1. Cash Transactions
Chapter 12

2. 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.

3. 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
Page 458 Float- use book example.

4. Cash Loans Third-Party Sources of Cash
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%.

5. Paid-outs to Concessionaires
Concessions – beauty salon, florist, gift store, valet cleaning, etc
Hotel acts as middleman in concessionaire-guest relationship
Hotels earn 10% to 20% of the laundry and dry cleaning revenue (the other 80% to 90% accrues to the vendor)

6. 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.

7. Cash Receipts At Check-out On Account
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

8. Cash Receipts cont’d At Check-In Reservation Deposit Receipts
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

9. 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:
Receipts for meetings or banquet functions
Reimbursements or rebates for overpayment to vendors
Refunds or credits from taxes
Lease revenues from merchants or concessionaires

10. 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

11. 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

12. 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.

13. 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.

14. 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.

15. 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.

16. 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.

17. 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.

18. The Income Audit cont’d
Paying Off the House Vouchers
In hotels that utilize imprest petty cash fund, front-office 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.

19. 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.

20. 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

21. Page 484

22. 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

23. 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

24. 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.

25. 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