ABTA’s Webinar on 9 July saw a panel of industry experts discussing the need for TMC fee structures and credit terms to be revamped, following the Covid-19 pandemic.  This webinar focused predominantly on assisting TMC’s based in Nigeria, but our panel of exerts agreed that changes in TMC fee structures would become a global trend.

Our panel consisting of Adaeze Okonkwo, Head: Travel & Protocol for Access Bank PLC Nigeria, Claude Vankeirsbilck, Chief Operations Officer for  Tourvest Travel Services, Jo Lloyd, Partner at Nina & Pinta, Kingsley Ezenekwe, Product Manager: Cards for Citibank Nigeria Ltd, Lola Adefope, Managing Director of Business Travel Management Ltd Nigeria, Shalini Patel, Team Leader for  Uber for Business, Susan Akporiaye, President of NANTA and Tinuke Nwakohu, Managing Director of Aviator Travels & Tours Ltd Nigeria shared the following insights:

1. Credit terms for clients cannot continue

In countries like Nigeria where credit terms are extended to clients for their travel, immense pressure is put on TMC’s to act as a ‘bank’ for their clients and carry the clients travel-related debt.  Credit terms can sometimes extend to 30, 60 and even 90 days and keeping in mind that BSP is due every 2 weeks, this places a tremendous amount of risk and cash flow strain on TMC’s said Susan Akporiaye, President of NANTA.

The Covid-19 pandemic has highlighted that these kinds of business practices simply cannot be allowed to continue.

Sadly, the ability to offer extended credit terms to clients is sometimes used as a competitive advantage of one TMC over another, says BTM’s Lola Adefope.  However many of these TMC’s have now learned the hard way that this is simply not good business practice and that ‘not all business is good business’.

2. Understanding your client

To understand the behavior around credit terms and late payment, it is important for TMC’s to really understand their clients, how their payment processes work and what kinds of approvals are required says Access Bank’s Adaeze Okonkwo. Once TMC’s are fully armed with this knowledge, discussions can then be had with clients where both parties agree to payment terms and processes that work for both parties.  It is important to note that clients will struggle to pay for single travel bookings at a time due to approval processes, thus they may wait for several invoices to come in over a period of time before making a bulk payment.

It is also of vital importance to understand the level of maturity of the client in relation to how they run their travel programmes in order to gauge what types of payment solutions they would be open to exploring, and what kind of a client they will be in relation to payment terms and good procurement practices. TMC’s need to aim to have clients that understand and respect them as a business partner, and not just one of many suppliers they deal with monthly.

3. Re-course is not a simple thing

Unfortunately the nature of travel and the on-going relationships that TMC’s want to have with their clients means that TMC’s are fairly limited as far as their options for recourse on late payments.  Whereas other professional services would often charge interest on overdue accounts, or even go the litigation route, this is not something many TMC’s consider doing.

However, it is not unusual for TMC’s to build a ‘late payment clause’ into their contracts which needs to be clearly explained to the client while payment terms are being agreed.

Those TMC’s who still do business without contracts need to seriously address this, and ensure contracts are drawn up and regularly reviewed with all clients.

4. Getting away from cash and bank transfers

The good news is that there are many different payment options available in Nigeria to move clients away from debtors books and cash says Kingsley Ezenekwe of Citibank. Options include debit cards, credit cards (although these are currently only 5-10% of all cards issued), lodge cards and mobile money.  The challenge is more around clients being afraid of using alternative options and not fully understanding the benefits.

Says Tinuke Nwakohu of Aviators Travel, if clients fully understand the benefit to them in using alternative options, that will be half the battle won. From a strategic perspective, some TMC’s offer reduced fees to clients who opt for better, more convenient payment methods, thus providing a win/win for all. It is of vital importance that TMC’s have rigorous conversations with their banking partners to fully understand the options, and then carry this information to their clients.

Shalini Patel of Uber for Business says that understanding the marketplace and individual clients is of vital importance.  This enables open conversations with clients around moving them towards more convenient payment solutions as Uber for Business managed to do when moving to a completely cashless environment recently.

5. New remuneration models

In addition to doing away with credit terms, TMC’s globally are discussing different options when it comes to the way they charge for their services.  The conventional Transaction Fee model provides challenges for TMC’s at times when there is minimal travel (or no travel due to the current global crisis).  In addition, the other conventional model of Management Fees is something that Travel Buyers will find problematic if they are not seeing consistent service from their TMC monthly – again the current Covid-19 pandemic highlights this. TMC’s cannot be seen to simply hold value as travel co-ordinators.

Looking ahead, we may see a combination of  different options says Jo Lloyd of Nina & Pinta, where monthly Subscription Fees are paid to the TMC, along with Transaction Fees per travel transaction.  Or what is known as the CostPlus option which will combine monthly Management Fees with Transaction Fees.  In this way, even on months where transactional value is less than what the client originally committed, the TMC still gets consistent Subscription or Management Fee income.

Under a Management or Subscription Fee model, it is vital to show value that is not only around travel bookings.  Access to technology, content, management information and other services that clients value and are willing to pay for monthly will become extremely important.  These additional services could also fall under bundled, menu-based fees where clients pay per service that they require over and above travel bookings.

6. The time is now

When having conversations with clients about changing payment terms and structures, TMC’s must ensure that they are speaking to the right level of management within their clients organisations. They should consider having their Financial Directors involved in having conversations with the client’s Financial Directors as both will speak the same language and both will understand the cost of carrying credit for clients, and why things have to change.

Given the Covid-19 pandemic and the fact that globally, just about every organisation needs to re-look at how they do business, there has never been a better time for change says Tourvest’s Claude Vankeirsbilck.
Clients are primed to have these conversations with their suppliers and are expecting change – this is something for TMC’s to take advantage of in order to move towards healthier business practices.


If you missed this webinar, you are able to listen to it online HERE.
This resource is free of charge for ABTA Members and non Members pay R 250 ($15).


Leave a reply

Your email address will not be published. Required fields are marked *


ABTA African Business Travel Association. A member-led Business Travel Association | © 2024 All Rights Reserved | Sitemap | Website

Log in with your credentials

Forgot your details?