Practice Development Articles
Travel First Class with QuickBooks
How One QuickBooks ProAdvisor Helps Her Travel Agency Client in Style
By: Scott H. Cytron, ABC
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Similar to other professions, travel agents have their own set of niche accounting and bookkeeping requirements. However, the methods in which agencies set up their systems differ greatly due to many constantly changing variables, such as commission structures, client payment methods and deposits. Getting a traveler from his home to an exotic location is the easy part, so take a trip with Scott Cytron as he explores how one QuickBooks ProAdvisor works closely with a Houston travel agency for short- and long-term results.
Kathy Coffman, Advanced Certified QuickBooks ProAdvisor, brings a distinct advantage to serving her client, 2Getaway Travel; she is a former travel agent herself who spent three years in corporate and incentive travel.
"At first, the client did not know I had been a travel agent," Kathy says, "but once we met and they knew I understood the revenue and operations structure, it was a natural fit."
Kathy, who is also a Certified Sleeter Group Accounting Software Consultant and a member of the American Institute of Professional Bookkeepers, has a long history with QuickBooks. She started working with QuickBooks for her husband's direct marketing business in 1992.
That and other professional experience led to her starting Coffman Business Solutions in 2002. A friend introduced her to the travel agency.
Even after working for some time as a virtual controller for the travel client, there are some days in which Kathy believes she is still just getting started. After dealing first with basic QuickBooks procedures, she is now helping the agency become completely automated.
Automating Tasks in a Manual Environment
In this industry, "most agencies still track their information manually," Kathy explains. "They have a folder with vacation information and then put actual revenues into QuickBooks." she says.
However, her travel client is very different. "2Getaway Travel is on the other end of the spectrum," she says. "They want to do every task online and marry all activities with their accounting software, but the problem is that there hasn't been a software program I've found that talks to both sides, so almost any solution becomes a custom-solution."
Tracking Information
Kathy uses the QuickBooks friendly program, SmartVault, to help the agency become paperless by scanning documents.
She also reconciles the books every other week to produce the agency's payroll. But as the agency's bookings grow, so do several processes that require specific solutions not found in off-the-shelf software.
First up is how to track traveler information.
"In the insurance industry, an agent sells insurance and makes a commission; it's a very cut-and-dried procedure," she says. "Like insurance, travel agents sell travel and make commission from their travel sales. It is simple to book the commission into QuickBooks, but the matter becomes complicated when you must track sales and receivables - that are not part of your revenue - along with your real revenues. Job costing and profitability reporting becomes a nightmare.
"In addition, the client payments do not always pass through the agency. Oftentimes, a client's credit card information is passed directly to the travel vendor," continues Kathy. "The money never flows through the agency, but you still need to apply the payment to the customer's travel invoice."
The accounting is similar to accounting related to a trust because the agency has to track revenue and non-revenue accounting information. The agency has to track A/R and A/P balances that are not really part of revenue or COGS (cost of goods sold).
"In order to invoice the provider for our commission revenue, while still being able to send travel reservations payments, we also must set up the travel provider as a vendor and customer," she says.
Solving Complexities in QuickBooks
2Getaway Travel offers a unique group travel service: producing and booking concert packages to Mexico. Their services also include individual travel, faith-based group travel and destination weddings, but their concert bookings present the biggest bookkeeping challenges.
Job profitability tracking for groups is very difficult because the customer/job is not so easily defined.
"You need to track the traveler's information, but they are not necessarily the customer; in essence, the travel supplier can be the customer," says Kathy. "Costs are tied to the concert and individuals traveling to the concert. Commission revenue comes from any number of travel providers, or revenue can come from group package mark as well. Accurate job cost and profitability reporting is extremely important since margins in the travel industry are so small."
To determine profitability, Kathy sets up each individual group as the customer, and everyone else involved in the trip becomes a "job" under the main customer. Job profitability, as a result, is rolled up into the "customer."
Using Separate Files
"In order to track the multitude of reservation, invoicing, and group details for 2Getaway's more complicated group projects, we set up a separate 'reservation' data file in QuickBooks. We then use the accounting QuickBooks database to track revenues and costs for the agency using a single group name as the customer name instead of 200 or more names listed as jobs under the group."
Looking for the Next Solution
Kathy says that after two years she is still searching for an affordable add-on software program that integrates with QuickBooks and that meets her client's needs. Here is what her ideal solution would do:
- Track complete passenger and reservation information, while handling traveler invoicing and vendor costs.
- Pull actual revenue to the agency into QuickBooks from reservation software, and integrate with a Web reservation and payment system.
- Track job profitability, especially for group travel.
"It's all about 'lost profits,'" she says. "This day and age, the travel agency business is difficult because everyone can book on the Internet. Airlines no longer pay commissions, so if you want a travel agent to book airspace, the agent must often charge you an up-charge, or do it for free. Travel agencies go by the wayside because of lost profits, so if you can't track profitability, you're in trouble."
Editor's Note: We will check back with Kathy and her search, so if she finds her dream solution, we can share it with you.
In short, Kathy finds any workaround possible depending on the specific accounting need within QuickBooks - skills she believes she brings to her travel client not only because she is a ProAdvisor, but also understands QuickBooks and its capabilities.
Bonus: Here is a sample Chart of Accounts for basic accounting chores when working with a travel agency.- Sample Travel Agency Account Listing [PDF; 39 KB]
Scott H. Cytron, ABC, is a frequent contributor to Intuit ProConnection and other industry publications covering professional services, including accounting, healthcare, financial planning, collections and debt, and high-tech. He also works with CPA firms to increase their recruitment and retention efforts through communications and marketing strategies. Contact him at scott@cytronandcompany.com.
Last Updated: 07/10/2009
