Front Office Accounting
Accounting task throughout the guest cycle.
Pre – Arrival Stage
o Guaranteed Reservations
o Advance Deposits
o Prepayments
Check in Stage
o Documents Room Rates And Tax
Occupancy Stage
o Purchases of Goods and Services
Check out Stage
o Payment of Outstanding Balances
For a non-guest transaction that is captured by the Front Office Accounting System,
the collection of payment will be done by the Back Office Accounts Department.
The Front Office Accounting System
o Creates and maintains an accurate accounting record fo each guest and nonguest account
o Tracks financial transactions throughout the guest cycle
o Ensures internal control over cash and non-cash transactions.
o Records settlements for all goods and services provided
Accounts
o An account is a form on which financial data is accumulated and summarized.
o Accounts may increase or decrease and the current amount is also known as
the account balance.
o T- Accounting System is the most basic written form of accounting.
o The debit side ( left ) and the credit side ( right ) is used in accounting and is
know as “double entry”
o There are two types of accounts handled by a hotel: Guest accounts and nonguest accounts.
o Guest Accounts:
o A current record of financial transaction between an in house guest and
the hotel
o Need to be settled upon check out
o Non-guest Account
o Credit Facilities which are extended to Corporate Companies and the
Government
o Also known as City Accounts and need only be settled at the end of the
month.
Billing And The Guest Ledger
Guest Cycle
o Reservation makes the room booking for the guests
o The Arrival and Registration of the guests at Check In
o The Stay, and eventually
o The Check Out
Due to the fact that the guest during his stay would be able to charge his
consumption of goods and services to his room, the hotel would have to keep track
of guest bills. This is done by opening a guest account, which is known as a FOLIO.
Definition of a Folio
o An accurate and current statement of how much at the guest owes the hotel.
Deference between a Folio and an invoice in other businesses.
o Current and available at anytime from the front desk.
o The is an efficient system and must be accurate and efficient.
Collecting charges not on the folio when the guest has departed will often cause ill
feelings to the guest. When can this happen?
Accounts Receivable
Accounts Receivable
o The account, which is held as record of what, the customer owes from the
time of the sale to the time of settlement.
o Examples: Purchase of item on credit for later payment.
Opposite of accounts receivable is accounts payable – what the hotel owes. i.e.
suppliers.
Types of Accounts Receivable
o Guest Account Receivable – guest in-house having outstanding balance
o City Accounts Receivable – Companies / Organizations with outstanding
balance with the hotel. It would include credit card transactions.
o The accounts status can change from one from to another i.e. Guest Ledger
to Guest Ledger, Guest Ledger to City Ledger.
Ledgers:
o Guests Ledgers – Folios of all in house guests accounts.
o City Accounts Receivable – Companies / Organisations with outstanding
balance with the hotel. It would also include credit card transactions.
NOTE:
Cash transactions at point of sale, would not be taken into account in the Guest
Ledger.
FOLIOS
o A folio is a statement of all transactions (debits and credits) affecting the
balance of a single account.
o A folio starts with a Zero Balance and is increased by debits or decreased
by credits, then finally settled by a payment. It must end with a Zero
Balance.
o Posting - A process of recording a transaction on a folio
o Four types of folios are used in Front Office Accouting:
o Guest Folios
o Master Folios
o Non – Guest Folios
o Employee Folios
Guest Folios
o May be separated as well depending on the number of guest in the room as
well as between groups of transactions
o May be separated as follows:
o Room Folio
o Food and Beverage Folio
o Telephone Folio
o Incidental Folio
Master Folios
o Created for tour groups where all the group member’s room charges are
posted into the tour leaders folio, which acts as the master folio.
Non-Guest Folio
o Created for non-house with credit facilities.
o Known as City Account.
Employee Folio
o For staff with signing or Officers Check facilities
Vouchers
Vouchers are used to document transactions which are posted to the front office
accounting system. Types of vouchers are as follows:
o Cash Vouchers
o Charge Vouchers
o Transfer Vouchers
o Paid Out Vouchers
o Allowance Vouchers
Point Of Sales (P.O.S)
Any location in the hotel where services or goods can be purchased and revenue cis
collected. Often known as a Cost Center. Examples of P.O. S are:
o Restaurants
o Lounges
o
o
o
o
o
Laundry
Room Service
Telephone Service
Health Center
Bars
The Front Office Accounting system must ensure that transactions are properly
posted into guest accounts.
Vital information necessary for a posting to be done are:
o Voucher or transaction number
o Amount of charge
o Name of the POS outlet
o Debit Values – Amounts that increases the balance i.e receiving cash and
accounts receivable.
o Credit Values – Amounts that decreases the balance. I.e. Paid outs
o Double entry accounting is important in the above transactions.
o Room Number of Guest
o Name of Guest
o A brief description of charge
o Signature of the guest on the Voucher
Ledgers
o A summary grouping of accounts
o The Front Office ledger is a collection of front office account folios
o Accounts receivable ledger records al revenue owed to the hotel and is
divided into:
o Guest Ledgers – For in-house guest receivables
o City Ledgers – Non-guest receivables.
Locations of Guest Folios
o Guest folios are usually stored electronically. Fidelio P.M.S. would only
display the guest folios on the screen and a hard copy can be obtained when
the folios are printed out.
o Number of guest folios are determined by the size of the hotel. There is a folio
for each room. However in the case of a JOINER guest, where separate
accounts are needed, two folios may be required per room.
o Even in individual rooms, a guest may request for separate folios for different
consumptions. There is no limit to the number of folios that can be requested.
o Number of City Ledgers Folios is determined by the number of companies
that the hotel has granted credit facilities as well as the major credit card
companies.
Master Accounts
o Usually common with groups whereby all the group member’s room charges
are posted into one account. (usually the tour leader) which acts as the
Master Account.
o The person responsible for the Master Account would have to settle the bill
upon check out.
o However often the Mater Account would be transferred to the City Ledger and
settled at a later date via an invoice.
Vital information of a Folio
o Room Number
o Name of Guest
o Room Rate
o Arrival Date
o Departure date
o Account Reference Number
o Date of Transactions
o Reference or posting item
o Debits ( for charges)
o Credits ( for rebates)
o Balance Due
o Signature of Guest
o Disclaimer Clause