Travel agents arrange travel services from various principals on behalf of their clients and earn income in the form of:
- Commissions payable from the principal
- Service fees charged directly to the client
The most important concept to understand in the design of QuickTrav Invoicing is that for every charge invoiced to a client for services provided to that client by a principal, the corresponding liability to that principal, commission income due from the principal and output Vat on the commission is automatically raised .
In a typical sales and cost of sales environment, the agency would have to raise sales and debtors via an invoice in the sales journal and then raise any corresponding ‘purchases’ and creditors via a ‘goods received note’ in the purchases journal. The difference between sales and cost of sales would equate to com mission earned. Not only does this system require more work but it leaves the door open for a mismatch between income and expenditure (i.e. a sale could be raised without the corresponding cost of that sale and vice versa)
A QuickTrav invoice thus not only charges the debtor but also raises any applicable creditors and is thus both a sales and a purchases source document.