If you have been tasked by the CAA to put an escrow account in place, your main challenge is likely to be ensuring that your business has adequate cash flow to sustain the requirement to fund the account with up to 70% of cash that your ATOL customers have paid to you. The good news is that the technical operations required to calculate that figure need not add to that challenge.
Running any travel business – irrespective of whether or not it runs a trust – involves identifying and managing funds entrusted by customers for future travel arrangements. Indeed, as an ATOL holder, a travel business is required by ATOL Standard Term 5 to maintain electronic business systems that meet minimum requirements. If your IT system meets those requirements, you already have the technological capability to run an escrow account.
ATOL Standard term 5 says:-
- The business systems must distinguish between licensable and non-licensable sales
This will provide the ‘Stage one’ data that you need to access to assess the figure that you need to deposit into the escrow account.
- The business systems must record the date of booking and departure for each passenger booked on a licensable transaction.
You are not required to hold funds in the escrow account that relate to bookings that have been made after a certain date and have not returned from travel. Therefore, this information will allow you to filter the data collected at Stage 1 to exclude such values.
- The business systems must record of the number of bookings accepted by the ATOL holder…………….. with the amount of revenue associated with those sales… The ATOL holder must keep entries from day to day transactions of all sums of money received
In other words, the bookings you identify under Stages one and two should be reconciled to the business’s trading bank account so that you can identify what funds you have actually received and are still holding on the bookings that are to be protected.
It’s really very simple. As long as you are carrying out a regular bank reconciliation and your accounting system is able to download the reconciled transactions into excel, you have the IT capability to run a CAA escrow account.
There are many simple and inexpensive travel booking systems that exist on the market that comply with these requirements without the need to integrate additional software into your existing infrastructure.