Front Office Accounting Accounting Fundamentals Creation and Maintenance of Accounts Tracking Transactions

Definition A front office accounting system monitors and charts the transactions of guests and businesses, agencies and other non guests using other hotel services and facilities. The front office’s ability to perform accounting tasks in an accurate and complete manner will directly affect the hotel’s ability to collect outstanding balances.

Accounting Fundamentals An effective front office accounting system captures and records guest data during each stage of the guest cycle. During the pre arrival stage, a front office accounting system captures data related to the type of reservation guarantee and tracks prepayments and advance deposits. When a guest arrives at the front desk, the front office accounting system documents the application of room rate and tax at registration

Accounting Fundamentals During occupancy, the system tracks authorized guest purchases. Finally the system helps ensure payment for outstanding goods and services at the time of check out.

A Front Office Accounting System: Creates and Maintains an accurate accounting record for each guest or non guest account Tracks financial transactions throughout the guest cycle Ensure Internal control over cash and non cash transactions Records settlement for all goods and service provided

Accounts An account is a form on which financial data are accumulated and summarized. An account may be imagined as a bin or container that stores the results of various business transactions. The increase and decrease in an account are calculated and the resulting monetary is the account balance.

Accounts An account resembles the letter T: Account Name Examples Account Name Charges Payments

Accounts In a non – automated or semi automated recordkeeping system, a journal form might contain the following Examples Des of Ac Charges payments Balance

Guest Accounts A guest account is a record of financial transactions that occur between a guest and the hotel. Guest accounts are created when guests guarantee their reservations or when they register at the front desk.

Non guest Accounts A hotel may extend in house charge privileges to local businesses or agencies as a means of promotion, or to groups sponsoring meetings at the hotel. The front office creates non guest accounts to track these transactions. These accounts may also be called house accounts or city accounts. Non guest accounts are also created when a former guest fails to settle his or her account at the time of departure

Non guest Accounts When a guest status changes to non guest, the responsibility for account settlement shifts from the front office to the back office. Unlike guest accounts, which are compiled daily, on guest accounts are normally billed on a monthly basis by the hotel’s accounting division.

Folios Front office transactions are typically charted on accounts settlements called folios. A folio is a statement of all transactions [ Debit and Credits] affecting a balance of a single account.

Four[4] types of folios Guest Folios – Accounts assigned to single persons or guestrooms Master Folios – Accounts assigned to more than one person or guestroom usually reserved for group accounts Non Guest or semi – permanent folios – Accounts assigned to non – guest businesses or agencies with charge privileges at the hotel Employee Folios – accounts assigned to employees with charge privileges

Vouchers A voucher detailed a transaction to be posted to a front office account. This document lists detailed transaction information gathered at the source of transaction, such as the hotel dinning room or gift shop.

Points of Sale The term “point of sale’ describes the physical location at which goods or services are purchased

Creation and Maintenance of Accounts Guest folios are created during the reservations process or the time of registration. To prepare a folio for use, information from the guest’s reservation or registration records must be transferred to the folio. A folio tray may also be referred to as a posting tray, folio well or bucket

Credit Monitoring A line of credit is set for guests who establish charge privileges during the reservations or registration process. These internal credit restriction are called house limits. A front office management may need to be notified when a front office account approaches its credit limit. Such accounts are called high risk or high balance

Account Maintenance A folio is used to record transactions that affect the front office account balance. Guests folios must be accurate, complete and properly filed, since guest may inquire about their account balance or check out of the hotel with little or no advance notice.

Account Maintenance Front Office Accounting Formula Previous Balance +Debits+Credit = Net Outstanding Balance PB + DR + CR = NOB