Cash Transactions
Chapter 12
Handling Cash Transactions
Cash Paid-Outs
– Are the exclusive right of the front-office
cashier.
– Increases in assets, including accounts
receivable and cash, are made with debits.
Decreases in assets, including accounts
receivable and cash, are made with credits.
Tips to Employees
Most common cash advance.
Most hotels pay employees’ tips on receipt
or at the end of the shift.
– Often results in the hotel subsidizing its
employee gratuities in 3 common ways
• Float – the time value of money
• Merchant discount fees on credit cards
• Potential noncollectible accounts
Cash Loans
Third-Party Sources of Cash
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ATMs
Credit-card advances
Person-to-person pay services
Internet money services
Payday loan companies
Expedited money order services
These financial services are not free. Fees paid by
the guest to the third parties range upward from a
low of 10%.
Paid-outs to Concessionaires
Concessions – beauty salon, florist, gift
store, valet cleaning, etc
Hotel acts as middleman in concessionaireguest relationship
– Hotels earn 10% to 20% of the laundry and dry
cleaning revenue (the other 80% to 90%
accrues to the vendor)
Refunds at Check-Out
Cash is never refunded if the original
payment was not in cash!
If credit card was used, hotels issue a refund
against the credit card.
Reasons for refund could be there was a
substantial deposit with reservation or a
large payment on account was made on or
after arrival. Guest may have shortened the
stay or hotel adjusted the rate downward.
Cash Receipts
At Check-out
– Only small percentage of guests settle with cash.
– Very few use cash, traveler’s checks or personal checks
On Account
– Payments may be requested at any time, not just at
departure
– Long term guests are billed weekly.
– Guests decide to make payments against their account
before checkout
Cash Receipts cont’d
At Check-In
– Guests are asked to establish credit at check-in
– Most guests prefer credit card
– Cash guests are asked to pay their room charges up
front
Reservation Deposit Receipts
– Cash seldom used to secure a reservation
– Even advance deposit reservations are usually charged
to credit card
House Receipts and Expenses
Assorted City- and General-Ledger Receipts
– Some hotels elect to funnel all cash and check receipts
through the front office.
– Examples:
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Receipts for meetings or banquet functions
Reimbursements or rebates for overpayment to vendors
Refunds or credits from taxes
Lease revenues from merchants or concessionaires
Assorted House Paid-outs
Front office cashier acts as a depository for the
accounting department and also as the accounting
department’s disbursing agent.
The Imprest Petty Cash Fund
– If the front-office cashiers are only reimbursed when
petty cash vouchers reach a sizable amount or at the
end of each month, it is known as the imprest petty cash
fund
– This fund authorizes the front-office cashier to hold
petty cash vouchers in the drawer day after day
The Cashier’s Daily Report
Every cashier in the hotel prepares a daily
report
With report, cashier turns in departmental
monies.
These combined funds (plus any that clear
through the general cashier) constitute the
hotel’s daily deposit made to the bank
Preparing the Cashier’s Report
The Cashier’s Bank
– Each cashier receives and signs for a permanent
supply of cash, called the bank.
One major accounting firm reported that the
total of a hotel’s house banks and cash on
hand should be about 2% of total sales
Cashiers lock their banks in the safe or hotel
vault after each shift.
Net Receipts
Represent the difference between what the
cashier took in (receipts) and what was paid
out.
Are computed by subtracting total advances
(paid-outs), city and transient, from total
receipts, city and transient.
– House paid-outs and miscellaneous receipts are
not included because they’re counted as cash.
Over or Short
Over or short is the difference between what the
cashier should have in the cash drawer and what is
actually there.
It is the comparison of a mathematically generated
net total against a physical count of the money in
the drawer.
– The cashier should have the sum of the original starting
bank plus the net receipts.
The Turn-In
Front-office bank is used to cash checks, make
change, and advance cash as well as accept
receipts.
The objective of the cashier’s turn-in is to rebuild
the starting bank in the proper amount and variety
of denominations to be effective during the next
day’s shift, and “drop” the rest of the contents of
the cash drawer, i.e. checks, traveler’s checks,
foreign funds, large bills, casino chips, cash in
poor condition, vouchers for house expenses, etc.
The Income Audit
To process the cashier drops made the preceding
day.
Two purposes:
– To verify that each department’s cashiers have
accurately dropped (turned in) the amount indicated on
the deposit envelopes.
– To prepare the hotel’s daily bank deposit
General cashier(s) & income auditor(s) make up
the day audit team.
The Income Audit cont’d
Paying Off the Due Bank
– Due bank is calculated by subtracting the
amount of money retained by the cashier
from the amount needed to open the next
day’s bank
– The income audit staff pays each cashier’s
due bank from the growing pile of turned-in
cash before preparing the hotel’s daily
deposit.
The Income Audit cont’d
Paying Off the House Vouchers
– In hotels that utilize imprest petty cash fund, frontoffice cashiers are asked to hold their house vouchers
until they reach some predetermined amount.
Tour Package Coupons
– Redeemed coupons are proof that goods were
exchanged and become the basis for the account
receivable. They are part of the departmental cashier’s
daily turn-in.
Foreign Currency
Not regularly accepted in the United States.
Cities with large number of foreign visitors
have adequate exchange facilities.
Exchange agencies allow hotels to service
the currency needs of the international guest
with a reasonable ceiling on costs.
Foreign traveler’s checks are more readily
accepted than personal checks.
Cash and Cash Equivalents
Counterfeit Currency
– There may be as much as $1 billion in
counterfeit currency in worldwide circulation.
– Detecting Counterfeit Currency
• In 1996, the US Treasury began issuing currency
with new security features.
• Supernotes – Superior counterfeit fakes
• Search the bill for magnetic ink
Check-Cashing Safeguards
Procedures for Minimizing Fraud
– The Old “One-Two-Three”
• Is the check perforated?
• Do the Federal Reserve district numbers 1 to 12 match the
location of the issuing bank?
• Is the routing code printed in magnetic ink?
– Simple Deterrents
• Closed-circuit televisions
• Photographing procedures
• Dual-lens cameras
Check-Cashing Safeguards cont’d
Endorsements
– Cashier should use a rubber stamp that includes
ID, credit card number, room number and the
initials of the person approving the check
– Congress enacted legislation in 1988 that
assigned the first 1.5 inches from the trailing
edge of the check to endorsements
– Use a check cashing checklist before approving
a check
Traveler’s Checks
American Express pioneered the traveler’s
check.
The traveler’s check industry stalled in the
late 1990’s at about $50 billion per year.
Very acceptable and some hotels will cash
them even for non-registered guests
Prompt refund of lost or stolen checks is
their major appeal.
Summary
Even as the quantity of cash circulating in hotels
declines, the need for careful cash-handling
practices increases.
Front-office cashiers receive cash from a number
of potential sources and is paid out by them for a
number of reasons as well.
Front-office managers need to carefully train
cashiers to identify situations where fraudulent
practices may occur