Travel Agent Finance Guide 2025: 3.3 Managing Client Money and Protecting Your Business

Part 3: Managing Money, Margins, and Growth in a Travel Business

3.1: Pricing Strategy and Profit Margins

• Why markup and commission are not the same

• Fee structures that work - planning, consultation, retainer, concierge

• How to price packages without undercutting your value

• Understanding COGS (cost of goods sold) in travel

• Examples of margin erosion: last-minute discounts, supplier rate changes

• Case examples: agents losing money on high-volume, low-margin bookings
  
  
  

3.2: Tracking Profitability and Business Health

• Net profit vs. gross commission and what actually matters

• How to calculate breakeven per month and per trip

• Why it’s dangerous to focus only on top-line sales

• KPIs that matter: average sale value, repeat booking rate, commission mix

• Monthly reporting rhythm: what agents should be reviewing

• How to catch cash flow issues before they snowball

3.3: Managing Client Money and Protecting Your Business

• Rules around client trust accounts (where required)

• Best practices for deposits, refunds, and cancellations

• What happens if a supplier collapses mid-trip

• Chargeback risks and dispute prevention

• Insurance: business interruption, cyber, professional liability

• Why you need clear written terms, and what to include

3.4: Planning for Growth and Scaling Smartly

• When to raise prices, and how to do it without losing clients

• Hiring: VAs, ICs, or full-time staff with financial implications

• Systems to scale: CRMs, payment links, workflow automation

• Growth traps: chasing volume instead of profitability

• Legal and financial issues when growing across states or markets

• How to build a business that can weather seasonality and economic shifts
  

Part 3.3 Managing Client Money and Protecting Your Business

One of the fastest ways for a travel agency to get into serious trouble is mishandling client funds. Whether you are a one-person agency working from home or a mid-sized business with staff, you are effectively holding other people’s money until services are delivered. The accounting and legal obligations around this vary depending on your state, your host agency, and your supplier relationships, but the principles are the same: client money must be protected, tracked, and never confused with your own operating funds.

Rules around client trust accounts

Some states in the U.S. require registered travel sellers to maintain a client trust account. California, Florida, Washington, and Hawaii all have seller-of-travel laws with strict rules about how client deposits must be handled. A trust account means client funds are held in a separate bank account, not mixed with your agency’s own money, until you remit them to suppliers. Even if your state does not require a trust account, many agencies adopt this practice as a safeguard. From an accounting perspective, this ensures deposits are treated as liabilities on your balance sheet, not revenue, until travel is actually provided.

We look into some of these State requirements in more detail under this blog.

Best practices for deposits, refunds, and cancellations
Deposits should always be documented with a clear invoice that shows the amount collected, what portion is non-refundable, and when the balance is due. If you collect planning fees alongside supplier payments, those need to be tracked separately in your books. Refunds and cancellations create extra complexity: if a supplier refunds you in gross but you had deducted your commission upfront, you may need to repay more than you received. Having a clear system of reconciling supplier invoices, client payments, and refunds prevents disputes and ensures your accounting is accurate.

What happens if a supplier collapses mid-trip
Supplier insolvency is one of the most damaging risks in the travel sector. If a tour operator, airline, or DMC fails after you have collected funds, clients will often look to you for recovery—even if the money was passed on. Some U.S. states have restitution funds (for example, California’s Travel Consumer Restitution Corporation) but these only cover certain transactions. For most agents, the safest strategy is to book through trusted suppliers, diversify your relationships, and ensure clients are protected through insurance or credit card coverage. From an accounting angle, note that chargebacks and clawbacks can reduce revenue long after the initial booking month, so provisions may need to be made if risk is high.

Chargeback risks and dispute prevention
Credit card disputes are common in travel, especially with last-minute cancellations or no-shows. A chargeback can cost you the full amount plus fees. The best defense is documentation: signed authorizations, clear cancellation terms, and proof of communication. Reconcile merchant account statements monthly to identify disputes early, and keep a reserve fund so one unexpected reversal does not create a cash flow crisis.

Insurance: business interruption, cyber, professional liability
Every agency should have professional liability insurance (errors and omissions). This protects you if a client alleges negligence, such as failing to inform them of visa requirements or cancellations. Business interruption insurance can provide cash flow if external shocks—natural disasters, pandemics—force operations to pause. Increasingly important is cyber insurance, as agencies hold sensitive client data and payment details. From a financial strategy point of view, premiums are an expense category worth budgeting for, because they safeguard against catastrophic losses.

Why you need clear written terms, and what to include
Finally, never rely on verbal agreements. Your terms and conditions should set out how deposits are handled, what happens with cancellations, when refunds apply, and your role as an agent of the supplier rather than the principal provider of travel. Clear terms protect you legally and help in chargeback disputes. They also support proper accounting, because they establish when you can recognize income (for example, when a planning fee is earned vs. when supplier funds are remitted).

Managing client money is not just compliance, it is central to protecting both your reputation and your business’s solvency. The agencies that last are those that treat client funds with the same care as a fiduciary would.

References for Part 3.3 Managing Client Money and Protecting Your Business

Acknowledgements

Antravia would like to thank our consulting clients and industry partners who generously shared their time, insights, and real-world case studies. All client examples have been anonymized and edited for clarity, but they are based on true advisory engagements and reflect real decisions, challenges, and financial outcomes from across the travel industry.