The document outlines credit control measures in front office operations of hotels, emphasizing the importance of ensuring guests settle their accounts on time. It discusses the roles of front office staff and night auditors in managing cash flow, establishing internal controls, and addressing common credit control issues. Additionally, it highlights methods to prevent potential credit risks and the procedures for handling payments from various guest types, including those using credit cards, travel agents, and corporate clients.

1. CREDIT
CONTROL IN
FRONT OFFICE
By Arpendra Chauhan

2. INTRODUCTION
╺Guest to be contacted to
make the payment
╺Guest can also give pre-
auth
╺Credit limit is set by the
hotel for all guests
Credit Control refers to the various measures taken by the hotel to
ensure the guest settle their accounts in full at agreed time.
╺To ensure guest settle
their accounts in full
before check out
╺FO staff should keep a
track on all accounts
╺High balance account
to be identified
╺Night Auditor’s
responsibility to identify

3. CASH
CONTROL

4. “╺Cash is the company’s most liquid asset
╺Can easily be used to buy other assets, services etc.
╺Cash includes currency, coin in hand, money orders,
cheques etc.
╺Calculate total amount of incoming & outgoing cash
╺To estimate amount of cash available at point in time
╺Cash flow in business

5. INTERNAL CONTROL
╺ All companies should have internal
control system
╺ Regular external audit should happen
╺ Audits are important for verification of
accounting records, tax liability etc.
╺ Not only employees, but the owners
could also encourage fraud
╺ It safeguards the assets
╺ Maintains accurate & reliable accounting
records
╺ Protects from legal trouble
╺ Boosts morale of honest employees

6. ELEMENTS OF
INTERNAL AUDIT
╺Controlling work
environment
responsibly
╺Evaluation of risk
factors
╺Apply control
activities
╺Establish secure
information
╺Constant monitoring
of the system
PRINCIPLES OF INTERNAL AUDIT
╺Establish responsibility
One person will perform will perform
tasks at a time. One shift, once cashier.
╺Segregation of Duties
Accounting process steps to be
performed by separate employees.
Cashier & Night Audit must be
different
╺Documentation
Financial documents must be pre
numbered. One person to be assigned
for one task. One waiter for KOT book.

7. PHYSICAL CONTROL
MEASURES
╺Safe vaults
╺Safety deposit
lockers
╺Locked stores
╺Locked inventory
cabinets
╺Password enabled
computers
╺Fingerprint scanner
╺CCTV & Sensors
╺Cash counting
machines
╺Fake note detector
╺Time office punching
machine
╺Alarms (for break-ins)

8. “
Night auditor fulfills the responsibility
of verifying all financial records in the
hotel. However, night auditor should
only point out the mistakes, not do the
corrections.

9. CASH INFLOW
CONTROL

10. ╺One person at a cash counter
╺Lock cash drawers
╺Use cash voucher for every cash receipt
╺Separate employee for each duty
╺All financial records to be kept safely for future claims & disputes
╺Deposit all incoming cash to Cash Deposit Box
╺Don’t keep sums of cash in cash drawer for long time
╺Match cashier summary with cashbook for accuracy

11. CREDIT CONTROL

12. WHY DO HOTELS
SELL ON CREDIT?
•Hotel rooms are
perishable
•Revenue is lost forever, if
not sold today
•Risk is balanced by
accepting bookings on
credit
•Banquet & group bookings
are major examples
•New hotels offer liberal
credit to attract first time
guests
•In high competition, hotels
may offer credit to attract
more guests
•During off season, the
pressure is more to
generate operating capital
•Resident guest
pay at departure
•For travel agents &
companies, hotels receive
payment on monthly basis
(if they are credit listed)
•This helps in market
growth of the hotel

13. To avoid skippers
Take proper pre-auth
Take proper advance payment
Prevent late settlement of accounts
Late charges to be avoided
Pending charges to be avoided
Account ageing (HW) to be avoided
To avoid guest dissatisfaction
Card not accepted
Network issue while processing payment
Cash limit to be received
OBJECTIVES OF
CREDIT CONTROL

14. CREDIT CONTROL PROBLEMS
•Guest is not explained clearly which currency/ credit cards are
accepted
•The guest is not informed that is his bills exceed the house limit
he will have to pay cash
•Communication gap between accounts department and cashier
or night auditor and cashier
•Negligence by the staff to look at blacklisted guest
•Failure to follow procedure, to save time or to please the guest
•Not checking black listed list of past skippers, identity proof,
signature etc.

15. •Keep scanty baggage & walk
in guest on NO-POST
•Bell boy to monitor scanty
baggage
•Mark “scanty baggage” on
GRC
•Check for CC expiry, limit etc.
•Don’t accept third party CC
•Follow “luggage pass system”
at departure
•Reconfirm last minute
consumption to avoid late
charge
•Move all unsettled charges to
city ledger, inform Account
Team
•Follow all SOP every time
METHODS OF
CREDIT CONTROL

16. •Train HK staff to pay extra
attention to scanty luggage
guest
•Skippers have a habit of
fooling the hotel staff that they
are in the room sleeping
•Room service to report
unusually large quantity of F&B
orders
•Skippers tip very generously
•Recipient employee must
report to the Duty Manager
•Check for weekly settlement
from all long stay guest
•Communicate the hotel credit
policy at reservation, as well as
during the check in.
“Risk can never be eliminated.
But it can definitely be reduced.
Its better to be safe than to be
sorry.”

17. CREDIT CONTROL FOR GUESTS AT CHECK IN
GUEST PAYING BY CREDIT CARD
• Credit card details are collected at check in
• Name on CC is tallied with PMS
• Blacklisted guest to be checked
• Check if type of CC is accepted
GUEST PAYING BY TRAVEL AGENT VOUCHER
• Collect TA voucher copy from the guest
• Vouchers are prepaid
• Guest copy to be tallied with the hotel copy
• Attach guest copy to the RC
• Double check the billing instructions

18. GUEST PAYING BY TOUR GROUPS
• Post charges to master folio
• Credit procedure is fixed at pre-arrival
• Groups are pre-registered & pre-arranged
• No charges gets posted in guest account
• POS cashiers are briefed about the same
GUEST PAYING FROM AIRLINES (AIRLINE STAFF)
• Stayover guest are provided with PSO (Passenger Service Order)
or MAO (Meal Accommodation Order)
• It contains the details of facilities included in the stay
• Folio will be signed by the guest
• Bills are forwarded to airlines company for payment

19. GUEST PAYING FROM AIRLINES (CREW MEMBERS)
• Contract is signed with the hotel
• Rates charged are as per the contract
• Reservations need to be done
• Bills are sent to the airline company
• Guest signature is required on all the bills
╺ Non-guaranteed bookings are required to make pre-payment/ advance deposit
╺ Guaranteed bookings are allowed credit
╺ Check the method of settlement
╺ Reconfirm the rates to avoid any disputes
ASSIGNMENT:
GUEST WITH SCANTY BAGGAGE
WALK IN GUESTS
GUEST WITH THIRD PARTY PAYMENT

20. CREDIT CONTROL DURING
GUEST STAY
• Credit Limit is set for the guest
• FO should monitor all accounts
• The credit card limit can also be set as the credit
limit
• Management needs to be notified when guest
exceeds the limit
• Guest is requested to make partial or full payment

21. CREDIT CONTROL
DURING/ POST
DEPARTURE
• Guests who have given credit facility should be able
to pay within the scheduled period
• Entire payment to be collected at check out
• Mode of payment should be such that payment
comes instantly
• Cheque/ Draft/ Bank Transfer not be accepted
• Credit policy is allows credit to:
• Guaranteed reservations
• Company guarantee payments
• Credit card guarantee payments
• Deposit/ advance payment guests

22. •Credit listed companies
•Market value is checked
•Financial status is checked
•Account department maintains a list
•Different limits are set for different companies
•Factors like size, business volume, reputation etc.
•Contract has to be signed with the company
•Rates vary as per the contract
•Payment is done usually at the end of the month
•Mode of payment may vary as well
CREDIT CONTROL FOR COMPANIES/ TRAVEL AGENTS

23. QUESTIONS?