Here’s what you can do to safeguard your business and your customers :
- Report supplier issues: If you’re a member of a consortia or group, raise your suspicions. The head office will investigate your concerns directly with the supplier and put a “remediation” plan in place if required. One such issue could be a delay in commission payments or repeated urgent demands for early payment.
- Establish a monitoring protocol: Don’t wait for a supplier default to have a proper plan in place. Be proactive and ensure that you have a vigorous monitoring system and process for when concerns are raised that a supplier default is possible.
- Vet and monitor suppliers: While there are never any guarantees, ensuring that there are proper checks and balances in place to verify a supplier can help to mitigate your risk. One such check would be whether the supplier is an ASATA member, as these suppliers will be required to provide annual verification of their financial status, as well as comply with a strict code of conduct ensuring good business practice. You can also perform regular credit checks. Bad credit and judgments against a supplier are often early warning signs.
- Establish a sound preferred-supplier policy: Again, while there are no guarantees that a supplier’s financial situation is sound, having a proper preferred-supplier policy within an agency, selecting suppliers based on the quality of the supplier, their longevity in the industry and how stable they are can help to mitigate your risk.
- Encourage your customers to pay by credit card: Protect your customers by encouraging them to pay for their trip using a credit card as they some credit cards offer protection against supplier default. Travel insurance can also protect customers against end-supplier failures. Just be aware that these policies usually don’t protect customers against failure of travel intermediaries like tour operators. Ensure your customer is aware of the terms of their travel insurance, what type of supplier default is covered and for how much.