How to Calculate Your Remittance Holding Capacity (RHC)  16th May 2018

IATA’s NEWGEN ISS proposes to introduce what they call a safe selling limit for all agents transacting through the BSP.

Each agent will be assigned a limit within which they can sell based on their risk status.

After months of intensive negotiations between travel agents and airlines that saw the full implementation of NEWGEN ISS put on hold because of disagreements on the Remittance Holding Capacity (RHC), IATA last November announced that PAConf had fully adopted the NEWGEN resolution.  In the agreed plan, agents will have their RHC set at 100% over and above their annual sales levels. 

In order to understand how an agent’s selling ceiling will be calculated, let’s first of all understand how your risk status will be determined.  An agent who passed their annual financial test and have a clean credit history with no defaults will be assigned status A. Those who have failed either of the two will be assigned status B, while the ones that fail both requirements will be assigned status C. It should be noted that the RHC formula will only be applicable for travel agents in risk status ‘A’ and ‘B’.

If an agent belong to risk status ‘C’, their Remittance Holding Capacity will be equal to the financial security they provide. Therefore an agents calculated RHC becomes their financial security.

How to calculate RHC;

Risk Status

Remittance Holding Capacity Calculation

A & B

Total Days X Daily Average BSP Cash Turnover (3 Highest Reporting periods) + 100%

C

Remittance Holding Capacity = Financial Security Amount Provided

Remittance Holding Capacity = Financial Security Amount Provided

Total Days = Number of days in Reporting period plus number of days in Remittance period. (35 days)

Daily Average BSP Cash Turnover (3 Highest Reporting periods) = Agent’s Average daily BSP cash turnover for the 3 highest Reporting periods of the previous 12 months.

100% represents the year-over-year growth threshold.

The RHC calculation is designed to promote safer selling while ensuring that the majority of agents will not reach their maximum threshold. Agents will be notified by email when they reach 50%, 75%, 100% of the determined RHC, and agents will be able to monitor their RHC usage directly through the IATA Customer Portal.

 

An agent’s RHC will be reviewed at minimum once per year and will be reassessed with any change to an agent’s risk status or applicable cash conditions. Agents may also request an adhoc recalculation of their RHC considering sales from the previous 12 months.
In case the RHC threshold is reached, agents will have the ability to continue issuing tickets using IATA EasyPay, a new, voluntary pay-as-you-go e-wallet solution or customer cards. In addition, agents will be able to make full or partial advanced remittances to the BSP to lower their amount outstanding. These measures are intended to provide agents with the necessary tools to manage their RHC.

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