How does “Cash-Trust Account” work?

Lately, we’ve been receiving a number of questions about how the “Cash-Trust Account (Tracking)” section works in the Back-Office module. So, we decided to put this quick reference together for you. Please note that the “Cash-Trust Account” section is only useful for those agencies that maintain a separate “Trust” Bank Account where customer payments received are first deposited and supplier payments are made, with the leftover commission then being transferred to a “General” Bank Account. This is usually due to Travel Industry requirements or government requirements, to prevent misuse of customer funds. It is also a good practice as it forces travel businesses to ensure that they only use the commissions earned (and not the full customer receipts) towards regular business operating expenses (i.e. rent, telephone etc.).

We provided this “Cash-Trust Account” section just as a helpful and easy tool so that you can keep track, by invoice, of commissions that you can transfer to the General bank account. It helps you track all fully completed invoices for which all money has been received (from customers) into the Trust bank account and all money paid from (to suppliers) the Trust bank account, and what the remaining ‘commission’ amount is that you can transfer to the General bank account is. But for this to work properly, it is very important that the invoices that appear in this “Cash-Trust Account” section have accurate amounts (or else you may end up transferring too much or too little to your General bank account).

So, the way the “Cash-Trust Account (Tracking)” section works in the back-office is that it only shows those invoices for which all the money has been received (from the customer) (and reconciled to the bank statement) and all the money has been paid to the supplier (and reconciled to the bank statement).

Generally, here are the steps that agencies go through before an invoice will appear in the “Cash-Trust Account (Tracking)” section:

  1. After creating a new invoice and recording the details, mark the invoice as “Completed”. (This pushes the invoice to the back-office.)
  2. Record any remaining outstanding amounts receivable from customers or owing to suppliers, as they are received/paid.
  3. On a monthly basis, reconcile the amounts received from customers/paid to suppliers in the system to your monthly Trust Account bank statement. Reconciliation is very important to ensure accuracy.
  4. For invoices that are fully recorded and reconciled, they then appear in the “Cash-Trust Account (Tracking)” section. Use this to decide how much to transfer from the Trust Bank Account to the General Bank Account, and keep track of it here by recording the invoices that you have transferred the commissions for.

We hope this helps you manage and track the commissions you can transfer to the General Bank Account and use to pay for operating expenses and contribute to your profits.