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Uploaded byArpendra Chauhan
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Front Office Accounting

The document outlines the basics of front office accounting in hotels, detailing various accounting terminologies, types of folios, ledgers, and transaction processes. It explains the creation, maintenance, and settlement of guest accounts, including different types of vouchers used for financial transactions. Additionally, it covers cash transactions, account corrections, and the importance of credit monitoring within the hotel accounting system.

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FRONT OFFICE ACCOUNTING By Arpendra Chauhan
TABLE OF CONTENTS 1 ACCOUNTING SYSTEM FRONT OFFICE ACCOUNTING BASICS ACCOUNTING TERMINOLOGIES FRONT OFFICE ACCOUNTING CYCLE INTERNAL AUDIT TYPES OF TRANSACTIONS 2 3 4 5 6
1 Basic Accounting Terminologies & Introduction
WHAT’S IN IT FOR YOU? ACCOUNTING Types of Accounts FOLIOS Types of Folios LEDGER Types of Ledgers OTHER TERMS Accounting Terms VOUCHERS Types of Vouchers
GUEST ACCOUNT The record of financial transactions which takes place between a resident guest & the hotel. NON-GUEST ACCOUNT ACCOUNTING is the process of collecting, recording, summarizing, analyzing financial transactions. The record of financial transactions which takes place between a non- resident guest & the hotel.
FOLIOS The statement of all the transactions that take place between a guest and the hotel. GUEST FOLIO Used to record transactions made by an individual guest. MASTER FOLIO Is assigned to more than one person. Usually reserved for group account. NON-GUEST FOLIO Also known as semi- permanent folio. Assigned to non-guest business/ agencies with hotel charges like pool charges, meeting rooms etc. EMPLOYEE FOLIO Folio assigned to employess with charge purchase privilages. SPLIT FOLIO The folio in which charges are split as requested by the one paying for the same.
POSTINGS add or subtracts guest charges & payments to the guest’s individual account. CREDIT POSTING DEBIT POSTING Include room charges, restaurants, coffee shops, or any other charges for any facilites used in the hotel. Include pre-payments, advance deposits, partial payments, final settlement of payments etc.
VOUCHER are documents that have the details of the transactions made by the guest. Charge Voucher is also called as accounts receivable voucher. These are for the charges posted in the guest folio & guest signs the same. Correction Voucher is the voucher used for correcting any wrong charges posted (higher/ lower) Allowance Voucher need manager approval. Used for compensation OR correction of posting error after the closure of business date. Paid Out Voucher is used when the hotel is paying for the services on the behalf of the guest. Transfer Voucher is used when charges are moved from one folio to other.
GUEST LEDGER CITY LEDGER POINT OF SALE Also known as Room Ledger or Transient Ledger. It has the data of all payments made by the guest in advance or the time ofcheck in. A book in which the summary of both resident & non- resident guests are entered. It is a collection FO Folios. Denotes the location at which the guest purchases goods or services in the hotel property. Also known as non-guest ledger. Used for skippers & no-shows who have made advance payment. Also used for TAs & Companies who have credit facility. LEDGER
2 Accounting System & Credit Monitoring
NON-AUTOMATED SYSTEM is the manual system of keeping guests debit & credit entries during occupancy. Everything gets totaled at the end of the day & the closing balance is carried forward to opening balance of the next day. SEMI-AUTOMATED SYSTEM records the daily transactions and prints the same on a machine posted folio. AUTOMATED SYSTEM are the computerized POS system in which all the transactions are automatically recorded.
Floor Limit is the limit set by the bank to charge the credit card. CREDIT MONITORING is the process to make sure all the accounts are within the hotel credit limit. Night Auditor & FOM are responsible for the same along with the Credit Manager. ASSIGNMENT: Do a detailed study of Credit Monitoring process. Differentiate between Floor Limit & Credit Limit. Credit Limit/ House Limit is the limit set by the hotel to be posted in guest account without partial payment.
3 Stages of Settlement
STAGES OF SETTLEMENT CREATION OF ACCOUNTS SETTLEMENT OF ACCOUNTS MAINTENANCE OF ACCOUNTS
CREATION OF ACCOUNTS •First transaction between the hotel & the guest •Advance payment at the time of booking •Pre-payment prior to arrival •System creates a folio when it received a payment •All transactions are recorded in the system •Hotel sets a credit limit i.e. maximum amount of credit that the hotel will extend to the guest MAINTENANCE OF ACCOUNTS •All transactions are recorded in order of the occurrence. •Debit entries like room charges, F&B charges, telephone, laundry, transportation etc. •Credit entries like pre-payment, advance deposit, partial payment, allowance given to the guest, adjustments made in case of error etc.
SETTLEMENT OF ACCOUNTS •This is the final stage of settlement •This is the stage/ phase which does the zeroing of the balance in the guest folio •Outstanding Balance= Opening Balance+ Debit Entries- Credit Entries •Final phase which takes place at the time of check out
4 Cross checking of processes internally
-Verifying account entries and balances -Identifying risks in the accounting system FRONT OFFICE CASH SHEET OR CASHIER LOG SHEET -Tracking transaction documentERNAL AUDIT CASH BANK OR CASH FLOAT SHORTAGESOVERAGES DUE BACK
5
CASH TRANSACTIONS •Amount paid in cash is posted as credit •Reduces the net outstanding balance •Cash voucher is used for transactions •No entry will appear when cash is paid at POS •Front Office will have to keep a copy of the check
CHARGE PURCHASE •Outstanding payment transaction •Guest consumes now but pays later •These transactions increase the net outstanding balance •Transactions are supported by charge voucher •Charge voucher/ check is printed in copies •One copy goes to the front desk, one is with POS •Can be posted directly from POS to PMS
ACCOUNT CORRECTION •Resolves posting error to the folio •Correction is made on the same day the error is made •Should be done before night audit •Correction can either increase or decrease the balance •Correction voucher is used to document corrections ACCOUNT ALLOWANCE Compensation of poor service or rebates or discounts Decrease the guest account This is strictly controlled Requires authorization from DM & above Posting error after night audit or closing business date Wrong posting done after closure of business date Allowance voucher is filled Errors entered in accounting records Requires approval from Finance department
ACCOUNT TRANSFER •Charges are transfered from one guest account to other •Approval & agreement from both the parties is required •Supported with a transfer voucher •Payment is made on behalf of the guest •Debit transactions •Increase account balance •Money is used from cash bank •Payment is always made in local currency CASH ADVANCE/ PAID OUT
ASSIGNMENT Explain in details the Paid Out procedure.
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