Reducing Credit Risk

The eurozone debt crisis. Global recession. Bailout funds. Public sector strikes. Rarely has the economic outlook been so bleak.

Amid the backdrop of a challenging economic and geopolitical environment and the relapse into a second successive recession in as many years, businesses worldwide are becoming increasingly vulnerable to the dangers of credit risk.

Furthermore, with the festive period imminent and the accompanying lull in business, it is inevitable that numerous companies will experience short-term cash flow problems. As a result, payments to suppliers are delayed, who in turn suffer from credit exposure and take longer to pay their own bills. This creates a domino effect that cascades its way throughout supplier and customer networks.

The business travel sector is no different. In fact, credit risk becomes an even greater problem because of the fine margins to which many in the industry work. As recently as last week, Thomas Cook, one of the most iconic British brands in the travel sector, secured a £200m loan to enable it to survive the winter lull in business.

TMCs. OTAs. Hotels. Everyone is vulnerable to credit risk. For instance, hotels typically have to wait 30-60 days to receive payments in traditional billback agreements. Depending on their business model, payments to suppliers are then synchronised accordingly. However, a single default on payments in the supply chain affects everyone.

Therefore, in such challenging economic times, companies that become synonymous with prompt payments become increasingly attractive to do business with. This is where Conferma’s products, based on virtual card technology, offer many benefits for banks, corporates and the business travel community. With the Conferma Settlement Platform (CSP), TMCs can hold the credit on a virtual card account or, better still, have their corporate customers open a virtual card account, thus removing their own credit exposure. Conferma’s automated settlement and reconciliation solutions not only significantly reduce the risk of fraud, but also guarantee immediate payment to the supplier in order to remove any credit exposure.

For TMCs, assigning the credit risk to the corporate customer also opens up further opportunities for your business. Perhaps most importantly, if a client does experience problems, you will only be exposed to the loss of the transaction fee, as opposed to the full amount of the booking. However, you could also charge your transaction fee to the virtual card, ensuring that you receive payments quicker.

As an independent third-party settlement solution, Conferma represents the best option because it currently partners with some of the world’s largest banks. Furthermore, with an extensive network of content providers at our disposal, the Conferma Platform provides a single point of connection to the banking world and the travel community.

In the current economic climate, the Conferma Platform not only guarantees punctual payments to ensure customer satisfaction, but does so securely, efficiently and with reduced processing costs, allowing your business to weather the stormy winter period ahead.

Content is King

Over the past few years we've seen a huge rise in the meta search engines, such as Kayak, SkyScanner, Farecast (now part of Microsoft Bing). These meta search engines crawl the web on your behalf to understand, read and record the information that varied online travel agencies (OTA) are publishing. These services give users the ability to enter search requests and in response receive an abundance of pricing from across the web. In seconds offers from ebookers, Expedia, Opodo and many more are returned. Users simply select the deal that's appealing, click a link and they are instantly transported to the OTA for payment.

Like meta search engines, the business travel community want a single view of inventory at a hotel, across all major booking channels to view the best deal and then book it. For all the power Hoteliers are given for yield and channel management, consumers are trying their best to beat the system for the lowest rate, wherever it is.

In business travel the biggest prize was how many hotels you had in your database, then how many can be booked online and finally how many of those are duplicates... No longer is the case. Content within business travel is about the quality of the product the OTA, GDS, Merchant or Direct Connect is providing. Questions are raised on; how long does it take to book, payment terms, commission, how much back-end resource is required, what key locations are covered for specific suppliers.

Over the past couple of years we have seen growth in the request for consumer OTAs to be included within the Conferma Booking Platform. Many OTAs offer affiliate schemes for agencies to join, with a major benefit of receiving commission from one supplier, the OTA, not through chasing each hotel.

The Conferma Booking Platform connects to all major GDS, multiple Direct Connects, OTAs and Merchants plus support for Offline and Allocation content. Agencies have the power to pick and choose what content they would like made available and hold their own agreements with the Content Providers. The Conferma Booking Platform is built on an architecture that allows us to easily add new content without having to make a single code change to our booking tool (in the majority of cases new providers can be implemented in six weeks).

Trends in the consumer travel sector steer the future of business travel, and at Conferma we’re positioned to react quickly.

Ps. 160'000 unique hotels (130'000 online (and no duplicates))

The importance of choice

The recent news that International Airlines Group (IAG) are in negotiations with Lufthansa to acquire British Midland (BMI) has raised concerns in the aviation community. The acquisition of BMI would see IAG, who already own British Airways and Iberia, increase its share of landing slots at Heathrow, the UK’s busiest airport, rise from 45% to 54%.

The Leicestershire based carrier has reported losses of 154m euros (£133m; $213) for the first nine months of 2011, citing rising fuel costs and social unrest in some of its destinations in North Africa and the Middle East as reasons.

Amid growing concerns that IAG are monopolising Heathrow, Virgin Atlantic, who have tabled a rival bid to acquire the loss-making carrier, have described the prospect of an IAG takeover as "disastrous for consumer choice and competition".

Consumer choice is one of the fundamental aspects that Conferma, expert providers of settlement and reconciliation solutions to the Travel and Expenses (T&E) sector, values greatly. Providing access to multiple GDS and non-GDS content providers, Conferma prides itself on its vast and varied suite of content. Our award-winning Conferma Settlement Platform (CSP) can be seamlessly integrated into all systems, therefore we can partner with any card issuing bank or payments provider.

Conferma, who itself has recently expanded its own portfolio to offer payment solutions for low-cost carriers, is proud of its independence. Furthermore, Conferma’s neutrality endears it to an extensive network of travel and banking partners. This neutrality allows Conferma to maximise the number of potential opportunities in the business travel market and encourages competition amongst its partners.

Only time will tell if IAG's acquisition of BMI will deprive Heathrow of healthy competition and consumer choice.

Building A Platform For Commerce

In the early days of CSP, CSP stood for the Conferma Settlement Plan and our customers had only one card partner and one booking tool (ours) to access. Of course, this was only ever going to be beneficial for some customers and so we took a step change in the way we developed CSP. We began to build version 2, the Conferma Settlement Platform. A Platform that would facilitate the same founding features of CSP but on an open network for any booking or desktop tool to connect to any card issuer they want.

The effort the team has put into the platform over the past few years is demonstrating how our open network is coming together. CSP is being used to pay for more travel via more booking channels, where customers are based in more countries with an ever expanding supplier base.

Today, with an ever expanding CSP network you can;

• Use a booking or desktop tool of your choice (XML integration)
• Use Hotel Booker with over 12 content providers
• Use Conferma Low cost air tool
• Use Conferma WebPay to place cards into any website or desktop system
• Use our Batch Interface for bulk card deployments
• Seamlessly access (and switch between) cards from all of our major card issuing banks
• Settlement is being performed in multiple currencies
• Access powerful data hands offs for your system

At the start of the month we implemented our latest card partner, HSBC. The speed and professionalism of the implementation into a major partner, such as HSBC, shows the strength and capability of the team here at Conferma.

The choice of booking tool and card issuer is up to you, as it should be. Like never before we’re making it easier to be part of the network. Contact us for more information.

New Office

You may have noticed a lack of blog posts in the past couple of months, all I can say is it has been very busy here at Conferma! In the coming weeks we have a number of exciting announcements to make which will give you some insight into what we have been up to.

That said, I would like to announce we have successfully moved office! Whilst our previous offices were certainly different from the normal financial services HQ, we had simply grown too big for them. We have now moved into our very own bright building at Cheadle Royal Business Park, which has plenty of space for growth.

Overall the move was stress free with just a few technical hiccups with internet access from our offices and a rather frustrating incoming call issue, let’s just say you had to get your point made in ten minutes...

The move is a step change for Conferma, with a more corporate feel, but we have kept the fun and quirky environment we are known for. A big hit with the staff is the new break area where the full walls are white boards.

The new offices are a recognition to the staff, customers and partners that together we're doing something right. The new offices mark a point in Conferma's history and the continuation of an exciting journey that I hope you will all join us on.

Conferma WebPay: The New Way to Pay

In the corporate world, there is an opportunity to automate low to mid value, high volume transactions with new payment technologies. These traditional transactions represent what is called the ‘middle-ground’ of purchasing and they take a disproportionate amount of resources to process.

Research by *RPMG found the cost of processing paper-based purchase orders averaged $93 (US). However, making the same transaction with a single-use purchasing account cost $22. Further analysis revealed that purchasing cards can:
· reduce typical procurement cycles by approximately 12 days;
· reduce the number of suppliers managed by an average of 16%; and
· result in a reduction or redeployment of staff.
With these results, it is easy to see how new payment technologies are gaining traction in the corporate world.

Conferma’s new payment technology, ‘WebPay’, automates the procure-to-pay process delivering real-time efficiencies to both procurement and accounts payable departments. This solution uses web based technology to introduce single-use credit cards into the purchasing process and capture enhanced levels of data.

Unlike other payment solutions, WebPay is connected to Conferma’s network of financial partners giving its users a choice of card provider. This allows Conferma’s customers to select the best payment partner. With WebPay companies can retain cash longer, pay suppliers earlier, reduce man-power costs, drive compliance and cover new spend categories.

WebPay can purchase anything online from paper to corporate travel all via one platform. Once the system is deployed, it can quickly be extended out into many purchasing categories. This allows companies to centralise their procurement. Many companies are now realising the power of having one platform, one investment, capable of managing this middle-ground of payment. WebPay can use any web-browser to access any website and complete a transaction.

WebPay can standardise reporting data from a multitude of transactions by using the same accounts to purchase a variety of products. Therefore, the data reported back via WebPay is consistent and accurate. This standardised data can be handed-off into other ERP systems to create a powerful management tool capable of tracking payments.

Conferma’s WebPay has a global capability and can be used to purchase goods and services online anywhere in the world. This gives corporate managers the ability to globally synchronise purchasing practises.

This new solution levers all of Conferma’s expertise in the corporate payment sector into a single powerful platform.

*RPMG - 2010 Purchasing Card Benchmark Survey Results - http://www.rpmgresearch.net/.

Conferma: The virtual world of Conferma

It seems that every day a new technology appears on the horizon with new functions and capabilities. The ever excited media is all too keen to report that this new technology is going to revolutionise the way we live.

Since the birth of the internet business has recognised its potential to create new markets and generate money. But, many early attempts at creating online businesses were restricted as the internet and its associated technologies were simply to slow – regardless of the potential. This led to the dot-com bubble as investors invested in projects that the technology couldn’t deliver.

Perhaps the most notable example of this was Boo.com an online fashion retailer in the early-mid nineties. They stretched the technology too far and their resultant collapse was symptomatic of the dot-com bubble - plenty of potential but not enough technology. However, as the internet developed and its capability improved the world became ever more reliant on this new virtual world.

Yet the emergence of one new piece of payment technology has gone largely unnoticed, virtual credit cards. Virtual credit cards operate in the same way as a normal card with the exception that no physical card is produced; they are issued dynamically for single purchasing events and are inherently secure.

In the virtual world the virtual card is coming to the fore. Enabling transactions and helping to realise the potential that so many saw in those early dot-com start-ups. They are easier to use and manage whilst offering increased flexibility and peace of mind. Essentially, virtual cards unlock revenue and create the flows of money many predicted.

Conferma has worked hard to build a network of financial partners capable of delivering virtual cards into the purchasing of corporate travel and expense (T&E). This growing network is; creating new efficiencies in existing purchasing processes, winning new business and creating new markets. Furthermore, Conferma’s settlement and reconciliation technology is superseding the traditional T&E billback process.

Conferma call this solution CSP (Conferma Settlement Platform) and it is rapidly gaining recognition within the world of corporate T&E.

Conferma and others within the payments industry have long recognised the potential of virtual cards. Conferma are using this technology to create new web-pay solutions that extend beyond corporate T&E into other B2B related purchasing categories. Anywhere, where there are; high-volume, mid-value transactions Conferma’s virtual cards can be deployed. Using Conferma’s technology does much more than traditional paper-based purchasing processes. It allows for data to be captured, processed and transmitted in a way that was not previously possible.

Ultimately, Conferma’s virtual credit card technology will give freedom of choice and transaction security in the virtual world.