HMGT 3700: Test 4a, CH: 10-12 – Flashcards
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City Guests
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persons or organizations that OWE the hotel, but are NOT currently staying at the hotel.
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Types of Accounts Receivable:
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The Ledger, What is and isn't accounted for
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The Ledger, and types of ledgers:
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an accounting book, that contains a set of accounts. Transient/Front Office/Guest/Rooms Ledger, and City Ledger.
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Transient/Front Office/Guest/Rooms Ledger
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where the folios of the current registered guests are kept. - it is maintained at the front desk - charges are "posted continually, as incurred by guests - bill is presented to the guest on departure
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City Ledger
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where the folios of non-registered guests/organizations are - it is maintained in the accounting office - charges are posted periodically and bill is presented for payment periodically
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What is and isn't accounted for
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guests pay cash directly, no "accounts receivable" is created.
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Folio/Bill/Guest Bill/Guest Account/Visitors Account
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the individual account receivable.
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Folio/Bill/Guest Bill/Guest Account/Visitors Account Location:
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kept at: - front office (FO) in paper form in manual systems - in memory of the computer system and printed on demand at the front office in a computerized system
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Number of folios:
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- one per room is MOST COMMON - one per guest when rooms are shared - one per many rooms if one guest is paying.
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Master Accounts
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used for single-entity groups for common charges, NOT billable to individuals.
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Split Billing
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distribution of charges between a Master Account/Folio (A FOLIO) and a guest's personal folio (B FOLIO)
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Casino Comps
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posted to A Folio, others to B Folio
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Preferred-guest Programs
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room rate to A Folio, others to B
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Charges/Debits
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Charges incurred by the guest that increase the amount owed
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Credits
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payments made by the guest that reduce the amount owed; credit cards, or TRANSFER to City Ledger by signature to an authorized account.
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Assets
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something a business OWNS - Cash, accounts receivable - Increase in incomes are made with credits (sale of room, food, beverages - Decrease in incomes made with debits
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Liabilities
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something a business OWES - Accounts payable (salaries to be paid at the end of the month
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Equality of debits and credits
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main principle of dual-entry bookkeeping that every debit should be matched with an equal dollar amount credit
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Allowance/Adjustment
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same meanings, but "allowance" is used more. Allowance: reduction in the guest's bill; Stores give you a partial or full refund (credit), if you return your purchase for an error, etc.
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Preparation of the Folio
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folio is created when the guest arrives and registers, may be pre-printed if computerized
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Filing the folio
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- electronic folios are in computer memory and printed on demand - manual folios are filed sequentially by room number at the front office in CASHIERS WELL OR PIT OR BUCKET
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Presenting the bill
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- credit is a PRIVILEDGE, hotelier has the right to demand pre-payment - bills are presented normally on departure - bills may be presented weekly, or when credit limit is reached
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Before Electronics Communications
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bellboys, runners, waiters used to physically carry VOUCHERS (lost, delayed, misplaced in the process which resulted in difficult to collect LATE CHARGES) - pneumatic tubes used in larger properties (like drive-thru banks) - need to prepare department control sheet at POS (point of sale)
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Communications WITH electronic systems
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POS systems integrated into Property Management Systems (PMS)
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POS
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Point of Sale system
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PMS
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Property Management Systems
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Three means of setting accounts:
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- Cash - Credit - Allowance
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Allowances are given for:
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Comp Allowances, Allowance for poor service, Allowances to correct errors, Extended-Stay allowance
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Comp Allowances
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when the whole bill or some items are given free or "COMPED"
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Allowances for poor service
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discount given for poor service, bad or delayed food/drinks, etc.
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Allowances to correct errors
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mathematical errors, "I never made that call/saw that in-room movie", etc.
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Extended-Stay allowance
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discount given as a condition of extended stay. Full rate is charged and allowance given at the end.
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Recording the allowance
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a supporting "ALLOWANCE VOUCHER" should be made, and approved by a manager; daily allowance report needed
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Transfer
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an accounting technique that moves a figure from one folio/account to another; one account is credited, the other debited by the same account
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Folio formats
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debits and credits may be indicated by "+" or "-" signs, CR used to designate credits, separate columns used
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Types of transfer:
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Transient to Transient Ledger, City to Transient Ledger, Transient to City Ledger: Credit Cards, Transient to City Ledger: Direct
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Transient Ledger to Transient Ledger
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one guest folio balance is transferred to another
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City Ledger to Transient Ledger
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Advance Deposits; Credit balance of guest paying in advance is transferred from City ledger to their guest folio on registration
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Transient Ledger to City Ledger: Credit Cards
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MOST COMMON; used when guest pays by credit card (Folio balance of the guest is transferred to the folio of credit card company in the city ledger
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Transient Ledger to City Ledger: Direct
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Folio balance of guest is transferred to an AUTHORIZED individual/corporate/organizational account
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Skipper
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guest leaves without payment
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**Pics of Folios in Ch. 10 slides
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Computerized Guest Bill (Folio), Manual Folio, Computerized Folio, Department Control Sheet, Allowance Voucher. **END OF CHAPTER 10**
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Cash Paid Outs
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cash is taken out of front office cash and "paid out" to someone (employee, guest, vendor, manager, etc.)
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Tips to employees
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MOST COMMON form of cash "paid out" at front office, float losses, merchant discount fee, non-collectible accounts, another look at the employee tips
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Float Losses
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hotel gets money later, pays employee up-front
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Merchant discount fee
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hotel has to pay fee to VISA or AMEX, but does not reduce tip
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Non-collectible accounts
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if the bill is not paid, hotel cannot recover tip already paid out
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Cash Loans
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a loan given to a guest from front office cash, common earlier for taxi fare, similar small amounts (not a good idea for large amounts, and rare with ATMs and credit cards), third party sources of cash, ATMs (automatic teller machines!), ATMs in hotel lobbies (source of revenue for hotel as ATM company pays a fee
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Paid outs to concessionaries
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hotel pays dry-cleaner or hairdresser and charges it to guest account as a "paid out", guest pays on departure
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Refunds at check-out
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if the guest paid a large advance up-front and has money left over, they are refunded as a "paid out" ($100 limit or so in cash to avoid fraud)
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Cash receipts at the front office
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when cash is received by the front office as payment
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Cash receipts at check-out
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when guest pays their bill in cash on departure (rare these days with direct billing and credit cards)
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Cash receipts "on-account"
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when a guest makes a PARTIAL payment against their final bill; may be ASKED to pay as a credit-control procedure, guest may WANT to pay to avoid carrying cash, to avoid delay due to anticipated very early check-out, etc.
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Cash receipts at check-in
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"cash-only" guests may be asked to pay in-full, in cash, up-front; all departments should be notified about "cash-only" status
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Reservation deposit Receipts
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when a guest pays cash in advance at the point of reservation; normally transferred to City Ledger and re-transferred to Guest Folio on arrival.
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Assorted City and General Ledger Receipts
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in smaller properties all incoming cash is funneled through the front office cash system
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Assorted House Paid Outs
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- when cash is disbursed from the front office for the expenses of the hotel ("house") - the imprest petty cash fund - a fund maintained by the front office cashier for small house expenses like stamps, local produce, etc.; reconciled and "bought out" by accounting department periodically
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Petty Cash Couchers
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used to support transactions
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The Cashier's Bank
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a permanent supply of cash received by the front office cashier for daily use (ranges from $250-$1000, audited regularly, individual banks for individual cashiers, cover all cash handling employees with a "bond")
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Net Receipts
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the difference between money taken in and paid out TOTAL RECEIPTS - TOTAL PAYMENTS = NET RECEIPTS
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Over or Short
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difference between "what should be" and "what is"; differences due to errors, over/under payments, fraud
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"What should be"
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cash according to accounts
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"What is"
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actual cash in dollars and cents in the cash drawer
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"Over"
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more money in cash drawer than should be
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"Short"
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less money in cash drawer than should be
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The Turn-in
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cashier turns in the actual cash, along with the Cashiers Report, accounting for "over" and "short"; cashier turns in the actual cash and an auditor does the accounts.
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The Income Audit
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a checking of accounts done EVERY MORNING to verify accuracy of cash transactions and to prepare bank deposit for the day
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Due Bank
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when more money is paid out than comes in and the cashier uses his "bank" for that payment
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Paying off (Refunding) the due bank
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the bank has to be re-built to the stipulated amount by giving cash back to the cashier
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Paying off (Refunding) House Vouchers
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the accounting departments "buys out" the house putty cash vouchers with real cash, so the cash drawer is accurate
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Tour Package Coupons
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coupons used by members of tour groups to "pay" for meals etc. (accounted for like regular cash)
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Foreign Currency
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*NORMALLY NOT ACCEPTED IN US HOTELS, some hotels provide money-changing facilities at front office, the EMU "EURO", in general, credit card and ATM usage has reduced currency exchange world-wide.
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Credit cards became big when:
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in 1950 with the founding of Diners Club
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Hotel chains started issuing their own credit cards, but dropped the idea later due to:
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increasing acceptance of general cards
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Four major credit cards
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Visa, Mastercard, American Express, Discover
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Visa's contribution
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national educational program concentrating on reservations and no-shows
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MasterCard supports
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the Education Institute of the American Hotel and Lodging Association (AH&LA)
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MasterCard's major trust is
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developing service skills at the front desk
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American Express partners with
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the AH&LA in legislative affairs and contributes regularly to the American Hotel Foundation
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Discover's national contribution
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is yet unclear, but it is forming strong single-company relationships
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All credit-card companies
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participate in the lodging industry's regional and national meetings.
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Kinds of Credit Cards
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Bank Card, Travel and Entertainment Card (T&Es), Private Label Card, Co-branded or Affinity Card
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Bank Cards
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issued by banks, VISA & MasterCard; Customers get credit and can pay in monthly installments with interest; banks make money from annual fees, merchant fees, interest; customers get convenience, "float" and flexibility in spending
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T&Es
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Travel and Entertainment Cards; issued by AMEX, Diners Club with strict credit checks; no credit, bill is to be paid in fulle ach month; AMEX makes money by card fees and merchant fees (both high!); Some merchants do not accept AMEX as a result
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Private Label Cards
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Gas company, department stores, etc. issuing their own cards; due to limited use, they are slowly disappearing away!
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Co-branded or Affinity Cards
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VISA or MasterCart affiliated to an organization, ex: UNT; a small percentage goes to the organization
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How the system works
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Customers get convenience, float, credit, security; merchants get additional business, less cash handling costs and headaches; banks get annual fees and interest from customers, and fees from merchants (1% to 5%)
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Other Cards:
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Debit Cards, Smart Cards
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Debit Cards
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transfer funds instantly from customer's bank account; no float for customer, less fees for merchants
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Smart Cards
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credit cards with memory chips that can store other information; ex: ID, medical info, insurance info, etc.
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Other City Ledger Categories
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Master Accouts, Groups, Packages, and Company Sponsored Functions, Individual City-Ledger Receivables
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Master Accounts
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Accumulate charges for groups
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Four common errors that irritate meeting planners
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split billing, unauthorized signatures, the sequence of posting, comp rooms
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Groups, Packages, and Company Sponsored Functions
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split folios
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Split Folios
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major items, such as VIP rooms and group meals are posted in the A folio, the master account, for which the entity pays; personal incidentals are charged to the B folios and paid as the individual guests check-out
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Individual City-Ledger Receivables
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Travel Agencies, Miscellaneous Charge Order, Banquet Charges, Late Charges, Delinquent Accounts, Executive Accounts, Due bills/Trade Advertising Contracts/Trade-outs/Reciprocal Trade Agreements, Frequent-Guest Programs (Loyalty Programs)
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Travel Agencies
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travel agency can become an account receivable in the city ledger when guest pays the first night's room charge with the travel agency's coupon
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*MCO
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Miscellaneous Charge Order: standardized voucher issued by an airline, authorizing the holder to utilize hotel services; hotel collects the MCO from the guests and bills the airlines
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Banquet Charges
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an open account created by a catered party in the hotel, that a guest pays after-the-fact; credit cards are increasingly replacing this
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Late Charges
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charges that appear onthe folio after the guest has checked out; may be "written off" as un-collectible if amount is too small to pursue
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Delinquent Accounts
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accounts that have not been paid in a long time; may be transferred to "bad debts" account and "written off" if found to be uncollectable
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Executive Accounts
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personal account of Managers in the hotel; may receive discounts for hotel services; need to distinguish "personal" and official entertainment
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Due bills/trade advertising contracts/trade-outs/reciprocal trade agreements
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hotels trade their room nights for other services like newspaper or TV advertising; voucher issued by the hotel is often traded like real money; the guests presents the Due Bill on check-in for payment
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Frequent Guest Programs (Loyalty Programs)
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hotel company is billed for the room rate on the A folio; guest is billed for other personal charges on B folio
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Managing Cash
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Courterfeit or Fake Currency: hotels are targets (front office is busy and easy to cheat); train cashiers to detect fake currency; can buy devices to detect fake bills
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Managing Check
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check cashing safeguards; traveler's checks
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Check Cashing Safeguards
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do not accept checks, use a check clearing service like Tele-check, train employees in detecting fraudulent checks
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Traveler's Checks
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issued by AMEX and other issuers; as good as cash; cashed with verifying signature; train employees in proper procedures, fraud detection; be careful about Canadian/Australian/other dollars
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Managing Credit
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Cost-Benefit Decision; Components of Credit Management; The Management Function; Managing the Specifics
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Cost-Benefit Decision
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if you do not extend credit you will have NO losses due to "bad debts", skippers, etc.; you will also miss out on good business that was turned or scared away by rigid credit policies
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Components of Credit Management
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Having reasonable credit policies and procedures, CONTINUALLY monitoring credit standing of all accounts, following up promptly on accounts due to the hotel
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The Management Function
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Extending Credit; less of an issue with growing use of credit cards; shift risk to credit card company; ask guests without credit cards or "suspicious" guests to pay cash in advance
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Managing the Specifics
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Chargebacks: when credit card company refuses to pay the bill, guest refuses to pay, hotel did not follow card company procedures; Minimizing chargebacks: communicating charges/fees clearly to guest, avoiding "late charges" by better training and good systems, training employees in following correct procedures *END OF CHAPTER 11
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Night Auditor Work Shift
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Graveyard: 11/12a - 7/8a; required to remain, until the job is completed, relieves the "swing shift" and is relieved by the "day shift"
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Night Auditor General Duties
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night audit PLUS nigh manager duties in smaller hotels (security, front office, housekeeping, maintenance, etc. (just auditing in larger hotels)
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The Audit
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reconciling accounts receivable, closeout hour
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Reconciling Accounts Receivable
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all businesses need to reconcile accounts PERIODICALLY; hotels need to do it DAILY
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The Closeout Hour
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hotels never close, so a time needs to be picked to "close" (one days accounts are closed and the next days accounts begin; most hotels choose midnight; can be done later, if food and beverage outlets are open later; later closing puts pressure on night auditors but it accounts better for sales of outlets for the "day"
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Posting Room Charges
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manually, electronically, not by the auditor
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Posting Room Charges Manually
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each folio has to be taken out of the "pit" and room and tax charges are entered manually, room by room; days charges are totaled, and "brought forward" to get a cumulative running total; manual system errors
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Posting Room Charges Electronically
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room and tax for ALL room is posted at the press of one button instantaneously; totals updated automatically and a summary made; NO math or entry errors
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Room Charges Not Posted By the Auditor
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Day rate, use rate, part day rate guests; extra room charge for late check outs
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Verifying Basic Data
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closing routine, express check-out, PMS posting errors
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Closing Routine
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press of one button does ALL steps of the manual night audit; need to tally department totals with front office totals ONLY IF POS systems are NOT interfaced with PMS system; reports and print-out of folios generated automatically
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Express Check-out
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printed folio is put under guest room door late at night and amount is charged to credit card, guest comes to front office for check-out ONLY if there is a problem; similar procedure can be done with in-room TV; if guest needs a copy of bill, it can be maield
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PMS Posting Errors
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errors still possible; mostly entry errors from cashiers; system reduces errors by "rejecting" wrong entries; can be systematic errors due to bugs in the system
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Reports from the Night Audit
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turnkey systems; exception reports; downtime reports; credit reports; reservation reports; rooms management reports; room status reports; accounts receivable reports
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Turnkey Systems
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a STANDARDIZED system installed by a vendor that the user simply "turns the key" to start (as opposed to designing a system from scratch)
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Main Benefits of Turnkey Systems
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hardware and software work together; system is consistent across the chain
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Exception Reports
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highlights only exceptions from the norm; lists only those over credit limit as opposed to each guest
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Downtime Reports
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Print outs of CORE information in case of system breakdown
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Credit Reports
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credit status of "problem" guests
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Reservation Reports
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report of rooms sold, un-sold, sold-by, demanded, refused, walked, projected occupancy, etc.
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Rooms Management Reports
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list of guests, rates, convention member VIP, etc.
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Room Status Reports
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list of occupied, vacant, OOO, OOI rooms, etc.
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Accounts Receivable Reports
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Lists details of City Ledger, Credit Card transactions, departmental totals, etc.
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Report to the Mnaager
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report of key issues of the previous day; room count, house count, room income (reported daily and accounted for); room statistics (rooms sold, ADR, occupancy %, comps, RevPar are reported daily)
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Summary
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PMS allows night audit to be a REAL management tool, rathe rthan an accounting procedure to catch mistakes quickly! *END CHAPTER 12
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