Front Office Accounting System Terminology
Front Office Accounting System Terminology
Front Office Accounting System Terminology
A front office accounting system monitors and charts the transactions of the guests,
businesses, agencies and other non-guests using the hotel’s services and facilities.
There are two types of accounts maintained by front office department with front
office accounting system:
1. Guest Account
A guest account in front office accounting system is to record of financial transaction
between a guest and the hotel. It is created when the guests guarantee their
reservations or during registration. The front office usually seeks payment for
charges during the departure and settlement stage of the guest cycle.
2. Non-Guest Account
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 hotels. The front office
creates non-guest accounts to track these transactions which may also be called
house accounts or city accounts.
FOLIOS
Front office transactions are charted on account statements called folios. A folio is a
statement of all transactions (debits and credits) affecting the balance of a single
account. There are basically five types of folios used in front office accounting and
maintained with front office accounting system:
The term ‘point of sale’ denotes the location at which goods or services are
purchased. Any hotel department that collects revenue for its goods and services is
considered a point of sale. The front office accounting system must ensure that all
charge purchases at these points of sale are posted to the proper guest or non-guest
account. A computerized POS system allows terminals at the points of sale to
communicate directly with a front office computer system, and helps front office
staff to create a well-documented folio statement with a minimum number of errors.
Some basic information to be provided by the POS includes the amount of the
charge, name of the POS outlet, room number, name of the guest and a brief
description of the charge.
LEDGERS
A ledger is a summary grouping of accounts. A front office ledger is a collection of
front office account folios. There are two types of ledgers in front office accounting
system:
Guest Ledger – It refers to the set of accounts related to the registered hotel guests.
It is also known as Transient ledger, Front Office ledger or Rooms ledger.
City Ledger – Also called the non-guest ledger, it is the collection of non-guest
accounts. It can contain credit card payment accounts, direct billing accounts, and
accounts of past guests due for collection by the hotel.
CREDIT MONITORING
The front office accounting system must monitor guest and non-guest accounts to
ensure that they remain within acceptable credit limits.
OVERAGES – When the total of cash and checks in a cash drawer is greater than
the initial cash bank + net cash receipts
SHORTAGES – When the total of cash and checks in a cash drawer is less than the
initial cash bank + net cash receipts.
DUE BACK – A due back occurs when a cashier pays out more than he/she receives
i.e. there is not enough cash in the cash drawer to restore the initial cash bank. This
may happen when a cashier accepts many checks, or encashes large amount of
foreign exchange offered by a guest during shifts. These checks and bills are
deposited with other receipts and consequently the front office deposit may be
greater than the cashier’s net cash receipts, with the excess due back to the front
office cashier’s bank.
AUDIT CONTROL – Internal auditors should make unannounced visits to
the front office cashier’s desk for auditing accounting records as well as
conducting spot checks of the cash bank of the cashier on duty. A report
should be completed for management and ownership review.