Details of another dispute between credit card processing company E-Clear and a travel client over outstanding payments have emerged.
Totally Travel, a former client of E-Clear, has claimed it was forced to threaten legal action this summer before reaching an agreement to have a £200,000 debt paid.
E-Clear chief executive Elias Elia denied being forced to pay the debt claiming it was “an arrangement” for Totally Travel to end its relationship with E-Clear.
And Elia denied a claim he was threatened with a winding up order by Totally Travel, claiming bosses of the firm would not disclose its forward bookings, meaning he could not assess how much it was owed.
But, Totally Travel chairman Harry Goodman, rubbished this and said he was still angry about how the firm was treated by E-Clear.
He said: “Why would he sign a personal guarantee to get rid of us, why not just pay up? We were a client for four years and we were always open with them. If they wanted to hold back money why not write to us to say our terms had changed?”
E-Clear has been in the spotlight since the failure of two high profile firms last week with which it had links, Scottish operator Globespan and Allbury Travel Group, prompting demands for an inquiry from Scottish politicians.
E-Clear owed Globespan £35 million, £20 million of which was for passengers who had already travelled, it has been revealed.
Goodman claimed after the collapse of XL Leisure Group, which E-Clear processed payments for, the flow of money from E-Clear to Totally Travel became increasingly delayed.
Goodman said eventually E-Clear was delaying payments by up to 10 weeks and the amount Totally Travel was owed at one point topped £800,000.
He said the decision to pursue E-Clear for the remaining debt was made once Totally Travel joined Hays Travel, after which it’s lawyers threatened the card processing company with a winding up order.
This week, it was revealed Globespan had applied for a winding-up order on E-Clear before it collapsed on Wednesday, and a court hearing was set for February.
Goodman said Totally Travel held short of officially issuing a winding up order, opting instead to use the threat as a bargaining chip to get E-Clear to pay up.
A personal guarantee, described by Goodman as the “strongest worded he had ever seen”, was presented to E-Clear boss Elia who signed it on September 14.
Travolution has seen documents relating to both the personal guarantee and a letter in which E-Clear acknowledged the debt and agreed to pay it back.
E-Clear was given 10 days to pay and the outstanding sum was eventually received in full by the last of those days, Goodman said.
“I am still angry because our management were put through hell. We are a small company and although we were never in any danger of going bust, it was still a lot of money.
“Our people were dealing with this for week after week spending hours on the phone chasing the money.”
Elia, however, gave a very different account of the dispute, which he said was an arrangement for Totally Travel to end its relationship with E-Clear.
He said: “The directors [of Totally Travel] would not tell us the how far forward they thought their bookings were.
“If they are not open with us it’s very difficult for us to assess their business.”
Elia said E-Clear was prepared to work with Totally Travel when no other banks would and that if it was not for E-Clear it would not have had a business.
Goodman said E-Clear was used by many travel firms because they have found it impossible to get merchant facilities elsewhere from credit card firms. He said demands for multi-million pound personal guarantees and terms including up to a 60-day payment window from banks was making it impossible for start ups unless they are under an umbrella like Hays Travel.
“We are a company with average cash balances of between £2 million and £5 million throughout the year and with positive net assets, we have no debt and no bank borrowings,” he said.
“If they are asking us for that, how can anyone do a start up? The travel industry is such a concentrated and relatively small industry that they [the banks] can dictate their own terms.
“The way the banking industry in general is treating the travel industry at the moment is appalling. No company can now start up because of the requirements for merchant facilities are so horrendous and so unreal.”