optimise your costs savings.
Taking time to sit down and really assess your total cost of payments can return rich rewards, and there are tools out there to make this even easier. Our Account Managers offer an unrivalled set of travel knowledge and payments expertise. They regularly meet with our customers, armed with data to provide real insights to help them achieve their business goals. To make it even easier, we developed a calculator tool in collaboration with KAE Associates that provides even more clarity. And because we believe in transparancy, it's available to everyone, industry wide.
I encourage you to challenge your vendors, reassess your strategy, and look to the real cost of payments to make a tangible impact on your company's bottom line.
1. Travel Payments Insider Issue 2, November 2014: The Mobile Traveler – Convenience vs. Security

More Blog Posts

22 February 2018

Costing US$21B a year - it pays to know about fraud in travel payments

In 2017 the impact of fraud is estimated to have cost travel intermediaries US$21B. By 2020 the impact of fraud is expected to cost US$25B, driven by both a migration from offline to online, and an expected uptick in the rate of fraud. Understanding fraud and its true impact and cost to travel businesses is the first step to combating it.

Read more

07 February 2018

Future-proofing your business for 2018

Anthony Hynes gives his top four considerations travel companies should be thinking about to get ahead in 2018.

Read more

12 December 2017

A Year in Review for Travel

2017 is shaping up to be a record-breaking year for the travel industry. eNett MD and CEO, Anthony Hynes, recaps of some of the highs and lows over the past year, and ways travel companies can continue the growth trajectory in 2018

Read more

16 November 2017

Tackling Fraud in the Travel Industry

As part of International Fraud Awareness Week, eNett MD and CEO, Anthony Hynes gives his view on how travel agencies can tackle increasing levels of fraud in the travel industry.

Read more

30 October 2017

Key to tapping Asian travel market is payments

As part of International Fraud Awareness Week, eNett MD and CEO, Anthony Hynes gives his view on how travel agencies can tackle increasing levels of fraud in the travel industry.

Read more

27 September 2017

We’re backing World Tourism Day’s drive for sustainable tourism

Travel and tourism grow every year. Many underprivileged communities across the globe are being displaced - especially those in high-growth travel destinations. 'Repay the eNett Way' is our hands-on approach to make a difference in these communities.

Read more

29 August 2017

Great employee experience = great customer experience

A unique value proposition is one thing, the second step you take when launching a business is just as important.

Read more

01 August 2017

How Virtual Account Numbers Simplify B2B Travel Payments

Travel agencies are wasting time and money - it doesn't need to be this way. There is a solution today, it's faster, easier and safer than many other traditional methods too!

Read more

22 June 2017

Eight Entrepreneurial Essentials

From a tiny no-frills office near Heathrow airport, to offices in Asia, Australia, Europe and America just eight years later - what a journey!

Read more