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Saturday, 6 March 2010

How prompt payment can boost your business

If there is one thing that is virtually guaranteed in a recession it is that companies, particularly smaller ones, take longer to pay their bills. When cashflow becomes problematic, because the orders are not flooding in, it is very tempting for companies to start paying their suppliers later. Of course, those suppliers then have their own cashflow problems and this cascades its way throughout the economy.

What happens then is that companies that become known as prompt payers start becoming increasingly attractive to suppliers. Smart companies realise that by signing up to initiatives that promote speedy payment, such as the Better Payment Practice Campaign in the UK, can use it to their advantage.

The travel industry is little different. However, late payment can become an even bigger problem because of the thin margins that many in the industry work on.

This is where many of our products, based around virtual credit cards, can become incredibly useful.
Take Event Trustee, our credit-based, automatic invoice settlement tool. It uses virtual cards to automatically pay pre-agreed event costs at pre-scheduled times and reconciles each item with the same unique number when it is booked, billed or paid for.

It helps event management companies and other agencies organising events improve their cashflow in two ways. Since pre-agreed payments cannot be made until an invoice has been received, hotels invoice you as quickly as possible. This means you can invoice your clients sooner.

At the same time, because the invoice is paid for by a credit company initially, you have longer to settle the eventual bill.

But that’s not all. Since you are paying suppliers, such as hotels, more quickly they may offer you better rates to pass on to your clients. And if there’s something that can help you survive an economic downturn better than anything else, a happy client is it.

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