For many travel businesses, chasing clients for payments is not a happy experience. Slow-paying customers and “book now, pay later” offerings can negatively influence business cash flow, creating and compounding operational problems. No matter how profitable your business is, payment delays can soon lead to prolonged difficulties.
The industry has significantly extended periods between consumer payments and the date the goods (or the well-deserved holiday break) are received. Hence, it is vital to have good credit management processes in place if you work in the travel industry.
Establish clear credit policies.
Clear credit policies can underpin the success of your travel business. This will include establishing payment terms that work for the company, suppliers, and customers. As well as ensuring those policies are clear and workable, they must be coherently communicated to customers and suppliers.
For customers, this will mean ensuring that payment terms are clearly stated on the website and through the booking procedure. When working with new suppliers, it is essential to establish clear expectations and payment terms from the beginning to avoid any misunderstandings or disputes later.
You should keep track of payments and set up automated reminders for late payments, with late payment fees encouraging customers to pay their outstanding balances promptly.
Setting up automatic payments to be taken at a particular date when a customer books can reduce the risk of non or late fees.
Designated days of the week
Good organisation supports effective cash flow.
Teams should ensure that invoices and purchase orders are issued on certain days of the week and month. The aim should be to establish a routine, avoiding low cash flow and workflow bottlenecks.
You must stay on top of all transactions and record them accurately. Ideally, collection letters and emails should be sent out within 48hrs of a phone call to ensure timely follow-up.
Automate, automate, automate
Using accounts software to automate transactions will help you keep on track in real time.
This should include:
- Invoices
- Receipts
- Shipping
- Purchase Orders
- Financial Statements
- Automated Email Payment Reminders
- Ways to Pay Online
Credit Control Manager, Andrea Hooper, acknowledges that “automation can save your business time and money. Finding the right system that works for you is half the battle”
Communication is crucial
Good communication is vital when it comes to credit control in any industry. Although it is human nature to want to give people the benefit of the doubt, this can soon lead to carelessness.
Weekly reports help to track payments and give you an early indication of delayed payments. The sooner you speak to a customer about delayed payments, the easier it will be to resolve the issue.
A reason for overdue payments may be dissatisfaction with your service. Ensuring you address concerns can be an effective method to resolve issues and ensure future payments.
Implementing good practices when it comes to payments is vital to ensure consistent cash flow and that problems are minimised.
If you are looking for help with your credit management and work in the travel industry, we offer a free initial consultation contact our specialists today.
