Holding deposits until travel, and passport reminders
How the Travel pack holds a client's deposit as deferred revenue until the travel date, and warns staff well before a traveller's passport expires.
By Achekam · · 4 min read · For Travel businesses in South Africa, Nigeria, Kenya
Launching soon. The Industry CRM add-on described in this article is launching soon. This article describes it as it will work at launch.
Travel agencies are paid early. A client books a December safari in March, pays a deposit, and the agency's bank balance looks healthy for months before anyone has packed a bag. If those deposits are counted as income on the day they arrive, the March management accounts look wonderful and the December ones look poor, and neither tells you how the business is really doing.
There is a second early-warning problem, of a very different kind. A traveller's passport that expires a few months after the trip may already be a problem for that trip, and nobody notices until the check-in desk says so.
The Travel pack in Achekam's Industry CRM deals with both: deposits are held as deferred revenue until the travel date, and staff are reminded well before a traveller's passport expires. Both belong to the Industry CRM's third wave, which also brings subscriptions and renewals, milestones and retentions, and donation receipts to other industries.
A deposit is not yet income
Money a client pays before travelling is money for a service you have not yet delivered. Until the trip happens, the client could cancel, the trip could change, and some or all of the money could have to go back. In accounting terms, it is closer to something you owe the client than to something you have earned. Investopedia's explainer on deferred revenue sets out why payment received in advance is a liability until the service is delivered, and how it is recognised over time.
That is general accounting practice rather than a rule specific to travel, and your accountant will tell you how it applies to your agency. One question they will ask is whether you sell trips in your own name or arrange them as an agent for suppliers, because that changes how much of the money is yours to call revenue at all.
Holding the deposit until the travel date
The Travel pack holds a travel deposit as deferred revenue until the travel date. The deposit comes in and is recorded, but it does not count as revenue on the day it lands. It waits until the client travels.
The practical effect shows up in your monthly figures. Revenue appears in the months your clients travel, which are the months the work is actually done, rather than in the months they happened to pay.
The deferred balance becomes useful information in its own right. When it grows ahead of the holiday season, it tells you how much travel is already sold and not yet delivered. When it shrinks, the forward book is thinning out. Neither signal is visible when every deposit goes straight into income. It also reminds the owner that a healthy bank balance in the booking season is partly the clients' money, held against trips still to come, and not cash that is free to spend.
A worked example in words
A couple pays a deposit in March for a trip in December. Without deferral, March would carry that income and December, the month the trip actually happens, would carry none of it. With the deposit held as deferred revenue until the travel date, the money sits on the balance sheet from March, still owed to the client in effect, and only becomes revenue when they travel.
If the couple cancels in June, the deposit was never counted as income, so there is nothing to reverse out of an earlier month's profit. What happens to the money then depends on your terms; see refunding a cancelled trip paid online.
The passport-expiry reminder
The pack reminds staff 180 days before a traveller's passport expires.
That is a long warning, and usefully so. Many destinations and airlines set their own rules on how much validity must remain on a passport, and renewing one can take a long time. Six months' notice gives the traveller time to renew before it becomes urgent, and gives your consultant a reason to call a past client, which is often how the next booking starts.
When the reminder arrives, the consultant should:
- Check whether the traveller has a trip booked, and whether the passport will still be valid enough for it.
- Contact the traveller and suggest they start the renewal.
- Update the traveller profile once the new passport details arrive, with the traveller's consent.
A reminder can only count down from a date that was recorded. Make capturing the passport's expiry date part of taking any booking.
How the reminders reach your team
Industry CRM reminders come by e-mail and in the app. There is no SMS or WhatsApp channel. Consultants who work from their phones should have their work e-mail there and check the app's reminders as part of starting the day.
Reminders to clients need an administrator
The passport reminder goes to your staff, and a person decides how to contact the traveller. Where the Industry CRM sends a reminder to a customer directly, the rules are stricter. Each customer reminder stays off until a workspace administrator switches it on, is sent at most once, and is limited by a daily cap.
That suits a travel agency's reputation. Messages that reach clients carry your name, so someone with authority should choose to turn each one on, and no client should get the same reminder twice.
Before you rely on it
Two things are worth doing first. Ask your accountant how deposits should be treated in your agency, and confirm that holding them until the travel date matches their view. And make sure passport expiry dates are recorded for every traveller, so the reminders have something to count down from. Clear booking terms on deposits and cancellations make both easier, and matching gateway payouts and fees to your books covers deposits paid online.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
