Travel Trusts are increasingly favoured over travel bonding as a means of providing the financial protection that the law requires travel companies to have in place. Here are just some of the reasons why:-
Merchant services suppliers favour the use of trust accounts as they are transparent and greatly reduce the risk to consumer monies. Some merchant service suppliers recognise those reduced risks by passing on rate savings to trust account holders.
The cost of travel bonding is on the up as are the Authorities’ minimum bond requirements. Travel bonding options are often prohibitive for a start-up or low turnover business.
We aren’t promising that implementing a trust account is fun, but once it’s done, at least it doesn’t have to be revisited again another twelve months later. That’s more time for you to actually run your business.
Trust accounts are a simple and cost effective means of complying with statutory financial protection requirements for new entrants to the industry and established businesses alike. Having one trust account in place for all arrangements requiring protection avoids confusion for both travel companies and their customers.
In a correctly run trust structure, consumers’ money will be securely held in a separate designated account until the arrangements it relates to have been fully performed or until suppliers have been paid, and can be transferred to a fulfilment body immediately. So in the event of an account holder’s insolvency, customers will not experience lengthy delays in getting their money, and will not need to jump through administrative hoops to get it.
If correctly set up and administered, trust accounts are a more secure and reliable means of providing protection than an insurance policy or travel bonding. Insurance policies can be subject to onerous conditions which may mean cover isn’t as reliable as it might appear; and a bond is only as reliable as the assessment of turnover it is to protect. This means that the risk of over trading is constantly present.