If your travel firm is continually being rocked by cancellations and refund requests, you might feel like your accounts are set to be eternally chaotic.
However, losing money is by no means a certainty and there are ways to manage the impact of unfortunate outcomes effectively.
Knowing how to manage refunds and cancellations can keep your accounts in order and strengthen your financial position.
How should travel firms handle refunds and cancellations?
There is no way to avoid cancellations and refunds, as cancellations are often caused by factors beyond your control and refunds are a legal right.
What you can control is the impact that they have on your accounts.
The best way to do this is by only considering something as true revenue once the travel has occurred.
If there is any chance that a cancellation may happen or a refund be demanded, the money attached to that should be kept separate so that it can be easily managed.
This will allow you to be more effective in meeting your legal obligations while also not finding your accounts in chaos if money gets deducted.
Are there specific requirements for refunds?
Refunds will need to be issued within 14 days of a trip being cancelled.
This means it will not be necessary to keep the funds separate for an extended period of time.
One of the main challenges that comes with meeting these obligations is when other parts of the supply chain fail to issue a refund.
In order to manage this, it may be worth having a reserve fund for swift refunds that can then be topped up once airlines or hotels fulfil their obligations.
Can accounting chaos be avoided?
As accounting professionals, we would certainly hope so.
Utilising technology to better track the flow of money in and out of your travel firm can be helpful.
Likewise, clearly distinguishing between refundable and non-refundable payments in contracts can ensure that your customers also understand what to expect when they pay.
Ultimately, the best way to avoid accounting chaos is by getting support from a trusted professional.
Our team are here to help you handle refunds and cancellations so your accounts stay ordered.
Get in touch if you want to keep chaos out of your accounts.
