Trust Accounting in Practice: How Travel Advisors can protect client funds

Trust Accounting in Practice: How Travel Advisors Can Protect Client Funds

By the Antravia Advisory Team
November 2025

In today’s travel industry, trust isn’t just built through great itineraries but also through financial integrity. Handling client deposits and payments requires more than good organization; it requires compliance with Seller of Travel (SOT) laws that safeguard consumer funds.

These laws, enforced at the state level, ensure that travel advisors and agencies keep client money separate from business funds, protecting travelers if an agency becomes insolvent or mismanages cash. For many U.S. travel professionals, proper trust accounting is a legal obligation.

At Antravia Advisory, we’ve helped travel businesses, from independent advisors to global DMCs, navigate compliance, accounting, and financial control. This guide explains how trust accounts work, what the law requires, and how to manage them confidently using proven accounting methods and technology.

See also our blog - Seller of Travel Laws and Client Trust Accounts: What U.S. Travel Agents need to know.
In that blog, we discussed:

• Explanation that Seller of Travel laws exist at the state level (CA, FL, HI, WA).

• Mention of trust accounts, bonds, and registration.

• Basic accounting note that “client funds are not your revenue until services are delivered.”

• Light references to penalties and consumer protection intent.

In this blog, we dive deeper, and we discuss:

• Step-by-step how to open and name a trust account correctly.

• Operational flow of deposits, supplier payments, refunds, and commissions.

• Detailed reconciliation process and record retention requirements.

• Specific compliance pitfalls (commingling, delayed deposits, incomplete records).

• Coverage of accounting software tools, automation, and Antravia’s tech integration.

Understanding Seller of Travel Laws

Seller of Travel laws exist to protect clients’ money before their travel services are delivered. They prevent advisors from using client funds for business operations and require full segregation and typically through a designated trust account or, in some cases, a surety bond.

While there is no federal Seller of Travel license, several key states, including California, Florida, Hawaii, Washington, Iowa, and Nevada, have established their own rules.

• California requires either a registered trust account, a surety bond, or membership in a consumer restitution plan. The regulations apply to anyone selling more than $500 of travel annually to California residents, even if based elsewhere.

• Florida mandates a trust account or a bond between $25,000 and $100,000, though exemptions exist for advisors affiliated with host agencies.

• Hawaii requires either a trust account or a minimum $10,000 bond, and registration must include LLC or LLP details.

• Washington insists on a trust account and a valid business license, with oversight focused on consumer protection.

• Iowa and Nevada both accept either a trust account or bond arrangement, typically for businesses selling more than $2,500 per year to state residents.

Each state defines its own thresholds, but the message is consistent: client money must never be mixed with operating funds.

Non-compliance can result in fines up to $10,000 per violation, suspension of registration, or even criminal charges in severe cases. For agencies selling across multiple states, verifying where your clients reside is crucial. Tools such as Antravia’s compliance mapping checklist can help identify state-level obligations quickly.

Trust Accounting for Travel Advisors

Client payments are not revenue until the trip is fulfilled. Treating them as working capital and even temporarily, can cause significant legal and financial risk.

Strong trust accounting provides:

• Client confidence through transparency and integrity.

• Regulatory protection, reducing audit and penalty risk.

• Operational stability, as protected funds remain unaffected by cash flow swings.

• Efficiency gains through structured reconciliation and automation.

In California alone, poor segregation of funds has resulted in millions of dollars in restitution orders which is a reminder that proper systems are both ethical and strategic.

Setting up a Compliant Trust Account

Opening a trust account is straightforward, but the setup must follow state-specific rules to be recognized as compliant.

1. Choose a compliant financial institution.
   Select a U.S. bank that offers business checking accounts, is FDIC-insured, and supports supplier payments and wire transfers.

2. Name the account properly.
   The account title must clearly indicate its purpose, for example, “Antravia Travel Trust Account – CST #12345.” This distinction is critical for SOT audits.

3. Provide documentation.
   Submit your SOT registration certificate, Employer Identification Number (EIN), and any business formation documents. Some states require a minimum opening balance.

4. Maintain formal resolutions and records.
   Keep proof of the account’s purpose and governing terms, including bank correspondence and board resolutions (for incorporated entities).

5. Consider alternatives where permitted.
   In states that allow it, a surety bond or consumer restitution plan may substitute for a trust account. Bonds typically range from $25,000 to $100,000, depending on annual sales volume.

Once the trust account is active, update all client contracts and receipts to specify that funds are held in trust until travel services are provided.

Managing Client Money: Deposits and Disbursements

A trust account has one function, which is to receive, hold, and disburse client funds securely. Every dollar received must flow through this account.

Deposits should include all client payments such as deposits, balances, upgrades, and prepayments. They must be deposited within 24 to 48 hours of receipt. Even credit card transactions or supplier deposits made on behalf of a client must be routed through the trust before being forwarded. Each entry should record the client name, booking reference, and amount received.

Disbursements should follow the same discipline. Funds can only be released when contractual conditions are met, for example, after services are confirmed or tickets issued. Refunds should be processed promptly. Commissions can be withdrawn only after supplier payments have cleared. Trust funds must never be used for operational costs such as rent, salaries, or marketing.

For added control, implement dual authorization for any disbursement above $1,000.

Reconciliation: Keeping the Books Accurate

Monthly reconciliation ensures your client ledgers match your bank statements and that no funds are misplaced. For high-volume agencies, weekly reconciliation is even better.

The process involves five steps:

1. Gather all records — bank statements, client ledgers, supplier invoices.

2. Match deposits and payments to individual bookings.

3. Calculate the current balance of client funds (total deposits minus payments plus outstanding refunds).

4. Identify and correct discrepancies immediately, such as bank fees or supplier chargebacks.

5. File and retain reconciliation reports for at least six years to meet audit requirements.

Modern accounting tools simplify this process. QuickBooks Online and Xero can automate matching, while Antravia’s bespoke travel accounting integrations provide real-time reconciliation and compliance alerts. Also review our blog on Best Accounting Systems for Travel Agents in 2025.

Common Compliance Mistakes

Even experienced advisors can fall into avoidable traps. The most frequent errors include:

• Mixing trust and operating funds, often by mistake during cash flow pressures.

• Delaying deposits, creating temporary shortfalls in trust balances.

• Incomplete documentation, such as missing invoices or bank confirmations.

• Assuming a bond replaces all obligations, when some states require both.

• Applying one state’s rules nationwide, leading to partial compliance.

Avoid these pitfalls through automation, clear workflows, and staff training. Antravia regularly conducts trust account health checks for advisors to verify that systems align with state law.

Technology and Compliance: The Antravia Advantage

Manual trust accounting belongs to another era. Today, automation and digital reconciliation reduce risk and improve accuracy.

Antravia’s advisory and implementation teams integrate trust accounting workflows directly with booking and payment systems. Our technology solutions automate reconciliation, flag anomalies, and send compliance reminders before SOT filing deadlines.

Whether you manage a host agency, boutique DMC, or luxury consultancy, Antravia helps transform compliance into a competitive advantage, combining financial discipline, transparency, and trust.

Conclusion: Make Compliance Your Strength

Trust accounting is a legal requirement and it is the foundation of long-term credibility in the travel sector. By managing client funds correctly, reconciling diligently, and maintaining transparent records, advisors protect both clients and their businesses.

Antravia Advisory supports travel firms with financial transformation, accounting, and compliance audits.
To arrange a free trust account review, visit www.antravia.com or email info@antravia.com.

Antravia: Empowering travel businesses with finance, tax, and growth expertise.

References

• Florida Department of Agriculture and Consumer Services – https://www.fdacs.gov/Business-Services/Sellers-of-Travel

• California Department of Justice, Office of the Attorney General (FAQs) – https://oag.ca.gov/travel/reg-faqs

• Palmetto Surety Corporation – https://www.palmettosurety.com/2024/08/surety-bond-florida-seller-of-travel/

• Antravia Advisory Research – https://antravia.com/antravia-research-virtual-credit-cards-in-travel

• Host Agency Reviews – https://hostagencyreviews.com/blog/travel-agent-license-seller-of-travel-license

• Hawaii Department of Commerce and Consumer Affairs – https://cca.hawaii.gov/pvl/programs/travel/

• Washington State Department of Licensing – https://dol.wa.gov/professional-licenses/sellers-travel

• Washington Department of Revenue – https://dor.wa.gov/manage-business/state-endorsements/sellers-travel

• The License Company LLC (Iowa Registration) – https://thelicensecompany.com/license-types/travel-agent-licensing-services/travel-agency-registrations-by-state/iowa-travel-agency-license/

• California Department of Justice, Office of the Attorney General (SOT Statute) – https://oag.ca.gov/sites/all/files/agweb/pdfs/travel/sot-statute-17550-59.pdf

• Travel Consumer Restitution Corporation – https://www.tcrcinfo.org/

• Home Based Travel Agent Resource – https://homebasedtravelagent.com/lesson/comply-with-state-seller-of-travel-laws-and-licenses/

Disclaimer:
Content published by Antravia is provided for informational purposes only and reflects research, industry analysis, and our professional perspective. It does not constitute legal, tax, or accounting advice. Regulations vary by jurisdiction, and individual circumstances differ. Readers should seek advice from a qualified professional before making decisions that could affect their business.
See also our Disclaimer page