As everyone here knows, the cost of living is getting out of control. Global inflation rates are still elevated & although falling, still means the cost of everyday goods & services continues to rise.
Believe it or not,
W2V could benefit from an elevated inflation rate, even if global inflation accelerates.
Hear me out.
For example, say a client of W2V, a global enterprise, wants to send an employee on a business trip & the hotel room costs $1K (excluding GST) in a country with a GST rate of 10%. So, the GST payable on that room would be $100. So, under the VAT reclaim program, the client can make their submission on the W2V platform & get back that GST payment. W2V can then take their 5%, 10% or 20% commission (I'm not 100% sure of their commission rates as I think they vary). So out of that whole process, if the commission for W2V is, let's say 10%, then that would be $10 in the bank for W2V.
Hotel room = $1K
Plus 10% GST = $100, which the client reclaims.
W2V commission on the $100 is 10% =
$10.Let's say the following year inflation runs rife through that same economy & the W2V clients head back to that same hotel room, but it now costs $2K (extreme I know, but it's just an example). So, let's run the numbers again.
Hotel room = $2K
Plus 10% GST = $200, which the client reclaims.
W2V commission on the $200 is 10% =
$20.The cash receipts for W2V have doubled.The above scenario gets juicer if that same country increases their VAT/GST rate.
Hotel room = $2K
Plus 20% GST = $400, which the client reclaims.
W2V commission on the $400 is 10% =
$40.As long as W2V can keep their own costs under control, a high inflationary environment is actually beneficial to the bottom line.
That's just some of my thoughts, obviously, there are
too many variables to calculate & the above is just an example, but you can see how a high inflation rate could bring in more revenue for W2V. It also assumes the W2V client wouldn't make cutbacks themselves under that same high inflation scenario (smaller hotel room etc.)
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