Supplier payments for DMCs: what you owe, to whom, and by when

Supplier payments for a DMC come down to one line per sold booking: the supplier, the cost you agreed and the date your contract says you pay, all fixed when the booking is sold. Work the list by that date, record each payment with its bank reference, and let a cancellation change only what the supplier's own terms keep.

What a sold booking owes, and when it starts owing

A payable should be born with the sale, not typed in when the invoice arrives. When a booking is confirmed and names a supplier, it owes that supplier the cost frozen on the booking, by the pay-by date frozen with it. The line is written in the same transaction as the booking, so a checkout that fails owes nobody.

Two kinds of booking owe nothing yet: an agent's hold, and a request waiting for your answer. Neither is a sale until it is confirmed, and that is when its payable appears (on request or instant confirmation covers that choice).

Who is paid is a supplier record, not a line of text:

• For a hotel, usually the hotel itself, sometimes the representative you buy it through. How hotels, rate plans and their terms are loaded is on hotel contracting software.
• For a transfer, the transfer company, set per product and overridable per vehicle or departure.
• For a tour, its operator.

Freezing protects you twice. A new term agreed next month never moves last month's payable, and the cost you owe is the cost the booking was sold on.

Pay-by dates come from your contract terms

Every supplier contract says when you pay. You type that term once per hotel, or once per transfer company or tour operator, and every booking works out its own date from it.

Three rules keep these dates honest:

• No term, no invented date. A hotel with no term of its own takes the supplier record's "N days before the service"; with neither, the line has no pay-by date rather than one chosen for you.
• Never in the past. A term whose date has already passed when the stay is booked is due on the day it is booked: "30 days before arrival" on a stay booked 10 days out is owed now.
• "At release" needs a release. A room with no release days cannot date that term, and the hotel's editor names those rooms so you can fix them. How release days work is in allotment, release period and stop-sale.

The payable is owed in the currency the cost was entered in. If the supplier's record says it invoices in another currency than the contract's prices, the hotel's editor tells you; nothing is converted behind your back.

The payables desk: overdue, due this week, later

Everything you owe hotels, transfer companies and tour operators sits on one desk, by pay-by date.

• Overdue: past its pay-by date and not paid.
• Due soon: falling due within the next seven days.
• Open: everything still owed.
• Paid, to recover (paid for a booking that was cancelled afterwards) and cancelled.

"Today" is your agency's day, in its own timezone, so a line does not turn overdue at somebody else's midnight. Filter by hotels or transfers and by supplier, and read the list of who you owe most, which is the first question an accounts desk asks. Each supplier also has its own statement.

To record a payment, tick the lines, give the date the money left your bank (today or earlier) and the bank reference, once. A typed amount is allowed only for a single line, so a part payment is never spread across several by guesswork. The desk is for the roles you give it to, and recording a payment also needs the right to manage money. Every change lands on the booking's trail with who made it, and a payment recorded by mistake can be reopened. The money itself moves at your bank: the desk is the record, never a payment channel. Any view exports as CSV.

Cancellations and changes: what is still owed

A cancellation is where payables go wrong, because what you refund the agent and what the supplier keeps are different numbers. Treat them as two ladders: the one you sell, which cancellation policies agents can read covers, and the hotel's own, frozen on the booking with its rate plan.

For a hotel line not yet paid, the hotel's frozen terms decide what is still owed on the cost side:

• before the first cut-off: nothing, and the line is cancelled;
• a percentage: that share of the cost, rounded up;
• a fixed amount: that amount, never more than the cost;
• non-refundable, or the full stay: the whole cost;
• a number of nights: those nights' own costs when the stay froze them, otherwise unknown until the hotel's invoice says.

The line stays open at the amount kept, and remembers what it was before and why.

• Tours and transfers sold under a contract ladder keep that step's share of the cost. Without one, a tour or ride that will not run owes nothing.
• A line already paid is left alone and moves to "to recover". Getting money back is a conversation with the supplier, not a button.
• One room of a stay cancelled alone leaves the rooms that stand, plus what the hotel keeps of that room.
• Before you confirm a hotel cancellation, the preview shows what the hotel keeps and the payable after, worked out by the code that then runs it.
• An amendment moves what is still open to the new cost, service date, pay-by date and supplier (a different vehicle may be run by another company). A paid line stays as it was and the trail says so, so you settle the difference with the supplier.

Transfer suppliers, vehicles and routes are covered on transfer booking software.

A worked example: five bookings and two cancellations

Say today is 20 February and these five bookings are sold. The figures are illustrative net costs, and the terms are the ones you agreed with each supplier.

The desk shows 1,090 owed: 150 overdue and 700 due within the week. Number 5 is overdue because "14 days before arrival" fell before the day it was booked, so it was due the day it was sold. On 21 February you pay Hotel A for numbers 1 and 5 in one go, with one bank reference.

On 6 March the client on number 1 cancels, four days before arrival. Hotel A's frozen terms are free until 7 days before arrival, then 50%, so the hotel keeps 150. Number 1 was paid in full, so it moves to "to recover": the preview showed the 150 the hotel keeps, and the other 150 is yours to claim back. The same client's transfer, number 3, is cancelled too. Its contract has no ladder and it was not yet paid, so its line is cancelled and nothing is owed.

On 8 March the client on number 4 cancels, three days before arrival. Hotel C's terms make the stay non-refundable inside seven days, so the line stays open at 200, still due on 12 April, with the reason on it. Your agency's refund to the agent follows the policy you sold, which may be a different number.

Reconfirm the stay, not just the payment

Paying a hotel and having a room are separate facts. Reconfirm every sold stay a set number of days before arrival: your account's lead, overridable per hotel. The reconfirmation desk lists the exceptions: stays with no hotel confirmation number, stays due for reconfirmation and not yet done, and guests arriving within two days. Record what the hotel said, with its confirmation numbers per room; the number prints on the documents issued from then on. Switch on the morning digest and the exceptions go to your operations address at 07:00 your time.

Read the two desks side by side in the week before a busy arrival day. A stay that is overdue for payment and not yet reconfirmed is the one to call first.

Supplier invoices and other currencies

When the supplier's invoice arrives, enter it, attach the PDF and match it to that supplier's bookings, expected against invoiced: to check, matched, disputed or approved. A cancelled booking is expected at zero. An approved difference becomes one dated change to what is owed, and approving never pays: payment stays a separate step for someone who manages money.

A hotel bought in another currency is owed in that currency. When you pay it, the exchange difference between the rate its cost was carried at and what actually left your bank is recorded as your gain or loss, and the supplier's statement in its own currency is untouched. If you withhold tax at payment, your own rule decides what is kept, and it is recorded with the payment. At month end, the payables ageing in your accountant's pack is read from the same lines; travel agency accounting software covers the books side.

Setting up supplier payments: a checklist

1. Every hotel names who is paid: the hotel itself, or the representative you buy through.
2. Each hotel's term matches the contract: at booking, N days before arrival, at release, on departure, or N days after departure.
3. Rooms on an "at release" term have their release days.
4. Every transfer company and tour operator has its "days before the service" on its record.
5. Each supplier has its reservations email, duty phone and invoicing currency, and you have read any mismatch the editor shows.
6. Rate plans carry the hotel's own cancellation ladder, so a cancellation keeps the right cost.
7. Only the people who handle money can record a payment.
8. Someone reads "overdue" and "due soon" every morning, and "to recover" every week.
9. The reconfirmation lead is set for the account, and for each hotel whose contract differs.