How many conferences or events did you attend last year? One, two, five or more? If so, you’re not alone. The conference industry is booming, and with it, corporate event room rentals and accommodations play a significant role on the hospitality industry’s balance sheet.
All hotels recognize that prompt payment of all corporate billing is key to ensuring cash flow and profit margins. Yet, it is not unusual to see corporate accounts receivables with an average collection period of 60 days or more. This can have a downstream effect on financial statements, budgeting and collections – as well as a hotel’s ability to pay its short-term liabilities.
There are some key challenges facing hospitality organizations:
Manual Invoicing & Reconciling: In the hospitality corporate billing environment, too much time is spent manually printing out invoices and then matching customer payments to one or more invoices. Additionally, hospitality resources are stretched for time as their role entails resending misplaced invoices and chasing outstanding receivables. These open items present problems in closing the month-end.
Unlinked Systems: Working within a complex decentralized AR process, corporate receivables personnel frequently deal with out-of-date or incorrect data due to globally unlinked systems and discrete databases. As a result, management firms and franchise owners suffer from high days sales outstanding (DSO), missed cash collection targets, lack of cash-flow predictability and higher than target write-offs.
Disputes & Resolutions: Whenever accounts receivable process is manual-intensive, the end result is human error. Receivables processing continues to be burdened with inaccurate and incomplete information, which requires human intervention to sort out incongruities. These disputes take a further toll, as there are multiple calls from frustrated clients to the corporate receivables department.
B2B Collections: Effective management of corporate client credit and collections in-house can be a tedious and complex task that consumes huge amounts of resources and employee time. Operating at the hotel level, there is often no process in place to determine which accounts require more costly 1-to-1 interactions and which will self-correct with a lower-cost email reminder.
Fast Forward to Better Receivables
These challenges are a catalyst for forward-thinking hospitality organizations to look for new strategies that not only improve their working capital but also encourage a better customer experience for their corporate billing accounts.
Hospitality executives want to harness best practices, advanced technology and behavioral collection analytics. Equally as important is a centralized solution that allows them to scale with ease as they acquire and divest properties, ensuring maximum profitability.
Automation and workflow tools streamline processes and eliminate many manual tasks, driving up data quality and reducing disputes. These leading technologies also bridge the gaps between unlinked systems, improving the audit trail so that management and account managers can easily gain a portfolio view of the status of all corporate billing accounts. This information is key to resolving issues, speeding up the payment cycle and reducing costly collections.
The resulting business impact? Improved cash flow and better liquidity.