Billing The Guest Folio
Chapter 10
WHAT THE CHAPTER IS ALL
ABOUT
Between check-in and check-out,
guests enjoy the services of the hotel.
Selling those services is what hotelkeeping is all about. Recording those
sales is what this chapter is all about.
Sale of Services: Some hotels (budgets)
offer room sales only, others have many
operating departments ranging from room
service, to wedding chapels, to spas.
Recording Sales: Unlike other retail
merchants, the hotel merchant waits for
payment. In the meantime, guest purchases
are recorded on a bill, which hotel
professionals call a folio.
Preparing the Folio: The folio is available
on demand to both the guest and the hotel’s
management. It is ready even though the
exact moment of departure is unknown,
even unknown to the guest.
Recording (Accounting) for Each
Transaction: Understanding accounting
rules is not essential to a clear
understanding of the other three
components of the chapter.
ACCOUNTS RECEIVABLE
A customer who owes a business for
services that have not been paid is known as
an account receivable.
Types of Accounts Receivable (A/R):
2 Types
+ City Receivables: Accounts receivable who
are not registered
+ Transient Receivable: Accounts receivable
who are currently registered
Ledger: Group of folios
+ City Ledger: A ledger of city receivables
+ Transient Ledger: A ledger of transient
receivables; also called a rooms ledger, a
front-desk ledger, a guest ledger
Posting: The process of recording a
charge or credit on the folio
The Folio: The Individual Account
Receivable
Location and Filing of Folios:
+ Modern hotels use the computerized folios that
property management systems (PMSs) create.
Number of Folios:
+ One folio is the norm for each occupied room.
There are exceptions. A room with several
unrelated persons would need several folios if
each is to pay an equal share.
The Folio: The Group Account
Receivable
Master Accounts:
+ Accommodate tour companies, trade
associations, convention organizations, and
single-entity groups.
+ Transient accounts receivable, not cityledger accounts.
+ Settled at check-out as with all folios.
+ Complex. They may number 25 pages and
more.
How Master Accounts are Structured:
+ Single-Entity Groups
+ Convention Groups
+ Tour Groups
Split Billing:
The distribution of the charges between the
master account and the guest’s personal
folio is called split billing or split folios.
Understanding Charges and Credits
This knowledge is especially helpful in
understanding the interface between frontoffice records (the transient ledger) and
back-office records (the city ledger).
The Meaning of Debits and Credits:
+ Increases in assets, including accounts
receivable and cash, are made with debits.
+ Decreases in assets, including accounts
receivable and cash, are made with credits.
Assets: Something a business owns.
+Land, buildings, furniture, and the kitchen
equipment.
+ Accounts receivable, which are debts that
customers owe the hotel.
+ Cash.
Sales or Incomes:
+ Selling services, the sale of rooms is the
hotel’s major product.
POSTING TO THE FOLIO (THE
ACCOUNT RECEIVABLE)
Folios are accounts receivable, debts owed by
the guest and owned by the hotel. Posting to the
folio means recording the event, usually a sale (the
charge), or a payment (the credit).
Paying for a bar drink or a breakfast buffet with
cash or credit card does not impact the folio.
Certain services, room charges, and telephone
calls made from the room, must appear on the folio.
Overview of the Billing
Procedure
Preparing the Folio:
+ The property management system formats
the folios as guests arrive and register.
+ As society grows more litigious,
information of all kinds is being added to
the folio to protect the hotel from
unwarranted lawsuits.
Presenting the Bill:
+ Since most guests are not credit risks,
bills are normally presented and paid at
check-out time.
+ Long-term guests are billed weekly, and
they are expected to pay promptly.
Communicating the Charges:
+ Before the Age of Electronics: A voucher
was used to communicate with the desk.
+ With Electronic Systems: The hotel’s
property management system (PMS) has
done away with vouchers, control sheets,
runners, and late charges.
Recording Charges to Accounts
Receivable
Understanding the Line of Posting:
+ It tells the reader the source of the charge,
the department providing the service.
Reference Numbers:
+ These numbers identify departments in the
hotel’s chart of accounts. A chart of
accounts is a coded numbering system by
which the hotel classifies its records.
Posting Room Charges:
+ Posted differently from charges from all the
other departments.
+ Posted by the night auditor, not by the guestservice agents during the day.
Sales Taxes: Taxes levied on room sales by local,
county, and the state governments are universal
to hotel-keeping.
Taxes collected (taxes payable) make the hotel an
account receivable to the government just as the
guest is an account receivable to the hotel.
Recording Credits to Accounts
Receivable
As the guest folio (an account receivable) is
increased by charges (room sales, food sales and
so on) so it is decreased by credits (payments).
Three Methods of Settling Accounts:
1. Cash is one method.
2. Allowances, reductions to the amount owed.
3. Transfers—shifting the amount due to someone
else.
Settling with Allowances (Rebates,
another name for allowances):
+ Comp Allowances
+ Allowance for Poor Service
+ Allowance to Correct Errors
+ Extended-stay Allowances
+ Recording the Allowance
Settling with Transfers:
+ Folio Transfer of Registered Guest to
Registered Guest
+ Transfer of Folios to the City Ledger:
Credit Card
+ Transfer of Folios to the City Ledger:
Direct
+ Transfer from the City Ledger to the
Guest Ledger: Advance Deposits