Accounting is a major factor in any kind of business. It is designed to communicate, record, and pass the correct information to the internal as well as external users and recognized as an information system. The classification, recording, and summarizing accounting information to determine the financial strength and weakness of an agency is done through accounting. It is no doubt an important area in a travel agency business.
A travel agency profitably demands all accurate information, recordings, and preparations of its financial statements. As mentioned earlier, accounting plays a vital role in determining the correct and fair status of the travel agency business and also helps in making strategic plans and decisions. If you run a business or are thinking of running a travel agency soon, you must be preparing for some kind of investment to make for your business. It is really important to keep a record of every penny you use for starting or running your business to calculate the amount you have spent and the profit you had from it. The basic objective of accounting is to get the information of the profit and finance position of your travel business. To achieve this objective you are required to prepare and keep journals and some statements as listed below.
Maintaining Sales Journal by Travel Agencies
Sometimes some travel agents in a travel operation extend credit facilities for its customers like leisure and commercial clients—all these credit sales of travel business are recorded in a sales journal. A travel agency also makes some cash loans to its clients at certain points, which are also recorded in the sales journal. However not every travel agency can afford to extend credit. It has been recorded that only large-scale travel businesses do so for their corporate customers although a thorough check for credit is required prior to opening of a credit amount. A sales journal is extremely important for a travel agency during accounting.
Accounting for travel agents
Accounting Record of Cash Receipt
Keeping a record of receipts is extremely important for travel agencies during accounting. One of the important categories of accounting is to record all revenues received by the travel agency during the period of running the business. The transactions concerning cash, cards like debit or credits, and cheques for tour packages, commissions received by travel business from hotels and airlines, and other sources like vendors are all recorded in an accounting journal.
Account Receivable in Accounting
Account receivable is the term referred to the amount owned to producers, sellers, or suppliers for the purchase done by a travel agency for tourism services and travel products on credit. It is one of the important data for accounting to be recorded in the travel business.
Keeping a Record of Cash Disbursement for Accounting
Also called a cost journal, in cash disbursement journal all cash outflows of travel business are recorded. It is important to keep track of all the operating expenses of a travel agency for ease in accounting. The salaries of employees of the travel business, rents, telephone expenses, financial and legal expenses and administrative cash outflow, selling and distribution expenses, etc should all be recorded in the cash disbursement section of a travel operation.
Cash and cards transactions
Travel Ledger—The Chief Book of Accounts in Accounting
The chief book of accounts is the destination point of entries in journals and sub journals used for balancing the accounts of travel agency business. Balancing the accounts in accounting means the continuous and consistent check and verifications of accuracy of the accounting system of a travel agency. There are certain objectives of travel ledger in accounting for a travel agency as listed below.
- The identification of the revenue sources of travel agency
- Determining total sales in both cash and credits
- Determining total commission earned by travel agency through various sources
- Determining and finding out the total amount owned to travel ledger
- Evaluation of performances of all travel agencies recognized by travel ledger
Almost all travel agencies use Electronic Data Processing System or EDP these days for maintaining their accounting data resulting in an up to date record of each cash and credit transactions. The procedure of posting travel ledger is also really simple and understandable. All you have to do is enter the date, items, invoice number prior to entering the gross amount of cash and card transaction. Then calculate the commission and feed the travel agency commission column with that value. Now you have to subtract the commission from gross and enter the result in net amount column if any due is remaining simply put it in the due column.
Payroll Journal of Travel Agency for Accounting
Here, all the records of salaries and other benefits relating to finance are maintained by a travel agency. All these records include the number of employees and their salaries, insurance premiums, compensations, the total budget for salaries, housing facilities, medical facilities, etc. In any travel business, all the records from every journal are complied monthly and posted in a general ledger.
Any travel agency business requires a good accounting system for cash flow, profit and loss statistics, financial statements, which are basically the reflection of financial position and operating strength or weakness of a travel business, the establishment of budgets, etc. Accounting also helps in relating the responsibilities of executives, and a continuous comparison of the position of the travel agency can also be made by providing the agency useful parameters in measuring travel business’s performance. The travel agency management will be able to tape correct information and timely actions through the accounting system. An accounting system in a travel agency helps to conduct its business efficiently and effectively as a whole.
Going the Digital Way
When it comes to data collating, calculation, and safety, online travel management software is the answer.
There are many such software in the market that you can check out and subscribe to. If you want to stay ahead of the competition, going digital and online is your best bet.
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