For two years, the Covid-19 pandemic halted the global face-to-face meetings industry and planners spent much of their time cancelling or rescheduling meetings — and in some cases, chasing deposit funds that suppliers and venues no longer had at their disposal.
We are in the third quarter of 2022, and the recovery process is full steam ahead. It feels like our industry has gone from zero to 100 in the blink of an eye, and concerns have grown beyond financial risk.
Clients are looking for solutions to help with the workload, staff shortages and rising costs. Liz Holtby, vice president of operations at Meeting Escrow, a financial and risk management company, explains how to mitigate financial risk through third parties.
Can mitigating financial risk help secure more business?
Meetings, events, and incentive programmes are significant financial investments.
For corporations with a financial risk management mandate, paying advance deposits to suppliers can be problematic. We have heard from agencies and independent planners that they don't want to handle their clients' money.
Agencies can suggest to clients that they enlist the services of a financial solutions company by depositing funds for suppliers' advance deposits into secure escrow trust accounts. Outsourcing vendor payments to a third-party company provides agencies with a competitive edge in attracting more business from large corporations.
Corporate clients might ask to see an agency’s financial records. How can a financial risk mitigation platform make this process easier?
The RFP process can be intimidating, and sometimes smaller agencies are often overlooked because they can’t disclose their financial statements or their financial statements don’t match up to the bigger agencies.
Clients could be overlooking good service providers because they chose to walk away and not disclose their financials. Organisations want to know the firm's viability because they are instilling the agency with large supplier deposits for the event.
But what if agencies weren't handling clients' advance deposits at all? And instead, suggested that their clients use the financial services provided by a third party financial and risk management company? By putting advance deposits for global meetings and events into secure segregated trust accounts, clients will no longer worry about the agency's viability because their vendor deposits are protected.
With this solution, money isn't changing hands between the agency and the client; therefore, there would be no need to ask for financials, making the RFP process much more manageable.
How can mitigating financial risk help with staff shortages and rising costs?
Programme execution has become more challenging when faced with workload, rising costs, staff shortages, shorter lead times and increased demand. Organisations may want to consider offloading some financial elements to an outside organisation so that the key deliverables can be met successfully.
There is also the new reality of rising costs and supply chain issues. An escrow solution cannot control scarcity, but it can control currency fluctuation by converting your budget to the destination currency, so the budget will not be affected.
If we want in-person meetings to continue we have to find innovative solutions to get us through this crisis and for clients to plan with confidence.