Cost Controls1
Cost Controls and Resource Management System Flowcharts
BIS/303
Cost Controls2
Cost Controls and Resource Management System Flowcharts
Point-of-Sale and Inventory Tracking
The point-of-sale, or POS, and inventory tracking systems for hospitality
organizations integrate with the other information systems such as accounting and
operations information systems. The accuracy of information input at the POS is critical
because that information is passed on to other systems and databases. The
information input into the POS can be from multiple transactions inputs. These inputs
can be from booking transactions, sales transactions, service transactions, prepay
transactions, after-departure transactions, as well as any other transactions.
Customer information is entered through POS systems by an employee at the
front desk, concierge, over the internet, or phone. The information recorded on the
POS system includes information such as name, address, phone, email, rate, duration,
rewards information, as well as billing information or any other special requests. The
information input into the POS system integrates directly with the accounting and
operations systems through common databases or as part of a larger property
management system. This system would record inventory based on booked
reservations and new reservations coming from the POS system. A central database,
or database management system (DBMS), is used to interface with multiple systems.
“Eachwork area database interfaces with a central database, the DBMS, whichacts as a
centralized warehouse for the entire operation—thus the term data warehouse”
(Tesone, 2006, p. 176). The data stored in the central database can be accessed by
other departments including housekeeping, maintenance, accounting, operations, sales
and marketing, and more.
Cost Controls3
The operations and accounting departments use process control and
management reporting functions to make informed business decisions. Process control
is important to understand what products and services are being used. “Process control
functions are procedures that track the use of the materialresources required to produce
products and services” (Tesone, 2006, p. 173). For example, management reporting
functions may includesales details, revenue volumes, and other reporting based on data
input from the POS systems.
Operations and Accounting can use much of the information from the POS
systems. For example, customer information, rewards information, locations, rates, and
other information is input from the POS system and recorded in the POS database. The
central database can retrieve information from the POS server and interface with the
operations and accounting servers, which can then provide the information to the
respective departments. Operations can use this information to analyze and
understand occupancy rates, length of stay, and other information. Maintaining
accurate inventory information is critical. Accounting can use the information input on
the POS to invoice the customer the correct amount.
Input
Point-of-sale
Terminal
(input)
Name
Address
Rewards
Phone
Email
Billing
Accounting
Server
Transactions
Process
Control
Management
Reports
Point-of-Sale
Server
Property Management
System
Central Database
DBMS Mainframe
Operations
Server
Figure 1.1: The flow of information from the POS terminal
Production Systems and Management Control
Cost Controls4
Accounting controls, also known as management controls, and production systems help
front and back offices to work more efficiently by unifying the functions of each system. In other
words, the systems communicate between one another to help the human resources of a property
deliver higher levels of service and make smarter decisions.Management Information Systems
provide managers with the information they need to properly, effectively, and efficiently deliver
the best offerings for their guests by empowering the manager or managers with the information
needed to tailor those special offerings to specific guests. The production systems deliver the
finished product to a guest or customer while the management team administers control over the
operations of the organization or facility.
The accounting end of the team is part of management controls and performs back office
functions such as booking transactions, accounts receivable and accounts payable transactions
which are performed behind the scenes of the overall business operations. Modern Accounting
Information Systems help the productivity of the operating manager by saving him or her vast
amounts of time. Rather than spend time working on calls to other business offices, the manager
can now spend that time supervising a hospitality function on the property (Tesone, 2005). The
management control systems support the production systems which ultimately will help to create
a more responsive, current, and pleasurable experience for the guests of a facility or property.
In the hospitality industry both the management control systems and the production
systems must work as a seamless, unified system so customers do not realize there are so many
systems working--as opposed to a single system performing all functions on the property. The
front office should work efficiently so there is no thought of a back office group operating on the
premises.
The flow chart below illustrates how a customer transaction works from the front end to
the back end.
Cost Controls5
Customer contacts
hotel (Back office)
for information
Reservations made
(Back office)
Back office receives
customer's
information to
specialize services
Customer checks
in (Front desk)
Housekeeping
prepares room
before guests check
in (Front Office)
Front and Back
office systems
begin accounting
functions
Customer Checks
out after stay
(Front Office)
Confirmation Sent
to Customer
Management
reporting systems
activate (Back
Office)
Final bill paid in
full (Back office
provides total)
Accounting Control Strategy and Hospitality Technology Investment
Cost Controls6
In the past, achievement of accounting control strategies in the hospitality industry
was extremely labor intensive. Large numbers of accounting clerks and data entry staff
were needed to transfer data from front end hotel systems to back office controllers via
spreadsheets and complicated reports. Today, the hospitality industry uses the
Accounting InformationSystem (AIS) as a centralized hub for a completely networked
and functionally integrated Hospitality Management Information System (HMIS).
The AIS receives automated accounting data from other functional areas, including
Human Resources, Supply Chain Management, and front end sales (booking,
tendering, and credit), and places it electronically into one or more of several account
control tracking systems--General, Accounts Receivable, Cash Accounts, Accounts
Payable, and Payroll Account Ledgers.
The General Ledger is the main tracking control system and hub of the accounting
database within the AIS. It is a journal that consolidates data received from other
journals that contain data from specialized accounting functions (D. Tesone, 2006).
This data is then retrievable manually or automated by other accounting control and
tracking systems such as the Account Receivable Ledger.
The Accounts Receivable Ledger is used to track entries pertaining to credit
transactions with customers who owe payment to the hospitality organization that are
due full at a future point in time. When a client tenders payment for a block of rooms or
conference area using a line of credit, it is essentially a contract for payment at some
future date. The amount of money owed will reflect on the General Ledger and then
post to Accounts Receivable where it can be monitors and tracked for compliance with
payment contract requirements. Some of these requirements include penalties for late
Cost Controls7
payments or discounts for early payments. Credit transactions from sales, booking, and
tendering are cash settlement transactions and only reflect on the Accounts Receivable
Ledger as cash accounts until the client debt is paid in full.
The Accounting Information System facilitates automated accounting transactions
with suppliers and venders. By tracking production, trends, and supply stock levels, the
AIS can automatically determine supply shortages and submit requisitions via network
to Supply Chain Management systems. Payments for these material acquisitions are
tracked on the Accounts Payable Ledger. These are transaction between the hotel
enterprise and any outside business entity that results in an enterprise debt. All monies
owed by the enterprise are tracked on an expense account such as the Accounts
Payable Ledger. Other expense accounts include tax and debt service accounts.
Another expense account is the Payroll Account Ledger. This control tracks employee
pay information received by AIS from hotel Human Resource Management Information
systems.
Investments in technology in the hospitality industry have a major impact on
accounting strategies. Corporations in hospitality are extremely capital intensive, “large
amounts of capital dollars are spent on the assets of a hospitality enterprise” (D.
Tesones, 2006). In addition to expensive buildings and facilities, technical solutions are
a major and defining investment. Hospitality companies may carry debt owed to
software systems companies on their Accounts Payable Ledgers indefinitely due to the
accelerated nature of new technology. Corporate executives and managers must
consider this factor when developing short and long range enterprise strategic goals.
Accounting Control Strategies and Point-of-Sale, Inventory Tracking,
Cost Controls8
Production, and Management Control
Accounting control strategies can affect point-of-sale in purpose, ideas, and sales.
The purpose of the point-of-sale can negatively change if the accounting control
strategies are not well managed. Ideas can turn the opposite way when the company
fails the accounting control strategies, and can cause misinterpretation and lack of
production within the company. Sales can go down on any point-of-sale because the
company accounting is not having any progress during a certain period. Inventory
tracking can be affecting it in disorganization, schedule, and lack of information.
Hillstrom stated, “Inventory control (also known as inventory management) refers to the
systems and strategies businesses use to ensure that they have adequate supplies of
raw materials for production and finished goods for shipment to customers, while also
minimizing their inventory carrying costs.” Disorganization of inventory tracking can
show bad work and control of products and services inventory. Schedule delay can
cause serious problems within the company with unsatisfied customers and suppliers.
Lack of information is based on incomplete information provide to customers and
suppliers about certain product or services within the company. Production systems are
affecting it in lack of production, no collaboration, no teamwork. Accounting affects the
company on lack of production because the products and services prices decrease and
the production goes down. Suppliers, managers, and employees are affected it by the
company accounting and they stop collaborating on the company production. The team
doesn’t work together to reach the short-term and long-term goals within the company.
Management controls are affected by the company accounting on time management,
communication, and decision-making process. When the company is just focus on what
Cost Controls9
is happening within the company and there is no time for the other projects. When
company accounting is bad, it comes bad communication between managers,
employees, customers, and suppliers. Decision-making process goes down and the
company became unsuccessful and under budget and the company is forced to be out
of the marketplace.
Cost Controls10
References
D. Tesone. (2006). Hospitality Information Systems and E-Commerce. Accounting
control and production systems. (ch.10). Retrieved March 23rd, 2011 from:
https://ecampus.phoenix.edu/content/eBookLibrary2/content/eReader.aspx
K.Hillstrom. (2011). Inventory Control Systems. Retrieved March 23rd, 2011 from
http://www.referenceforbusiness.com/encyclopedia/Int-Jun/Inventory-ControlSystems.html