FRONT OFFICE MANAGEMENT - Unit II

GUEST ACCOUNTING

There exist several transactions between the hotel and the guest. it is the front office staffs that carry out this functions. Normally hotels have a front office cashier to engage in these type of transactions with the guset. As soon as the registration of the guest is over,folio is opened no his/her name to record all transactions.The gueat folio should always updated whenever the makes a transactions.At the time of guest's check out, the guest's folio is verified for the outstanding expenses of the guest. The final bill is made handed over to the guest for the settlement.
The following are the main objectives of the front office accounting system:

To handle the guest’s transactions in an easy way
To identify the revenues from different departments
To monitor credit limit of the guest
To avoid the fraudulent practices of staff
To maintain an accurate data of guest’s transactions
To save time and to avoid misplacement's

Documents Generated in Guest Accounting

There are various documents that are maintained to ensure a proper guest accounting system in hotels. They are as follows.
1) Folios

2) Vouchers

3) City Ledger

4) High Balance Report

5) Guest Ledger

1) Folios:A folio is a statement of all transactions (i.e. debits & credits) affecting the balance of a single account. At Checkout, any guest folio should be balanced to 0 through full cash payment, credit card transfer, personal check transfer, special program transfer, and direct billing transfer…The correct way of maintaining folios starts with proper posting, which is the process of recording transactions on a folio (i.e. proper folio, proper location and proper amount)Under the manual, semi automated and fully automated systems, folios are called hand-written folios, machine-posted folios, and computer-based electronic folios respectively. Moreover, all folios shall have a unique serial number for internal control and storing purposes.

In the front office department, there are four common types of folios used:

a) Guest folios: accounts assigned to individual persons or guestrooms

b) Master Folios: accounts assigned to more than one person or guest room; usually reserved for guest groups

c) Non-Guest (or semi-permanent) folios: accounts assigned to non-guest businesses or agencies with hotel charge purchase privileges

d) Employee Folios: accounts assigned to employees with charge purchase privileges
Apart from the above mentioned common folios, front office department get use of some other types of folios such as A-type, B-type, C-type, D-type, and E-type folios.

2) Vouchers:Vouchers are documents that have the details of the purchases made by the guest from an outlet of a hotel. This is send to the front desk and they carry out the posting process in the guest’s folio. Vouchers acts as a supporting document of the transaction happened between the hotel and the guest.If the guest pays the amount in the outlet, then the voucher is filed there itself. And in case, if the guest signs the voucher, it is send to the front desk for the posting purpose. Vouchers are also known as Checks. A voucher is a proof that a transaction has taken place in the hotel. Charge vouchers, Correction vouchers, Allowance vouchers, Transfer vouchers and Paid Out vouchers are examples of vouchers.

a) Charge vouchers: Charge purchases are deferred payment transactions. In a deferred payment transaction, the guest receives goods or services from the hotel but does not pay for them immediately. If the transaction occurs somewhere other than at the front desk, it must be communicated to the front desk for proper folio posting. This is done through a charge voucher, also called as account receivable voucher.

b) Correction vouchers: An account correction transaction corrects a posting error in a folio. An account correction is made on the same day the error is made, before the close of business. An account correction can either increase or decrease an account balance. E.g. If a charge is wrongly posted as lower than the actual rate, it can be corrected on the same day after entering the details of correction in a correction voucher.

c) Allowance vouchers: Allowance vouchers can be of 2 types. One type of allowance is a compensation given to a guest for poor services or discounts etc. The other type of allowance is a correction to a posting error on an existing account after the close of business. Any account allowances must be documented with the use of an allowance voucher. All allowance vouchers require management approval.

d) Transfer vouchers: A transfer voucher is used when the account balance or account entry is transferred or shifted from one folio to another folio. E.g. When one guest staying in room 203, agrees to pay a dinner charge for his friend who is also a guest staying in room 209 in the hotel, the charges must be transferred from room no. 209 folio to room 203 folio and this transfer must be documented by a transfer voucher. An account transfer may also occur when a guest checks out by paying through credit mode. The guest’s outstanding account balance is transferred from a guest account to a non guest account through the use of a transfer voucher.

f) Paid Out vouchers (Visitor’s Paid Out): Also called as a Cash Advance or VPO. It is cash paid out by the hotel on behalf of the guest. If petty payments like taxi fare, cinema tickets, postage etc. are made by the front desk, a Visitor’s Paid Out Voucher is issued on guest’s name and his signature is collected and the amount is debited in guest’s folio.

3)Ledger
A Ledger is a book in which the accounts of both resident and non-resident guests are entered. In simple words, it’s a grouping of guest accounts. This ledger aids in preparing the Profit and Loss account and Balance Sheet of a hotel.

a) City Ledger: The City ledger is also known as the Non-guest ledger. It is the collection of non-guest accounts. If a guest account is not settled in full by cash payment at checkout, the guest’s folio balance is transferred from the guest ledger to the city ledger in the accounting division for collection.

City Ledger could also include accounts held by:

Ø Local business people who are not resident in the hotel but who use the hotel facilities and services for entertainment or business meetings.

Ø Guests who walk out of the hotel without settling the outstanding balance. Walkouts are no longer resident so their account is transferred to the city ledger, till the account is settled or closed by writing off as bad debt, if the amount is over due and not forthcoming for a long period.

Ø Guests who have sent prepayments to guarantee their bookings, but have not arrived or checked in. This amount is recorded in the city ledger and the account needs to be closed as per the terms of the reservation.

Ø Even a skipper’s outstanding balance is transferred to city ledger with a hope that the amount may come through. Eventually if there was no trace of the guest the amount will be written off as a Bad Debt.

b)Guest ledger:Guest Ledger is a type of ledger that has the accounts of all the guests residing in a hotel. After the registration process of the guest is over, a guest folio is opened on his/her name to record all the purchases which he/she is making from the hotel. This ledger is also known as Transient or Room Ledger.
Guests who make appropriate credit arrangements at registration may be extended privileges to charge purchases to their individual account folios. Guests may also pay against their outstanding balance at any time during occupancy. Guest’s financial transactions are recorded in guest ledger accounts to track guest account balances. Some of the accounts of the resident guests may be settled by their company, travel agency or airline company. In this case, at the time of the guest’s check-out, his signature is taken and the guest account is transferred from the Guest Ledger to City Ledger.

JOB DESCRIPTION OF FRONT OFFICE CASHIER

Job description                                    Front office cashier

Category                                               Non-supervisory

Reports to                                             1. Income accountant

                                                              2. Chief accountant

                                                              3. Front office manager

Job definition                                        Post all guest’s charges and credits on

                                                              Guest’s folios accurately and in time so as to

                                                              Properly settle guest’s accounts or receive 

                                                              Payment upon guest departure.

Directly controls / supervises               None, except when made shift in charge

Assigned area of activity                      Front officer’s cage

Hours of operation                              One shift in 24 hrs for 8 hrs, or as per policy

                                                              of the management

Authority                                              Refuse credit cards, currency notes /

                                                              personal cheques as offered by guests.  Give

                                                              discounts as per policy.  Hold back “credit      

                                                              cards” listed in the cancellation bulletin.

Work performed /Duties of front office cashier

RECORDS AND LEDGERS MAINTAINED BY THE CASHIER

1) TABULAR LEDGER: For many years this method of recording charges issued in hotel was the only one existence and for several years even after the introduction of electronic account and in the early days of computerization it continued to the most of the common method in use. The advantage of using the system is that hotel can head up columns according to their needs and should they change over a period of time no extra cost are incurred.
            Although still used by many smaller hotel in many units it has been replaced by computerization since computer programs are now available to suit all type and sizes of hotels even so, the possible of the tab and its double entry of charges is applicable to all sorts of hotel billing, and student who are familiar with its operation in easy adapt to other more sophisticated means of accounting.
            The system revolves around two records one is the customer account and the another is the summary of all the change incurred by all guest during the day and forms the basis hotel record of earning the customer’s bill is normally prepared in duplicate one copy being given to the guest upon departure and the other retained by the hotel for control purpose.

2) VERTICAL TABULAR LEDGER: The rooms numbers of guest are entered across the tab the charger are recorded vertically below each room numbers. This system is often used in hotel the carbon paper is used to ever charger on to the tab and the bill at the same time debit entries form the main body of the tab, while credits and entered at the bottom after the daily total has been summarized.
 Each days tab would consist of a number of similar sheets. The exact number of sheets used depends upon the number of rooms let.

3) HORIZONTAL TABULAR LEDGER: With the horizontal tab the departmental charges are lighted across the tab so each guest account is arranged horizontally across the page of the tab. Debit charges to the guest accounts are enter on the left hand side and credit entries on the right. Normally two lines are allowed for each room number this enables the number of entries to be made under the departmental heading for example, a guest may have a number of telephone calls course of a day.

Records Maintained by front office cashier

The following are the records that are maintained by the front desk in terms of guest accounting

1) Daily Report

2) Account Aging Report

3) Visitor’s Tabular Ledger

4) High Balance Report

5) Vouchers

6) Folios

7) Ledgers

8) Cash Receipts

1) Daily Report:

The night auditor of a hotel summarizes the total receipts for each day on a daily report. This report includes:

Ø Room rentals

Ø Banquet room rentals

Ø Food sales

Ø Beverage sales

Ø Gift shop sales

Ø Telephone charges

Ø Vending machine sales

Ø Other miscellaneous sales or services

The daily report may also include:

v Room and food statistics, such as:

v Number of rooms occupied - single

v Number of rooms occupied - double

v Number of complimentary rooms

v Average daily rate

v Number of breakfast, lunch and dinner covers

v Sales tax payable

v Hotel Occupancy, Tax payable.

v Cash account and credit card accounts

2) Account Aging Report

                       It is a document that supervises the receivable account from the guest that has aged over a specific period of time.

3) Visitor’s Tabular Ledger (VTL):
            VTL is a loose large sheet used in small hotels in which the daily guest transactions are entered. Whenever a guest is purchasing, the entry is made against each guest account in a VTL Guest bill is made on the basis of VTL and hence it should be updated every time.

4) High Balance Report:
                     A high balance report is made daily which states all the guest accounts whose totals are near to or in excess of the credit limit of the hotel. It is the duty of the night auditor and front desk agents to handle the high balance guest accounts. The night auditor will send a copy of the guest bill with a letter to the guest’s room requesting him to deposit the amount in the reception so that they can extend the credit facilities to the guest.

              In case if the guest fails to contact the reception, then the Lobby manager might personally meet the guest and talk out the matter. But if the guest is not responding at all, then the room of the guest will be double locked

5) Vouchers:
              REFER VOUCHERS ON DOCUMENTS GENERATED BY FO CASHIER

6) Folios:
             REFER VOUCHERS ON DOCUMENTS GENERATED BY FO CASHIER

7) Ledger:
             REFER VOUCHERS ON DOCUMENTS GENERATED BY FO CASHIER

 8) Cash Receipt:

                        Cash receipts are actually the printed documents which are needed by any business, each and every time when the cash is received for a specific service or good. It is necessary for making a cash receipt that you must know all the aspects of cash receipt so that you would be able to get special cash receipt for your business purposes. Sometime when people want to get a special cash receipt format then they often make many mistakes. In order to avoid such mistakes, here is the complete format of cash receipt and by using such format the chances of mistakes would be minimized.

Handling Foreign Exchange:
                                The hotel industry in any country is a prime source for the generation of foreign currency exchange. Foreign Currency Exchanges are done in hotels through a strict system of checks and records. In a hotel, the front office cashier is the authorized person on behalf of the management to receive foreign exchange. As most of the overseas visitors prefer to pay their hotel bills in foreign currency, the cashier must know the rates of exchange. The hotel can exchange the foreign currency but cannot sell it. If the guest has settled his account in foreign currency, the balance should be given in the local currency. The foreign currency exchange rates offered by the hotel might be slightly higher than the bank rates. This is done to cover up the administrative costs, market fluctuations in the exchange rates and a small profit. Hotels accept foreign currencies but not coins.

FOREIGN CURRENCY ENCASHMENT

1. Request the guest to produce his/her passport and determine the credentials.
2. Ask to the guest for his room number.
3. Incase of non-residence, request his/her to contact the lobby manager for his authorization for the transaction
4. Find out the type of currency to be exchanged and determine whether it is exchangeable as per governor banking regulation.
5. Fill in all the details in the foreign exchange encashment certificate.
6. Request to the guest to sign the travelers cheque and voucher in person.
7. Compare the signature.
8. Receive the amount of foreign currency in cash or travelers cheque.
9. Calculate the total amount to paid in local currency by multiplying the foreign currency amount by the rate of exchange.
10. Give the original copy of the certificate and the total amount in local currency to the guest.
11. Attach the second copy of the encashment certificate to the notes to the traveler’s cheque.
12. Leave the third copy in the book.
13. Fill in the details in reception cashier’s report.

Fill in the details in the foreign currency control sheet.

PETTY CASH
                     Taxi fares, laundry and dry cleaning and other small items are often paid by the cashier’s department from a separate petty cash float. This float is reimbursed daily by the hotel’s and individual petty cash vouchers are allowed against the days takings. It is important for the control of the petty cash float that only authorized payments are made against receipts for the amount spent. Petty cash payment are subject to an upper limit and are only paid out after being counter signed by a member of the management.

CREDIT CARD PROCESS

1. Present the charge record form to the guest and receive his signature on it.
2. Check the following establish the validity of the card.
1. Whether credit card is accepted by the establishment.
2. Expiry date of card. The card should be within the expiry date.
3. Compare the name and the number with that calculation bulletin circulated periodically and ascertained if the credit card is black listed.
4. Any alternations on the card.
5. Compare card holders signature on the credit card with that on the charge record form.
3. With the use of an imprinter, imprint the embossed credit card number on the credit card on to the charge record form in the space provided.
4. Enter the date in the appropriate column on the charge record form.
5. Enter the amount that is being charged in the totals column.
6. If the total exchange the authorize limit , look for further instruction from general regulation.
7. Fill check or bill number in the appropriate column of the charge record form.
8. Ensure that the cheque or bill has the guest’s signature and tally the signature with that on the credit card.
9. Give the guest’s original copy of the charge record form and clip the other two copies with the respective cheque or bill.
10. In the case of a late charge due to which the cheque or bill is note received by the front office cashier in time, fill the shaded area on the charge record for the specific purpose. Under the column “ The type of delayed change” Abbreviate the reason in word then fill the amount of delayed change and the new  total amount.  At no cast should figures be allotted or tampered with, the cheque or bill of the delayed change must be retained carefully by the hotel to present to the card holder should their be an inquiry.
11. The hard copy of two copies mentioned in procedure of all charge record form  are collected at the end of the day and totaled.
12. The total of not more than hundred charge record forms are entered in the summary of charge records in the column grand total.
13. Using the special imprinted issued by the credit card company to the hotel, imprint the companies name and account number embossed on the plastic card on to the summary of charge record.
14. The summary of charge records is signed by the authorized representative of the establishment the appropriate box.
15. On the line provided in the summary of charge records, enter the date of summary is being forwarded.
16. Sent the summary of charge record along with all the hard copies of the individual charge record forms to the company.

METHODS OF SETTLEMENT

A guest account can be brought to a zero balance in several ways. Methods of settlement include cash payment, credit card or Direct Billing transfer or combined settlement method.

1)      CASH PAYMENT IN FULL

Cash payment in full at check out will bring a guest account balance to zero. A cash receipt has to be issued to the guest by the cashier. The cashier should mark the folio paid. If the guest has produced a credit card at check in, the cashier should destroy the guest credit card voucher imprinted at registration when the guest pays the account in full with cash.

Guests paying in foreign currency should convert their money to local currency (some international currencies like $ are accepted). Hotels often charge a fee to convert currencies as banks charge the fee from the hotels. Currency conversion rates are displayed at the Cashiers counter or it can also be taken from business sections of newspapers.

Guests can also use traveler’s cheques to settle their bills. Traveler’s cheques are issued by banks and avoid the risk of carrying cash. At the time of settlement the cashier should confirm the identity of the guest from the safety and security point of view. Also there is no danger of them being stolen as they can be encashed only when the signature of the holder tallies with the signature signed at the time of issue. A foreign traveler’s cheque should be treated as foreign currency and the necessary records, statements and certificates must be maintained like in the case of foreign currency and should be sent to the Reserve Bank of India.

Difference between an ordinary cheque and a traveler’s cheque

Ordinary cheque	Travelers cheque
1.      For issuing a person should have a bank account (either current or saving).	1.      No need of any bank account for purchasing and encashing of traveler’s cheque.
2.      Any amount can be filled in the cheque as they are blank.	2.      Have a fixed amount printed on its face and available in different denominations.
3.      Only one signature is needed of the holder.	3.      Two signatures are required (one in the presence of the issuing authority and second in the presence of encashing authority).
4.      Ordinary cheques are valid only for 3-6 months.	4.      Valid for indefinite period of time unless dated.
5.      These cheques can be crossed for account payee.	5.      No such provision.
6.      No slip/list of lost, damaged or stolen cheques is issued by the bank.	6.      Many banks issue a stop list for stolen and damaged cheques.
7.      Cheque may bounce as the balance in the account may be less than the cheque	7.      No such possibility as the amount is already printed on the face of the cheque.
8.      Not safe as someone might force the owner to sign the cheque.	8.      Quite safe because the second signature have to be put in front of the encashing authority.

Procedure for accepting foreign currency:

Ø Request guest passport and determine the credentials such as name and photo identification place of issue and date of expiry of the passport.

Ø Confirm that the guest is a resident of the hotel by asking his room no. If the guest is a non-resident the permission of the lobby manager is obtained who will extend this facility to VIP’s and regular guests.

Ø Receive the cash or traveler’s cheque in foreign currency.

Ø Calculate the total amount of ocal currency to be paid by multiplying the foreign currency by the exchange rate displayed.

Ø Fill in details of the foreign currency encashment certificate.

Ø Request the guest to sign the foreign currency encashment certificate and compare the signature with the passport.

Ø Request the guest to sign the traveler’s cheque if it is an instrument of exchange.

Ø Give the total amount of local currency with the encashment certificate to the guest

Ø Second copy of the certificate is attached to the notes or traveler’s cheques received

Ø Third copy remains in the encashment certificate book.

Ø Fill in details in the record of foreign currency transactions.

Ø Fill in details of the foreign currency transaction in the cashier’s report.

2)      CREDIT CARD TRANSFER

Even though credit card transfer settlement brings a guest account to zero, the amount of the charge must be tracked until payment is actually received from the credit card Co.

 Credit card settlement creates a transfer of credit on the guest folio and moves an account balance from the guest ledger to a credit card account in the city ledger (non- guest ledger).

(Procedure).

Guest signature completes this transaction. In some hotels computer system sends the settlement transactions directly to the credit card Co. guest only signs on the voucher present at FO. There is no need to sign on imprinted voucher. When foreign guests pay by credit card, credit card Co. payment is in local currency.

3)      DIRECT BILLING TRANSFER

Like credit card settlement, direct billing transfers a guest account balance from the guest ledger to the city ledger. Unlike credit card settlement responsibility for billing and collecting a direct billing lies with the hotel rather than an outside agency. Billing should be arranged and approved by hotel’s credit department. Guest signs the folio and accepts the responsibility to pay the bill should direct billing account not pay the bill.

4)      COMBINED SETTLEMENT METHOD

A guest may elect to use more than one settlement method to bring the folio balance to zero.

E.g., guest may make partial cash payment and charge the reminder of the account balance to an acceptable credit card. FOA must accurately record the combined settlement methods and take care that all required paper work is properly completed. Once the guest has settled the account the FOA should provide the guest with a copy of the folio.

Good evaluation and follow up should be there as it is the last chance to make an impression.

CASH FLOATS:
                       count and document all hotel floats monthly, on a surprise basis, in the presence of the float holder as required by the company's policies and procedures- prepare a monthly summary of float counts, for month-end reporting- maintain current house bank agreements. Issue cashier safety deposit boxes for safe keeping, as required.- provide monetary change to personnel with hotel floats- issue due backs to hotel cashiers in a timely manner.

VARIOUS OPERATING MODES

NON-AUTOMATED: 

Guest folios in a  non-automated or manual system contain a series of columns for listing individual  debit (charge) and credit (payment) entries accumulated during occupancy.  At the end of the business day, each column is totaled and the ending balance is carried forward as the opening folios balance of the following day.

SEMI AUTOMATED: 

Guest transactions are printed sequentially on a machine posted folio.  The information recorded for each transaction included the date, department or reference number amount of the transaction, and new balance of the account.  The folio’s outstanding balance is the amount the guest owes the hotel or the amount the hotel owes the guest in the event of a credit balance at settlement.  The column labeled previous balance pickup provides an audit trail within the posting machines frame work that helps prove the current outstanding balance is correct.  If the semi automated posting is done by mechanical equipment, it does not retain individual folio balances.  This means that each accounts previous balance must be re-entered each time an account posting is made to the folio.  This process enables the machine to produce a new current total on the folio card, but it is very error prone and often and often leads to in correct folios balances and subsequent night audit mistakes.  Electronic posting equipment often does retain folio balances.

FULLY AUTOMATED: 

Point of sale transactions may be automatically posted to an electronic folio when a printed copy of a folio is needed, debits (charges) and credits (payments) may appear in a single column with payments distinguished by parentheses or a minus sign.  Printed folio copies may also be proceeded in the traditional multiple-column account format.  It is unnecessary to manually maintain an account’s previous balance in a fully automated system, since computer based systems maintain current balances for all folios.


TELEPHONE VOUCHER

LONG DISTANCE TELEPHONE VOUCHER

LOCAL TELEPHONE CALL VOUCHER