FRONT OFFICE ACCOUNTING
Need
for accounting system at Front Office -
To
monitor and chart all the transactions that take place between the hotel and
others i.e. resident guests,
companies,
agencies, non-resident guests etc.
ACCOUNTING
FUNDAMENTALS
-
the functions of Front Office Accounting System are:
01.
To create and maintain an accurate accounting record for each guest/ non-guest
account.
02.
To track financial transactions throughout the guest cycle.
03.
To ensure internal control over cash & non-cash transactions.
04.
To record settlement for all goods & services provided.
Note
: Guest means Resident guest and Non-guests means
Non-resident guest,.
Accounts:
An
account is a form on which financial data are accumulated and summarized. The
increases and decreases in an account are calculated and the resulting monetary
amount is the account balance. Any financial transaction that occurs in a hotel may
affect several accounts.
The
simplest form an account resembles the letter T –
In
Front Office, accounts are segregated into two categories.
a. Guest Account –
is a record of financial transactions that occur between a guest and the hotel.
Created
- a. during registration, b. when reservations are guaranteed.
_
Front
Office is completely responsible for it during guest occupancy.
Updated
on a daily basis.
Settlement
- a. on guest checkout, b. when the account exceeds credit limit.
b.
Non-guest Account - Between a non-guest and the hotel.
Also
called as House accounts/ City accounts
Accounts
of guests failing to settle their bills on departure are also included in this
(besides those of non-residents like companies, agencies, groups or individuals
with credit privileges)
Collection
& billing is the responsibility of Accounts Department! Credit (Control) Department.Billed
on monthly basis.
Folios:
- a statement of transactions (debits and credits)
affecting the balance of a single account.
- it begins with a ZERO balance and ends with the SAME. In
between, the balance may be debit or credit depending upon the type of
transactions.
Posting:
-
it is the process of recording transactions on a folio. Methods of posting are
as under:
a.
Non-automated system: Hand-written on a Paper Folio.
b.
Semi-automated system: Machine posted on a Paper Folio
c.
Automated system: Electronic Folios are maintained on a Computer.
Types
of Folio:
-
basically 4 types of folios –
a.
Guest Folio- accounts assigned to
individual persons or guest rooms.
b.
Master Folio- for more than one
person/ guestroom. Usually for Group Accounts.
c.
Non-guest or Semi-permanent Folio: for non-guest businesses/ agencies with
charge
purchase
privileges.
d.
Employee Folio: for employees with charge purchase privileges.
There
are more folios created by hotels to accommodate special circumstances/
requests e.g. room folio (A folio)
for Room+Tax and incidental folio (B
folio) for food/ beverages and other
charges.
Why all folios must have a unique serial number?
01.
It acts as an identification number & ensures that all the folios are
accounted for.
02.
Folio numbered may be used to index information in automated systems.
03.
In semi-/non-automated system, folio lengths are fixed. When a balance is
carried forward to a
new
folio, the old folio number has to be shown as reference of where the balance
originated.
Vouchers:
- a voucher details the transactions to be posted to a
front office account.
- it lists the detailed transaction information gathered at
the source of transaction, such as any F & B
outlet,
gift shop.
Types of vouchers:
1.
Cash Voucher
2.
Charge Vouchers
3.
Transfer Vouchers
4.
Allowance Vouchers
5.
Paid-out Vouchers
Ledger:
- is a summary grouping of accounts.
- In Front Office, called as Accounts Receivable Ledger (a
collection of folios).
Guest ledger:
- the set of guest accounts that correspond to registered
hotel guests.
- also called as Transient Ledger or Rooms Ledger or Front
Office Ledger.
Non-Guest Ledger:
- it is the collection of non-guest accounts.
- it includes all non-cash settlements, skipper accounts,
disputed bills & non-guest functions.
CREATION & MAINTENANCE OF ACCOUNTS
- it is the responsibility of Front Office to record all
transactions that affect guest-ledger and non-guest
accounts
accurately and completely.
- Guest folios are created during reservations process or
at the time of registration.
- for Folio creation, the necessary information is taken
from reservation & registration records.
- for pre-numbered folios, the folio number is entered on
to the registration card and vice-versa for
cross-referencing.
- Manually-/ machine-posted folios are stored in a front desk folio tray (also
known as posting tray/
folio well/ buckets).
- electronic Folios are automatically cross-referenced with
other records within the system. This
considerably
reduces transactional accounting errors.
Record keeping Systems:
-
the folio formats of guest and non-guest account may be different and depends
on the record keeping
system:
a. Non-automated system:
- Guest folio in a manual system contains a series of
columns listing individual debit/ credit entries
accumulated
during the occupancy.
- at the end of the financial day, each column is totalled
and the ending balance is carried forward as the
opening
folio balance for the following day.
b. Semi-automated system:
- Guest transactions are sequentially printed on a machine
posted folio.
- The information recorded for each transaction includes
the date, department code/ check no., amount
of
transaction and the new balance of the account.
c. Automated system:
- Electronic folios are maintained on the computers.
- POS transactions may be automatically posted to an
electronic folio.
- Computer based systems maintain accurate current balances
for all the folios.
Charge Privilege:
- The privilege given to a guest to avail hotel facilities
on credit basis.
- A guest may be required to present an acceptable credit
card or a direct billing authorization at the time
of
registration ( or at the time of reservation in fully automated hotels)
- Guests are authorized to make charge purchases once a
line of credit has been established (through
Direct
Billing Authorizations or Credit Cards).
PIA Guests or Paid-in advance
- Guests who pay cash for accommodation at the time of
registration.
- Generally charge purchase privileges not given.
Credit Monitoring:
- A major task of Front Office is to ensure that all guest
& non-guest accounts are within acceptable
credit
limits.
- FOM & Night Auditor are responsible for
identification of such High Balance Accounts & necessary
action.
In large hotels, there is a credit manager for reviewing such accounts. He/ she
is also
responsible
for settlement of city ledger accounts.
Account Maintenance
- Guest folios must be accurate, complete and properly
filed since guests may enquire about their
balance
or check out in a hurry.
- Transaction Postings conform to the Basic Front Office
Accounting formula –
Previous
balance + debits - Credits = Net Outstanding Balance
PB
+ DR - CR = NOB
