by WEX Travel
The travel industry is evolving rapidly with economic, political and technological factors all putting increased pressure on businesses. In order to survive travel companies need to constantly look at the way they operate to ensure that they are equipped to adapt to changes effectively and efficiently. As businesses respond to these challenges, choosing the right supplier payment solution is a key enabler of success.
Traditional supplier payment methods such as corporate credit cards or lodge cards, bank/wire transfer or check payments simply do not allow businesses the agility that they need to succeed. Similarly, solutions that rely on travel businesses to prefund accounts before payments can be made don’t give the industry the flexibility it needs.
Access to interest free, unsecured credit via trusted payment providers is almost always desirable to CFOs and Finance Directors, irrespective of how cash rich a business may be and it’s highly unusual for prefunding to be the preferred option. Travel intermediaries are experts in maximising returns from the use of their own cash or credit facilities provided by payment providers. The industry is so competitive that no stone can be left unturned.
To provide the best possible payment solutions to travel businesses payment providers need to offer flexible funding options – only offering credit or only offering prepaid simply doesn’t address enough use cases for travel businesses.
Here are three reasons to choose a truly flexible alternative payment solution incorporating credit AND prepaid funding:
1. Cater to Shorter Payment Terms and Discounts for Immediate Payments
Paying suppliers early improves relationships and often results in discounted rates which increase per booking profitability. The reality of running a business and trying to pay suppliers early is difficult without access to a credit line. Having a flexible payment solution with the option of a credit line enables immediate supplier payment while giving travel businesses flexibility to pay later.
2. Facilitate Low Deposit Options
With customers looking for both low cost air travel and to early booking, travel companies can win customers by offering low deposit booking options with competitive rates where customers only pay part of the cost upfront. This still comes at a cost to travel companies as for example airlines often require immediate payment of the full fare. This presents additional financial risk as well as creating cash flow implications for businesses that are not cash rich.
In order to facilitate offering low deposit options, travel companies need to choose a payment solution with flexible funding options that allow savings to be made on fees where possible, supplier payment requirements to be met and cash flow to be managed effectively.
3. Lower the Cost of International Payments
Paying global suppliers in their local currency can easily cost around 3% per transaction in FX rate mark ups and cross-currency transaction fees. These costs can soon add up as we highlight in our blog post How Much Is Your Travel Business Losing On International Payments?
The right travel payment solution allows travel businesses to pay suppliers in their local currency and avoid these fees wherever possible, regardless of whether the payment solution is credit or prepaid funded. In a marketplace where fast-paced current events can mean that travel companies need to quickly shift destinations offered a payment solution should facilitate the payment of suppliers in new locations without creating additional admin and contracting hassles.
Choosing a travel payment solution with flexible funding options also enables businesses to make savings and even earn money back on payments made. The right payment provider will work with you to optimise your supplier payment strategy for your business.
It is time to get real about choosing a truly flexible alternative supplier payment solution with a complete range of funding options that will help your travel business succeed – learn more about WEX’s payment solutions for travel businesses.