Choosing the Right Accounting Software for Tour Operators
If the financial side of things is causing you stress as a multi-day tour operator, you are not alone! Choosing the right accounting software for tour operators is an important thing to prioritize: in the dynamic business of travel, understanding the profitability of each trip and your overall business is essential for sustainable business growth. Many tour operators find themselves operating in the dark, unaware of their true financial performance. To address this challenge, selecting a tour operator software platform with integrated accounting capabilities tailored to the complexities of the multi-day tour industry is crucial and not something that should be left up to guesswork or end of year reporting.
The Complexity of Tour Operator Accounting
If you work in the industry, you already know this, but: tour operator accounting is inherently complex, marked by a continuous flow of inbound and outbound payments and the often-unpredictable fluctuation of costs with vendors. Managing this level of complicated finances demands a comprehensive system that minimizes errors, fosters efficiency, and instills confidence in businesses as they handle the ins and outs of their financial transactions.
Think about it this way: as a tour operator, you are likely operating on cash-based accounting due to the mismatch of payments in the travel industry. Accounting software that includes accrual-based and cash-based accounting allows for easier reconciliation. With a fully integrated general ledger system, as a tour operator, you can separately track accounts for accrued profit tracking vs. banking accounts. The timing of payments must also be considered. Often, payments are not taken from your passengers until six months before departure, but your vendors are not paid until a month after the trip departs. Whether you are an FIT or group-based tour operator, your finance team must field payment requests from coworkers and vendors with various methods of payment and various times. To solve this (and eliminate stress and manual work from your finance team), you need accounting software that can…
- Manage vendor database and payment terms
- Store full vendor contract rates for accurate cost estimates
- Provide schedules for required prepayments prior to departure
- Provide reconciliation tools for vendor invoices against your loaded costs
- Approve vendor invoices and communicate with vendors for billing discrepancies
- Track payment method to vendors for checks, wires, credit card, and EFT payments.
Let’s not forget about contingent liability either: accounting software should provide access to a balance sheet that includes large accounts like contingent liability.
All-in-One Solution for Seamless Data Management
If your business is getting by in dozens of Excel spreadsheets, let us tell you: there’s a better way. Tour operators, despite their scale or operational reach, should prioritize accounting software purpose-built for their industry. An ideal solution provides a centralized platform for managing all accounting needs, eliminating the need for duplicating information across disparate systems. This not only streamlines the financial workflow but also minimizes the risk of errors associated with tedious exporting and importing disjointed manual work processes.
As a tour operator, you should consider accounting software that provides you with a holistic view of accrual-based financial statements. This will allow you a more complete, better understanding of profitability within a given period. If you are currently running a separate reservation system from accounting, you probably have to reconcile everything to make it balance out. With any tour operator software worth its salt, this will be done for you by integrating the reservation financial transactions into a general ledger system. An all-in-one, comprehensive solution should be at the top of your list for any accounting software, which will give you a complete picture of your profitability – without any manual reconciliation or guesswork.
Multi-Company and Multi-Currency Capabilities
Given the inherently global nature of the tour industry, as a multi-day tour operator, you often engage in multi-company, branding, and multi-currency transactions. The accounting software that you choose to invest in must seamlessly accommodate these differentiations. Ensuring the ability to run all month-end and year-end accounting processes for diverse organizational structures and currencies is essential for obtaining an accurate and comprehensive view of financial performance. It’s not easy to calculate these differences manually, so having a tour operator accounting software that can do the math and factor them into the profit and loss for you is a game-changer.
Efficient Forecasting for Informed Decision-Making
In travel, the future is always not-so-clear, but important business decisions hinge on how well your tour operations staff can financially manage this. Effective forecasting serves as a cornerstone for the success of any tour operation. Accounting software should empower you as a tour operator by enabling the efficient preparation and delivery of pertinent financial information to various departments. This not only streamlines internal processes but also contributes to more accurate forecasting, allowing you to make informed decisions for the sustainable growth of your operations.
While no one can predict the future, as a multi-day tour operator with a lot of payments coming in and out for trips that haven’t happened yet, your accounting software should help you navigate these uncertainties. Consider accounting software that helps you calculate break-even numbers on group departures to help determine passenger count for setting base prices. Then, as departures go on sale, that software should be able to monitor the guest count and recommend yield management decisions on whether to run the trip and the price considerations. As you approach a departure date, your accounting software should be able to refresh vendor costs to reflect the actual passenger count, providing the most accurate estimate for final costs. Pair that with the ability to process supplier invoices, and you can easily identify a departure’s gain or loss from the estimated to the actual rates.
Streamlined Payables and Receivables Management
For multi-day tour operators, cash is flowing in and out at a rate that’s almost impossible to keep up with manually. Navigating the constant ebb and flow of payments, commissions, and client invoicing is a perpetual challenge for tour operators – can you relate? Your chosen accounting software should simplify these processes by providing easy access to manage both payables and receivables. Facilitating the efficient running of month-end and year-end processes ensures that financial records are consistently up-to-date and accurate.
More specifically, your accounting software should give you the ability to quickly view payments that are outstanding or overdue and need follow-up. When you have a system that creates specific workflows for accounts receivable focused on your processes, your staff’s lives will become a whole lot easier. Think about all the moving parts of a tour operator space: deposits, refunds, moving funds between reservations, travel agent checks, group reconciliations, and more. Accounting software should also handle accounts payable with a breeze. Specific workflows that focus on your processes would ideally be able to also seamlessly handle things like invoice processing and reconciliation, travel agent commission, travel insurance payments, air ticket reconciliation, and more. With lots of different money exchanging lots of different hands, it’s important to have a system that can reduce your back-and-forth work and keep your books organized.
Comprehensive Reporting and Chart of Accounts
Can you tell exactly where your tour operator business stands financially at any given time? Organized financial management hinges on the ability to prepare detailed financial reports and maintain a comprehensive chart of accounts. An adept accounting solution empowers tour operators to efficiently prepare reports, disburse payments and commissions, and invoice clients. The flexibility to create and manage a detailed chart of accounts tailored to specific needs ensures adaptability to diverse financial structures within the industry.
With an integrated accounting system, tour operators can access a plethora of relevant and helpful reporting features. Some of these reports might include processes for month end closing and financial reporting to aid in sales processes such as the ability to automate moving funds from the balance sheet to the income statement at a time of revenue recognition. You should also be able to calculate new ending balances for large balance sheet accounts like customer deposits and supplier accruals. Having a bank reconciliation module, along with trial balance and financial document creation, should help set your tour operator business up for success. With accurate reporting and a system that can handle how those reports are used, accounting software can be a real asset in determining where your business is at for a given time.
Insightful Financial Tracking for Every Trip
You might know how well your trips performed at the end of the year, but few tour operators know on a trip’s individual basis. Acquiring a nuanced understanding of expenditures and earnings associated with each trip is a transformative capability for tour operators. The chosen accounting software should provide granular insights into the financial performance of every trip at the individual reservation or departure level, offering a clear breakdown of expenditures and earnings. This transparency is critical for identifying areas of improvement and maximizing profitability on a trip-by-trip basis.
Choosing the right accounting software for tour operators is a strategic decision that can significantly impact the success of any travel business. Softrip is a comprehensive solution designed to address the unique challenges faced by tour operators in a platform that stores everything in one place with data that can be pulled at the click of a button. With its integrated features, multi-company and multi-currency capabilities, and emphasis on streamlined processes, Softrip provides tour operators with the tools they need to navigate the complexities of financial management and achieve sustainable growth without the need to run a separate system. Not to mention, it leaves more time to focus on the good stuff: travel!