Using the Agency Credit Card to Pay Vendors for Client Reservations

This article will cover three different scenarios when using an agency credit card to pay vendors for client reservations.

Scenario One:  When paying the vendor the gross amount of the trip and billing the client.

     ***Move to the bottom of the article to watch a recording of this scenario

Scenario Two:  When paying the vendor, the net amount of the trip and billing the client.

     ***Move to the bottom of the article to watch a recording of this scenario

Scenario Three:  When the client payment is closed with the agency credit card.

Scenario One:  

Client pays the agency with cash or check; agency pays the gross amount to the vendor with the agency credit card. 

Handling this scenario depends on what amount the agency is paying the vendor.  If the agency is paying the vendor the gross amount and expecting a commission, follow the steps in Scenario One below.  If the agency is paying the vendor the net amount of the trip, then follow the steps in Scenario Two below.

1. Create a Sales invoice: booking one the Submit To is Supplier with no commission.
2. Create a second booking for the commission amount using Supplier or Comm Track.

   • You can use either Supplier or Comm Track for the second booking.  A Supplier booking will account for the Sale and commission in the same month and the commission due will be on the Vendor Balance Report.  A Comm Track booking will not account for the commission until it is received and applied to the Comm Track booking.   

When the invoice is issued in the GDS and interfaced into Trams Back Office, there will be one booking with the total sale and commission amount.  The TBO user can copy the first booking, choose the preferred Submit To and delete the total sale amount leaving only the commission amount in the second booking.  The commission amount will then be deleted from the first booking. 

The second booking can also be created from the Payment screen when entering the Payment Made to the Vendor as in Step Four.  Click on Edit Invoice and create the second booking: Submit To: Supplier or Comm Track. Delete the commission amount in the first booking. 

While it is possible for agents to issue an invoice with two bookings in ClientBase, it is usually better to have them issue the final payment invoice with the commission amount in one booking. This gives the TBO user the option to create the second booking if the vendor has been or is going to be paid with the agency credit card.

     3. Close the client side of the invoice with the client’s payment of cash or check.

     4. Enter a Payment Made to the Vendor for the Gross amount of the Sale, Pay Method: Other

     5. Create a Journal Entry to credit a Liability Account named “Vendor Payments on Agency CC”. This account will act as a “Wash” account.  It is helpful to put the Vendor, Client and Invoice Number in the Journal Entry Remarks field for easier reconciliation with your credit card statement.

     6. When you pay the credit card bill, create a Journal Entry to debit the same Liability Account used in Step Five.  

To reconcile the 'Wash' account, go to General Ledger | G/L Account Reconciliation.

Pros: 

1. The invoice is “open” and appears on the Client Balance report.  
2. The amount due to the vendor is “open” and appears on the Vendor Balance report. 
3. The Back office has control of the Client Receivables and Vendor  

Cons: Without the proper accounting procedures in place the TBO user could make a payment to a Vendor on the Vendor Balance report, not knowing that it was already paid on the agency credit card which would result in a duplicate payment. 

Scenario Two:

Client pays the agency cash or check, and the agency pays the Vendor the net amount with the agency credit card.  The steps to handle this scenario are very close to scenario one.  The difference is you don’t have to create two bookings.  

1. Create the invoice: Submit To: Enter one booking for the total sale with the commission amount.
2. Close the client side of the payment using the cash/check received from the client.

3. You are paying the vendor a net amount by deducting the commission.  Enter a Payment Made to the vendor using Pay Method of Other.  For this step be sure to make the amount of the payment the amount charged to the agency credit card.  Payment Method is set to Other, and the vendor name is the actual vendor used on the invoice.  Toggle the invoice closed, and when prompted for a journal entry, credit the Liability account. 

     4. When you pay the credit card bill, debit the same Liability account. 

  

Pros:

1. The invoice is “open” and appears on the Client Balance Report 
2. The amount due to the vendor is “open” and appears on the Vendor Balance report.
3. The Back office has control of the Client Receivables and Vendor Payables.
4. Since the Net amount is paid to the vendor, you do not need two bookings

Cons: Without the proper accounting procedures in place (see pages 9/10) the TBO user could make a payment to a Vendor on the Vendor Balance report, not knowing that it was already paid on the agency credit card which would result in a duplicate payment.  

Scenario Three:

Client pays the agency cash or check; the invoice is issued as closed with the agency credit card. 

Option One:  The payment from the client creates the Vendor Liability used to reconcile the agency  credit card. 

1. Create the invoice. The Submit To is Supplier.
2. Close the client side of the invoice with Payment Method of Credit Card (Agency credit card).
3. Enter the money received from the client using Profile Type of Other.

Note:  When you are entering the payment using Profile Type of Other, you can create an "other" profile for the client or you can create one profile that you use every time the agency credit card is used.  In the example above, "Agency Credit Card" is listed as the name, this is the generic profile used every time instead of creating a new "other" profile.  Regardless, be sure to put the client's name and invoice number in the remarks field.

     4. When prompted for a journal entry, credit the Liability account "Vendor Payments on Agency CC"

     5. When you pay the credit card bill, debit the same account used in step 4.  

Time Saving Tip:  Use Pay Codes to help save time.  When entering the payment received from the client, assign a pay code.  For example: ACC for Agency Card.  The next time you use the agency credit card, instead of entering all the information from scratch, go to Payments Query, in the payment code field enter ACC, and click on query.  This displays a previous credit card entry, click Copy, change the amount, and the remarks field.  When you click OK, the journal entry is filled in for you.  Click OK to save. 

Step One:  Assign a payment code when you enter the payment received from the client. Save the payment following the steps outlined in scenario three. You only need to assign the pay code once.  Once the pay code is assigned you can simply query on that pay code in the future. 

Step Two: Next time you use the agency credit card, query for payment code ACC 

The payment code is on the Advanced Tab of the payment query screen.  After entering the payment code, click Query.  This displays a previous payment with ACC in the Payment Code field. 

You can then click Copy, to make a copy of the payment.  Once the payment is copied, just change the amount and save the payment.  Clicking on Copy creates a new payment, with the same information as the previous payment.  Change the total amount, and the remarks, and save the new payment. 

Option Two: A Negative Client Voucher is created to record the payment due from the client and the Vendor payment on the agency credit card.  This option could be used to record the payment to the vendor on the agency credit card if the client payment has not been received or is received after the invoice is issued.  

Go to Utilities/Setup/Global Defaults/Prompt. Check the box in front of “Allow Negative Client Vouchers” 

1. Create sales invoice, the Submit To is Supplier.
2. Close the client side of the invoice with Payment Method of Credit Card (Agency credit card).

3. Enter a Payment Made for the amount the Client owes the agency. Pay Method is Other. Client Name: the name of the client on the invoice. Click on Query. 

     4. Click on OK to create a voucher. The voucher will create a balance due on the Client Balance Report.

     5. When prompted for a journal entry, credit the Liability account "Vendor Payments on Agency CC".

     6. When you pay the credit card bill, debit the same account used in step four. 

     7. When you enter the client payment close the voucher on the client’s account. 

Pros and Cons: Scenario Three                     

Option One:   

Pros:  Because the Invoice is closed with the agency credit card the TBO user would not make a duplicate payment to the Vendor. 

Cons: 1) Because the Invoice is closed with the agency credit card a Client Balance is not created and the TBO user does not know that the client owes the agency for the invoice unless procedures are in place to track client payments on the agency credit card. 

2) Because the Invoice is closed with the agency credit card the Vendor Balance Report shows the commission amount as due from the Vendor and unless procedures are in place (pages 9/10) the TBO User would not know that the vendor was paid with the agency credit card. 

Option Two:   

Pros:  This option does create a Client Balance.  A duplicate payment to the Vendor would not be made.  Cons:  As in Option One, unless strict accounting procedures are in place, the  TBO User does not know that the Client and Vendor Balances are open. 

Run a weekly Report Generator Report to find the Invoices charged to the agency credit card.   Go to Reports/Report Generator/Print Report.

Click on Report and choose:    CC_RECON.RPT 

Invoice Payment Status: Client: Closed 

Pay method: C/C 

Please Note: The recommendations contained in this document are designed to allow your Trams Back Office program produce information in a manner which Trams and ClientBase Products and Services believe to be useful to a travel agency. However, Trams and ClientBase Products and Services, make no representation or warranty that the recommendations, if applied, will conform to generally accepted accounting and auditing practices or principals or to any type of financial reporting requirements. To the extent that any reports generated by Trams Back Office are used for reporting purposes, including tax reporting, we strongly suggest that you review these recommendations with your certified public accountant or tax advisor as applicable.