Mostly each agency engages in a practice that allows an average of more than 13.5 days for corporate travel customers to pay for tickets issued. However, if the ticket is issued by credit card, ARC (Airlines Reporting Corporation) does not create your agent’s bank account; instead, the airline picks up directly from the credit card company. These cash flow benefits are significant in an industry that operates with thin profit margins.
And there’s even more good news! Travel agents can deduct commissions derived from transactions directly from the official draft amount of the ARC. In fact, some agencies whose accounts are almost 100% credit card have no account at all; they receive a check every week for the airline commission earned.
During the previous hours spent worrying about Tuesday night bank balances, now you can see how cc can help you manage your business better. If most of your accounts were switched to CCS, could your employees spend their time more productively?
After all, the need to process all of those statements, or ask employees to research so many unknown payments, or to turn over receivables will be ignored. Furthermore, the complications of tight internal cash controls are reduced.
Elimination of statement handling responsibility results in more profit for your agency. How many of your accounts still demand that additional copies of invoices be attached to statements? How many hours per week are lost on this task?
How many payments are delayed because a copy of the invoice is lost when the report arrives at the customer’s accounting department (coincidentally, this is a classic way in which companies delay payments and, thus, increase their money)? How much did it cost you to print all those additional copies of invoices and reports? Paper alone can generate as much as one percent of your commission income.
By encouraging your clients to use credit cards, you can:
1. Earn your own interest income on funds previously “invested” with ARC on behalf of your clients;
2. Significantly improve your cash position;
3. Saves dollars previously spent on forms and payroll;
4. Benefit from fewer complications and increased productivity/profitability.
Credit cards benefit both buyers and sellers.
All of the internal control benefits that companies derive from using some form of credit card system yield other additional benefits:
1. The company benefits from a significant down payment—travels are paid for when credit card bills are due.
2. Companies that accurately reflect their financial position by accumulating travel expenses in the month in which they are incurred may show aggressiveness in controlling the balance sheet (ie, recognizing expenses, but not paying them until later).
3. Clients only need to issue one, or at most two, checks per month for most travel related expenses.
4. The use of credit cards significantly reduces the amount of cash the company holds for travel advances.
5. Most major credit card companies offer free life insurance for trips booked with a credit card. This not only adds peace of mind for travelers, but can also result in significant savings for the company in its life insurance benefit exposure.
Do you believe that you can reap the benefits without doing more than just providing a service to make companies aware of the value of using a company credit card? The various companies that offer credit cards will fully explain the services they offer, and if the account you are targeting is large enough, they can even follow up on your introduction and sell their products directly on behalf of your agency!