Owning a travel agency requires good accounting. According to New Century Financial (www.newcenturyfinancial.com), there are several tips and ideas out there, but the suggestions below are vital for success. Just because the first few months of a business’ life have gone well doesn’t mean it can continue without having the right accounting procedures in place.
Have the Right Systems in Place
Make a habit of keeping good records. Make sure that your records are such that you could look back and recreate any business day, knowing what transactions took place, how, and why. This is critical if an audit ever comes up, but more important than that, it is critical to continue to steer in the correct direction. Know what your fixed costs are, what your variable costs are, and how much you need to bring in to go over both and begin to make a profit. Make sure you go over that baseline number every day. Keep track of it. Having the right software is critical for this, but don’t over spend on software you don’t need. Often keeping a couple of relevant excel spreadsheets updated daily is enough to keep a very accurate account of the financial well-being of your travel agency.
Pay Someone to Do It Right
If you are busy enough to need to hire someone, an accountant should be your first choice. The importance of good paperwork can’t be underestimated, and your time can be better spent bringing in the money and letting someone else do all the time consuming tasks like paying bills and invoicing.
Consider Factoring for Improved Cash-flow
Factoring is a very useful tool for small businesses. Travel agencies can particularly benefit from factoring to increase cash flow with client accounts that work under net terms. Factoring is a service that pays on accounts receivable right away and then collects the money later themselves. This is a service that does not depend on the business credit of the travel agency but rather on the credit of the clients who have been invoiced. Many industries and sizes of business use factoring to keep cash flowing. A bank or financial institution that offers factoring will charge nominal fees for the service, but it could be the difference between staying open or closing the doors when large accounts are on net 30 or even net 90 terms.
Avoid Depending on Family for Accounting Needs
There’s nothing worse than having a huge problem that affects both family and business. While family is likely very trustworthy, the accounting facet of business should be separate. Trust a CPA or other accounting professional to do it right and keep everything in the clear, and use family for other business roles if necessary.
Make Sure to Have The Right Insurance
Small businesses could all benefit from having insurance that covers their facilities. Travel agencies also have specific needs. A lawsuit could result from making incorrect travel arrangements for a client, and having an insurance that would cover these types of needs just makes sense. The building should also be covered, in case of clients tripping and falling or other hazards. For travel agencies, one could start with general liability or home-based business insurance depending on the need.