The hospitality industry (which includes Hotels, Airlines, Rental Cars, Restaurants, Catering Services, Staffing companies, and Travel Portals), frequently faces the problem of mounting accounts receivable. This could be due to booking disputes, unpaid commission invoices, invoice corrections, check declines, credit card reversals or denials, property damages, cancellations, billing disputes, and denial to pay for the facilities used.
Collections in the hospitality industry can be both Consumer (B2C) and Commercial (B2B). Selecting a good collection agency with adequate experience in recovering money from past-due accounts in the travel industry is crucial. Their demand letters and collection calls are designed to achieve maximum recovery diplomatically yet follow a firm approach.
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Experienced collection agents are very well aware of the importance of maintaining a good creditor-debtor relationship. They spell out the importance and incentives for paying and the consequences of not paying. The unpaid amount can be reported to his credit report for individual collections. For commercial collections, it could mean filing a lawsuit.
Relying on your untrained in-house staff for collections can not only be inefficient, stressful and expensive, it will also result in lower recovery rates. Most importantly, in-house employees are generally unaware of the ever-changing federal and state debt collection laws, which itself can result in counter-lawsuits. They are also not fully prepared to handle all the excuses and problems involved in debt collections.
Collection agencies are experts in recovering money from all kinds of debt. Not just the hospitality industry, they have experience collecting money from virtually every industry. They know how to tackle all those debtor excuses. If it is impossible to recover the debt in one go, they will put the debtor on a payment plan. Due to the nature of the hospitality industry client base, your collection agency should have the resources and license to accept debts nationwide.
Hotels also host various corporate events, including seminars, conferences, trade shows, executive retreats, board meetings, product launches, etc. Although they are a great way to make quick money for the hotels, however if these corporate bills are not fully paid, these accounts receivable can easily run into thousands of dollars.
There is no point in writing off the debt that is hard to recover by your back-end staff when a collection agency can likely recover at least a part of that money.
Companies often host business seminars and rent halls
To get the maximum out of a collection agency, follow these two thumb rules:
1. Transfer your accounts to a collection agency after no more than 90 days of non-payment. If someone has not paid in 90 days, the likelihood of them paying you directly decreases significantly.
2. Whenever requested by a collection agency, provide a copy of invoices or the relevant paperwork that proves your financial claim promptly.
Debtors take collection agencies very seriously and are far more likely to pay, versus when your in-house staff raises demands.
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Here are a few tips on increasing cash flow and profit for businesses, including hotels, travel companies and the aviation industry.