A switch of payment dates by Iata at the start of this year is causing problems for Iata‑accredited agents and risks larger Atol holders breaching CAA financial requirements.
The requirement for Iata agents to settle Billing and Settlement Plan (BSP) payments fortnightly has not changed, but Iata brought forward the payment date from the first day of the month to the last from January.
Travel Trade Consultancy director Martin Alcock described the change as “profound”, explaining: “Taking payment a day earlier doesn’t turn a good business into a bad one, but it has huge consequences if you’re working to a bank covenant [a formal debt agreement].
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“Moving from paying on the first of the month to the last is akin to moving from paying your mortgage after you’re paid to before.”
He said: “It caught people by surprise. Iata flagged this a year ago, but a lot of people only heard about it when they received an email two days before. It wasn’t communicated well.”
Alan Bowen, advisor to the Association of Atol Companies (AAC), agreed: “No one seemed aware of this. Iata moved payment from the first day of the month to the last, so in January payments were required on January 1, 15 and 31.
“The problem is the CAA wants to see many Atol holders’ cash balance at the end of every month. When payment was on the first, the financial position at the end of the month was at a high point. Now it’s at its lowest. The CAA expects larger Atol holders to hold 70% of consumer payments at the end of the month. Now companies may not be able to comply. Yet the Atol holder’s financial position hasn’t changed.”
Bowen said: “We asked the CAA to take balances on the 29th of the month instead, but the CAA said it wasn’t appropriate to change the rules. So we’re encouraging every AAC member to write to the CAA.
“No one seems to have been aware of this. The CAA wasn’t aware of it. January was a shock when the CAA saw balance sheets nothing like they were the month before.”
He added: “I suspect Iata wasn’t aware the CAA requires this.”
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