The trust account solution for travel businesses seems wildly misunderstood by many. travel firms, both trading and startups, have misconceptions about the negatives of a trust account solution rather than looking at the huge amounts of benefits. The PTS Trust Account and insurance solution have been fully developed to help each PTS member grow their travel business.
Through a properly run travel trust account like Protected Trust Services (PTS) supplies, many misconceptions about the model strangulating business cash flow are banished. And, with a properly run travel trust account, the business will not sacrifice growth, but will actually grow all the stronger.
These misconceptions about trust can often come from poorly operated examples or limited knowledge of how a trust account like PTS operates and the abilities of those involved. Here we shall clear up these miscommunications and explain how PTS operates with our travel trust account solution.
The Trust Account Solution For the Travel Industry
The PTS trust account solution allows each travel business to separate client funds into an independent trust account to ensure Package Travel Regulation Compliance.
When a client pays monies for a package to any PTS member their monies are paid directly into the PTS trust account. The trust account is completely transparent so each PTS member can see their monies and client monies allocation at any time.
95% of travel businesses need to pay suppliers in advance of clients travelling. This is possible to do from client monies in the trust account. The money is not locked in the trust account to prevent paying suppliers.
When a supplier needs to be paid in advance this can be arranged and payment will be made from the trust account. To cover the monies and maintain Package Travel Regulation compliance we will arrange for Supplier Failure Insurance to be in place for each client for a nominal fee.
The Package Travel Regulations and impending New Package Travel Directive clearly state that a trust account and/or insurance are both viable solutions to ensure consumer protection.
In essence, the trust account is used to separate and protect and if a supplier needs to be paid in advance PTS flip the funds to SFI insurance cover to ensure PTR compliance.
The PTS travel trust account solution is not meant to hinder a travel firm. In fact, PTS has built this solution to be quite the opposite – It is a strategic, cost-effective solution that aids tour operators and travel agents to manage cash flow, client monies and ensure Package Travel Regulation Compliance.
Why Would I Not Just Choose An Insurance Model Alone for PTR Compliance?
An insurance model may seem like a simple cost-effective solution when starting as a tour operator. But, truly look at the expense as your travel firm grows. An insurance model will be far more expensive for you in the long run, and far riskier.
The big risk with an insurance model solution is that the insurance can change rates. As risk becomes larger in the travel sector the underwriters will increase insurance premiums. Or, in a worst-case scenario, as has happened recently, the insurance firm supporting the Package Travel Regulation solution will go bust themselves. For example, CBL Corporation went into administration and this left an array of travel firms, and most concerningly companies that offered PTR compliance solutions to independent travel firms, which had been underwritten by CBL, with a huge issue. If you would like to learn more and truly understand this insurance issue visit this site about the CBL Corporation impact.
Insurance is a solution that could work for some travel firms – this is fair to say. But it is also fair to say it is costly and risky and can fluctuate and leave travel firms vulnerable at any given time.
There are outstanding benefits to any tour operator or travel agency to use a travel trust account
- Complete client fund management
- Complete supplier payment management
- Extensive and secure cash flow management allowing your travel business to go from strength to strength
- Merchant Services for Travel Companies and preferential processing rates
- Package Travel Regulation Compliance Cost Effective – Pay as you go and becomes incrementally more cost-effective as the company grows.
- PTS independent trust account is driven by software that you manage yourself ensuring quick and easy use.
Can I Manage My Own Trust Account or Client Account?
Many travel firms have managed their own client accounts and separated client monies into separate bank accounts. However, this is a conflict of interest and does not offer consumer protection as the Directors of the company have full access to client monies. Fraud can easily still occur in this instance.
As of July 1st 2018 when the New Package Travel Directive has been implemented an independent trust account, such as the PTS trust account, is required. Self-managed trust accounts, or trust accounts with affiliated professionals, such as the company accountant, are no longer allowed.
If you’d like to discuss this further, please get in contact with one of Protected Trust Services’ (PTS) lovely staff members by calling 0207 190 9988. Or, you can visit our member support and travel trust account pages to learn more about how we protect you.