GUEST ACCOUNTING

GUEST ACCOUNTING

An account is a record of a business transaction and on this

document financial data are recorded and summarized.

The term guest accounting from hotel point of view means

knowledge of what is to be received from the guest and what is paid

by the guest. To have updated information of the same, it is

important that at all times during the guest cycle, an efficient system

is used. Various systems such as manual, semi-automatic or fully

automatic system may be used depending upon the size and type of

the hotel.

The objective of the guest accounting procedures is as

follows:

· To maintain accurate and up-to-date guest accounts.

· To ensure that payment is received promptly and in full.

· To provide management with accurate and up-to-date

financial reports.

Guest Bill

The guest bill is updated immediately as it is received from

the various departments / sales outlets. It is very important to

maintain and record all upto the minute details of the accounts of the

guest. A person who checks into a hotel is usually entitled to credit

facilities for his purchases of accommodation, food and beverages,

telephone and other facilities. The following picture shows the

sources of guest bill.

Guest Bill Communication Methods

Speed and accuracy in preparing and maintaining of guest

account is very important so as to avoid any late charges. This is

possible only when there is very effective communication system

between the billing section and sales outlet. Depending upon the

type of hotel the communication methods can be:

1. Manual In small hotels, a bell boy or a waiter or a person

from the department where sale has taken place

rushes to the billing counter for entry into the

guest folio.

2. Mechanical Some medium or large sized hotels have

pneumatic tubes (pressure suction tubes) for

sending signed vouchers of the guest from the

department or outlet selling the service or

commodity to the billing counter.

3. Fully Automatic System

From the point of sale terminal (POS) the entry is

made to the centralized computer server where

the guest folio is updated and stored. This

method is very efficient and convenient and is

widely used today in almost all the medium sized

and large hotels.

PROCESS OF GUEST ACCOUNTING

The process of guest accounting is based on the following

concepts:

1. Financial transaction, creation and maintenance of

accurate accounting details.

2. Making of necessary documents and recording of

transaction on relevant documents.

3. Ensuring internal control, checking and establishing the

accuracy of the recorded transaction.

4. Settlement of the accounts, which may be by cash or

credit payment.

15.3.1 Types of Financial Transaction

Financial transactions are generally of three types:

1. Accounts Receivable

When a guest goes to the bar or restaurant (and

consumes drinks or food) or avails laundry

facilities, or makes telephone calls, etc, and does

not pay cash but signs a voucher (an undertaking

that he agrees to the specified amount and shall

pay later) and also the room charges etc. are all

examples of financial transaction where amount

is to be received by the hotel from the guest

 (guest has to pay) and these are called 'accounts

receivable for the hotel. Any 'returned checks

and charge backs' (may be his previous skipper

account) etc. are also examples of the same.

2. Accounts Payable

These are those transactions where the guest

pays to the hotel against his outstanding; for

example, he pays against his bill amount in part

or full. Also this type of transaction would include

any allowances or discount given by the hotel to

guest and a transfer amount, etc. Such

transactions are not very common usually. Such

financial transactions will reduce the outstanding

balance to be paid by the guest.

3. Cash Transaction

Cash Transaction means that the guest pays

cash to the hotel. For example, when a guest

goes to a bar or restaurant and is served with

drinks or food and then presented a check for the

same, he pays cash for that check. Such

transactions neither increase nor decrease the

guest's outstanding balance.

Preparing of Documents

Documents are those where the financial transactions of the

guests are recorded, as it is humanly not possible to always

remember all the transactions made by all the guests. Various

documents are generated during the process of guest accounting.

The types of documents generated also depend upon the system

used, but some documents will always be there no matter whatever

system is followed.

1. Vouchers Vouchers are also called checks. A document to

detail transactions at point of sales and meant to

transmit transactional information to front office of

guest charges which need posting. When a guest

consumes some services / facilities / goods of the

hotel from any of its departments or sections, the

concerned department prepares the voucher. This

is a support document of the financial transaction.

When the guest signs the voucher / check for the

amount of goods / services consumed by him the

voucher is sent to the front office bill clerk to be

posted to the guest account card / guest folio.

Commonly used vouchers in hotels are cash

voucher, charge voucher, transfer voucher,

allowance voucher, check out voucher, credit card

vouchers, paid out vouchers, etc.

2. Folios A folio is a document which is initiated at the time

of arrival of the guest normally and all guest

transactions are recorded on it, which increase or

decrease the balance of account. This is also

called as 'guest accounts card' and is prepared for

every guest and room. In some hotels, it is also

called guest weekly bill. All accounts receivable,

payable and paid out transactions are entered in

this document. The information about the value,

time and date and the place of financial

transaction is communicated by the concerned

section / department through signed voucher /

check). Following are the different types of folios

that are used by the hotels.

· Individual guest account card or folio:

Maintained to record transaction made by

individual or independent guest with the

hotel. Also called as Guest Folio.

· Group folio: One folio for the whole group and

this folio is required for recording all the

transactions made by the group (which are

part of the package of the group). This is also

called as 'Master Folio'.

· Semi-permanent or Non-guest folio: In this

folio the credit financial transaction made by

non-resident guests with the hotel are

recorded. Also known as 'city account card'

or 'non-resident guest account card'.

· Employee folio: As the name suggests the

financial transactions (if any) made by the

employees are recorded in this folio. These

folios help in calculating incentives to the

employees.

· Permanent / Companies / Airlines / Agents

folio: Separate folios are maintained for all

the companies, agencies and organizations

with whom the hotel has permanent billing

arrangements.

3. Postings Posting is the process of recording transaction on

the folio. Posting will result in a new balance of

account. The posting may be done by hand

writing method (manually) by machine such as

NCR (semi automatic system) or through

computers (fully automatic system).

4. VTL VTL (Visitors' Tabular Ledger) is also called the

'tab' by some hotels. It is another document used

in small hotels. It shows debits and credits

activities of the guest account.

5. Account Aging Report

A document telling and supervising the receivable

account from the guest which have aged over a

specific period of time. Account aging refers to the

method(s) of tracking past due accounts based on

the dates the charges were incurred. To illustrate,

credit card payment accounts usually have ages

of maximum one month. However, some other

non-guest accounts (eg. late charges, disputed

bills, bad cheques and skippers accounts) might

have ages measured in months, and even years.

Below, is the terminology associated with each

account age:

· Less than 30 days Current Accounts

· 30 to 90 days Overdue Accounts

· Older than 90 days Delinquent Accounts

6. Sales Journals

A document which records cash sales of a

department

7. Cash Receipts

A document issued by the cashier to the guest

when the cashier receives payment from the

guest and then entered in cash register receipt

ledger

Checking and Ensuring Accuracy

This stage of accounting process is also called as 'auditing'.

Usually auditing is done during the night by Night Auditor when the

business is relatively slow and hence the process is called Night

Auditing. This stage of the process is important to ensure the

accuracy of accounts balance so that if there is any discrepancy

between outstanding folio balances and departmental balances then

the same may be sorted out without any delay. For an account to be

correct it is important that the total outstanding guest balance should

be equal to the sum of respective department's charged sale.

Settlement of Account

It is a very important phase of guest accounting process. This

phase is involved in a major activity of 'zeroing out' the folio balance

i.e. the outstanding debit balance is neutralized by the settlement of

credit balance. The settlement can be either by cash payment by the

guest or by credit card charge or by transferring the account to

company account. In the last two cases, the balance account is

transferred to city ledger account.

CREDIT CONTROL

The term credit control refers to the various measures taken

by a hotel to ensure that guests settle their account in full either

themselves or someone else on their behalf (which may be credit

card company, an airlines, a corporate office or any other agency or

person) and does that within a specified period of time. Various

steps that will help in credit control are to be taken at various stages,

by various personnel of the hotel.

Objectives of Credit Control Measures

i) To avoid and prevent loss due to walk-outs. Here the

term walk-out include all those guests who knowingly or

unknowingly or by mistake leave the hotel without

paying/ settling their bills.

ii) To reduce the problems of inconvenience which the

cashier (who will not have verification of bills), the

house keeper (who won't know the room status) and

the management (who may decide to start legal

proceeding) etc. will face because of a walk-out guest.

iii) To prevent late settlement of guests accounts. The

delay in payment can cause cashflow problems for the

hotel and if there are many such cases the hotel may

find itself in difficult situation to operate, and bad debts

may increase.

iv) To avoid guest dissatisfaction, embarrassment and

annoyance at the check out time when all of a sudden a

departure guest is informed that the hotel does not

accept any particular company's credit and or that the

hotel does not accept that particular currency in which

he wishes to pay or his total bill is above the credit limit

of the credit card company and the company refuses to

approve a higher limit.

Common Causes for Unpaid Account Balance

i) Guest is not explained clearly as to which credit cards

are accepted and that which are the acceptable

currencies, and if the bill exceeds the credit limit then

he will have to pay the balance in cash.

ii) Communication gap between credit department and

cashier- for example failure of the credit department in

timely communication to cashier that the bill amount of

guest has exceeded the limit.

iii) Negligence and carelessness for example ignoring to

look at the black list. To avoid such problems, it is

important that the guests are given clear instructions at

the time of check-in, timely notification of the exceeding

of credit limit, reference to black list frequently, and

making sure that the guests who come with company

credit facility and other such credit facilities such as

airlines, and travel agents etc, understand that they

have to sign their billing statement, before leaving the

hotel at checkout time, and finally it is important that all

the concerned departments and sections etc must

follow the credit policy of the hotel very strictly and

religiously.

CASH CONTROL

Like credit control cash control in a hotel is also of great

importance. Cash control involves that all the transactions which the

guest makes in cash with various sales sections of the hotel are

recorded immediately and cash collected. All the cash is kept

properly under lock and key and under the supervision of cashier.

The petty cash is also controlled and a proper check on that is made

since hotels don't encourage credit sales, and for proper cash sales,

the cash control becomes all the more important for a hotel. Usually

cash sales should be encouraged at areas such as health club,

swimming pool and car parking etc. Payment in hard currency,

traveler’s cheques and bank drafts are considered to be cash sales.

Whenever a guest pays cash it is mandatory for the cashier to make

cash receipt and hand it over to the guest. The cash collected every

day must be sent to the bank for deposit.