Supplier prepayments to destinations and your float

To hold a block of rooms, lock in coach transfers or contract a destination management company for a group, you usually have to put money down early. Destination suppliers want deposits, and often full prepayment, weeks before your group travels. Hotels and transport providers frequently expect to be paid around 45 to 60 days out, and for group business a large share of the total supplier cost can fall due before departure. The trouble is that you are committing real cash against bookings that have not yet been paid in full, and in some cases against bookings that may still cancel.

This is a particular cash-flow problem, distinct from financing a wholesale purchase order. It is about prepayments to destination-side suppliers such as room blocks, ground handlers and DMCs, almost always in a foreign currency, and timed to a group's departure date rather than to when your customers actually pay you. For room-block-heavy or group-led operators, that timing can invert the float entirely: money leaves before money arrives. This guide explains why, and how to keep committed cash clearly apart from cash you are free to spend.

Why the money leaves before it arrives

Destination suppliers carry their own risk. A hotel holding twenty rooms for your group is turning away other business, so it wants commitment in the form of a deposit or full prepayment with a deadline tied to the arrival date. Ground handlers, coach operators and DMCs work the same way: they schedule staff and vehicles against your booking and expect to be funded ahead of delivery. The result is a calendar of outflows that begins well before your customers have paid their balances.

For a typical leisure booking the customer pays a deposit then a balance close to travel, so cash tends to arrive ahead of the supplier needing it. Group and room-block business often runs the other way. You may need to fund a sizeable supplier prepayment around 45 to 60 days out while customer balances are still trickling in. Treat those figures as illustrative and check current terms, but the shape holds: the heavier your group mix, the earlier and larger your committed outflows.

How the float inverts

A healthy float means you are holding customer money before you have to pay it onward, so the timing works in your favour. Destination prepayments can flip that. When you advance a deposit for a room block, that cash is committed: it is spoken for against a specific group, even though it still appears in your bank balance as though it were free. Make several such commitments across overlapping departures and a large part of your headline balance is actually pledged, not available.

Cancellation makes this sharper. If a group shrinks or falls away after you have prepaid, you may be exposed to the supplier's cancellation terms while customer refunds are still being worked out. The core discipline is to know, at any moment, how much of your balance is committed to prepayments and how much is genuinely yours to deploy, so a strong-looking balance does not tempt you into spending money that is already promised to a hotel abroad.

Currency on committed cash

Because the suppliers sit in the destination, the prepayment is usually due in the local currency. If you fund each deposit by converting from your home currency at the moment the supplier invoices, you take a conversion cost on every commitment and you take it at whatever rate happens to apply that day. For a group with several destination suppliers, those conversions add up and they land at the least convenient times.

Holding a balance in the relevant currency changes the dynamic. If you keep funds in the destination currency, you can meet deposits and prepayments from that balance without a forced conversion each time, and you can choose when to top the balance up rather than reacting to each invoice. That separates the question of when a supplier must be paid from the question of when you convert, which is exactly the flexibility committed, time-sensitive prepayments call for.

How Altery fits

The heart of this problem is funding foreign-currency commitments early while keeping committed cash distinct from free cash. With a multi-currency account you can hold USD, EUR and GBP and fund destination deposits and prepayments from the matching currency, without being forced to convert at the moment each supplier invoices. When you do convert, you can do it on your own timeline rather than at a spot rate on the deadline day. You can find the wider travel toolkit at our travel business account.

To stop committed money looking like spendable money, you can earmark prepayments in ring-fenced pots, so the cash pledged to a room block or DMC sits visibly apart from your operating balance. Real-time balances let you see committed versus free cash at a glance before you take on the next commitment. For controlled deposit payments to individual suppliers, virtual cards with their own limits let you fund a specific supplier without exposing a main account. If you run more than one brand or destination entity, multi-entity management keeps each one's committed position separate. Altery is not a bank, and this is general information, not advice; the supplier obligations remain yours, so treat this as help organising and timing the cash, not as changing what you owe.

Frequently asked questions