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The types of travel trust account are many and varied. What is right for your business depends on a number of different factors:
What kinds of sales of travel services are you making?Sales of flight inclusive packages can only be covered by a CAA standard trust account arrangement – a full trust or escrow and only then, where the CAA have given their permission for you to use that method to protect your licensable sales.
Where you act as an agent for another travel company that is selling a flight inclusive package, you may only require a ‘pipeline monies trust’
If you don’t sell flights at all, then the most appropriate type of travel trust account for your business would be a gold standard or advance supplier payments trust account
What proportion of consumer funds can you afford to segregate in a trust account?
If you don’t have sufficient working capital to enable you to make payments to the suppliers of travel services making up the packages you sell, you will not be able to utilise a ‘gold standard’ trust account (link) but putting appropriate insurances in place would enable you to make use of advance supplier payments trust account
What IT capability do you have?
Having inhouse trust reporting development capability certainly puts you at an advantage in terms of the freedom you have to choose the type of trust account that works best for you. More complex trust account structures where multiple release criteria are utilised (like the ATOL full trust account) work most efficiently where reporting capability has been developed using a tailormade approach.
Do you have access to financial failure insurance and/or travel bonds?
Access to insurances and bonds at reasonable rates will enable you to balance cashflow enhancing release criteria against cost effective trust administration fees. If so, an advance supplier payments trust account or an ATOL full trust would be available options for you.
What requirements have the CAA imposed?
Is your ATOL renewal dependent on you integrating a trust account into your financial processes? If so, and you don’t have sufficient IT capability to manage a full trust, then the CAA’s standard escrow trust account may be best for you.
What requirements has your merchant acquirer imposed?
Your merchant acquirer may have requested that all your card turnover settles directly into a trust account and is not released until after travel arrangements are complete. If that’s the case, an ATOL trust or escrow trust account is unlikely to suit your requirements. You will need a specific merchant acquirer trust account or a gold standard trust
What risk are you aiming to cover?
Are you looking for some security over monies paid for supply of accommodation or other travel services? If so, our supplier payments protection trust and escrow arrangements would be one way of combating that risk.
If you would like reassurance that funds consumers are paying to your agents are segregated from agents’ own funds until they are paid to you, look at a travel agent pipeline monies trust.
What is your budget?
Use this as good albeit general rule of thumb when it comes to the fees associated with running a trust account: the more often you require a release of funds; and the more reasons you apply to make a release, the more expensive the running costs are going to be. This is so both in terms of the administration you must apply inhouse, and the administration your trustees must apply.
Serenity Travel Trusts
Suite 2, Realtex House
Leeds Road
Rawdon
Leeds
LS19 6AX
