External Accountants in the Travel Industry – 3 Main Mistakes Made by Novice Accountants
Accounting in the travel industry is complex and very specific because of the existing legislation in this sector. Understanding the accounting specificities in this field is essential for external accountants: They must be both professional and efficient with their travel agency customers. Accountants exclusively dedicated to the travel industry are rare.
At TravelWorks, our support team is constantly in touch with our system users and, of course, also with external accountants who are frequent users as well.
Therefore, our extensive experience allows us to identify very quickly between external accountants discovering the specificities of the travel industry and external accountants who have been dealing with the travel industry for a long time.
Here are the 3 major mistakes made by novice accountants in the travel industry:
1. Tax Calculation Rules
In the travel sector, unlike the vast majority of other sectors, taxes are calculated on the number of commissions and not on the number of sales. This is also one of the reasons why an efficient travel industry external accountant needs a specific software to efficiently manage for example, the vendors’ commission payment tracking.
2. Compensation Fund and Rounded Figures
In some countries or areas (particularly in Quebec), there is a compensation fund which represents a percentage calculated on the sales amounts and which allows consumers to be refunded. For example, in the event of a tour-operator bankruptcy that occurs before delivering the service to the client that has already paid the service to the travel agency.
In Quebec, the percentage of this compensation fund (OPC) is 0.1% on the sales amount and there are specific rules for calculating the rounded rates that some external accountant are sometimes unaware of.
A competent accountant will therefore avoid wasting unnecessarily time identifying why some files do not balance by $0.01 in the amounts of the compensation fund.
3. Exceptions With Tax Exemption
Some taxes are not applicable on certain services in the travel sector. This is particularly the case with travel insurance for which taxes to be paid are directly managed by the insurance companies of the sector.
In conclusion, if you are a travel agency, regardless of the country in which you operate, we recommend you hire an external accountant who knows the travel sector of your specific area. This will not only allow you to avoid mistakes but also reduce your external accounting expenses. We remind you that the external accountant charges their time: if they waste it because of a lack of knowledge of your field, your own finances will suffer the consequences.
If you are an external accountant who seeks to develop its clientele within the travel industry, we strongly recommend you work with a software tailored to the travel sector in order for you to demonstrate your professionalism and your efficiency to the decision makers of this industry.
Our experts are at your disposal to share with you the best practices!