Trust accounts for clients

I am a tour operator. I receive money from clients most of which is forwarded on to different overseas tour operators leaving 10-20% which is my commission and is transferred to my P&L as income.

Obviously the money held for clients is a liability and held in trust. I need to receive money into a client file from the client and pay money out of the client file to overseas operators. These transactions belong in the balance sheet under liabilities but I need files for each client showing incoming receipts and outgoing payments. The final payment will be my commission which will go to income in the P&L.

I must not get client money mixed up with the company’s money as this is the quickest way to lose control and go broke.

The structure you describe is very good and as far as the BS Liabilities Trust Account you could use the Customer Credits accounts. Create your Clients under the Customers tab.

When you receive money from the client enter their name as Payer and the Account as Customer Credits

When you pay the tour operator the Account would be Customer Credits - Customer

Then when you click on the Customers balance you can see the details

For clarity you could rename Customer Credits to Trust Account

For the Commission just create a Sales Invoice - which would clear out any Client Balance

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Sounds good. I will try it out.

Many thanks

Hi Brucanna,

I’m in need of Trust accounting, reading through the forum I found your post here: Trust accounts for clients - #2 by Brucanna

What I wanted to ask was, did they remove that Customer Credit function? I can’t seem to find it in my version.

Thank you.

Hello, yes that function has been removed.

Your option now would be:

  1. Activate the Special Accounts tab under Customise (below the Settings tab)

  2. Go to Settings > Chart of Accounts and create a BS Liabilities account called Trust Account

  3. Tick the Control Account box and select Special Accounts

  4. Then under the Special Accounts tab create the client sub-account

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Thank you.

Was reading topic on other post and came across this link: Use special accounts | Manager

Please refer to that link also for more details. I’m still trying to learn how to account it correctly at the moment.