LESSON 7

CHECK-OUT AND
SETTLEMENT

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Departure Procedure

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Departure Procedure

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Departure Procedure (Cont.)

The payment is received from the guest
The front desk makes the luggage out pass
Marketing activities are carried
communicate the check-out information to other concerned
departments.
The front office assistant updates the following front office
records:
Current room status
Guest history card.
Arrival/Departure register
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Departure Procedure in Fully

Automated System

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Departure Procedure in Fully

Automated System (Cont.)

The front office presents the master bill, along with supporting
vouchers, to the guest for review.
The payment is received from the guest as per the pre-determined
mode of payment.
The front office makes the luggage out pass.
The front desk communicates the departure of the guest to
housekeeping and all the other concerned departments.
The front office records are updated automatically. These include:
The auto removal of the name of the departed guest from the inhouse guest name list.
The automatic updating of the current room statusfrom
occupied to vacant/dirty.
The automatic updating of the guest history card.
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Mode of Bills Settlement

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Mode of Bills Settlement (Cont.)

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Currency Exchange Procedure

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Currency Exchange Procedure

(Cont.)

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The cashier prepares the currency exchange certificate

The cashier requests the guest to sign the currency exchange
certificate
The guest gives the foreign currency to the cashier in cash or as
traveler's cheques
The cashier calculates the total amount to be paid in local currency
as per the exchange rate
The cashier dispenses the amount to the guest along with the
original currency encashment certificate. He attaches the second
copy with the foreign currency or traveler's cheques and leaves the
stationary copy in the booklet
The cashier fills the details of the daily currency exchange
transactions in the foreign currency control sheet
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Potential Check-out Problems and

Solutions

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The following problems may occur during the departure of

a guest:
Late check out
Long queues at the cashier counter
Improper posting of charges in the guest folio

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Late check out

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If a guest vacates his room after the check-out time, it is considered late checkout. This may create a problem, especially during high occupancy periods, as the
guests with confirmed reservations will be required to wait for the room to be
vacated and cleaned. A hotel may take the following preventive measures to
minimize late check-outs:
Inform the guest about the check-out time and late check-out charges at
the time of reservation and also at registration.
Have the information regarding the check-out timings printed on the key
card and displayed at the back of the room doors.
Add the late check-out charges in the guest bill.
Request the guests to vacate the room as per the check-out time and
offer to keep their luggage in the left luggage room at no extra cost.
In case of groups, provide hospitality rooms without any extra charges.
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Long queues at the cashier

counter

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The standard check-out procedure, involving number of

steps dealing with the presentation and settlement of
bills, takes some time.
As more and more guests now want a speedy and queuefree check-out, hotels are coming up with alternatives
to the standard check-out.
These alternative methods are :
Express check-out
Self check-out terminals

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Express check-out

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The express check-out procedure requires the guest to fill the

express check-out form and a pre-departure folio.
The ECO form is an authorization by the guest to the hotel
authorities to charge the outstanding balance to his credit
card. By signing the ECO form, the guest agrees to pay the
amount finalized by the front desk cashier after his
departure.
These forms are available at the front desk or are sent to the
guest on the morning of the date of departure.
The ECO form is accompanied by a copy of the guests folio,
indicating the approximate total bill.
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Format of Express Checkout form

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Self check-out terminals

Only fully automated hotels are equipped
with self service terminals, which allow
guests to check-in/checkout promptly by
operating these interactive machines. The
self check-out terminals have the following
benefits:
They minimize the guests waiting time
They simplify the check-in and check-out
They eliminate the scope of human error
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Improper posting of charges in

the guest folio

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There are occasions when a guests financial transactions are

not properly posted in the guest folio and the final bill is
inaccurate. This might be due to human error or system error.
The front desk is flooded with check-out requests at peak
checkout times and the cashier might make some mistake in the
posting of charges or the calculation of bills.
This could lead to a dispute with the guest and delay other
guests in the queue.
The whole experience can be quite damaging for the hotel.
To avoid this, hotels should install guest accounting systems,
which are more accurate and faster, leading to higher guest
satisfaction.
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18
FRONT OFFICE ACCOUNTING

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Front Office Accounting

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Accounting may be defined as :

the process of collecting, recording, summarizing, and
analyzing financial transactions of a business.

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Major Functions of Front Office

Accounting System

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Types of Front Office Accounts

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Guest Account

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A guest account is the record of financial transactions

between and a resident guest and the hotel.
This account is created either during the registration of the
guest (at the time of check-in) or during reservation, if the
guest makes an advance payment.
The front office creates an individual folio for each guest for
maintaining a record of all the financial transactions that take
place during the stay of the guest.
On the basis of a guests folio, the final bill is prepared and
presented to the guest for collection.
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Non-guest Accounts

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A non-guest account is the record of the financial transactions that take place
between a non-resident guest and the hotel. This is also known as a city account.
The front desk cashier also maintains other types of non-guest accounts, which
include:
Guests who leave the hotel without the settlement of their accounts are
known as skippers; their accounts are also treated as non-resident guest
accounts. The account is transferred to the city ledger awaiting eventual
payment, and after a stipulated wait time, the same is written off as a bad
debt.
The status of guests, whose accounts are not settled by them (in case of bills
to company), changes from resident to non-resident guests when they leave
the hotel. The front desk cashier transfers the balance to the city ledger and
the payment is collected by the accounts department.
When advance payment has been received for a guaranteed reservation and
it is subsequently a no-show, the account is normally recorded in the city
sales ledger.
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Folios

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A folio is a written record of a guests account and is created

at the time of starting a book of account in the name of a
guest.
It is a statement of all the transactions that take place
between a hotel and a guest.
The initial balance at the time of opening a folio is zero.
It changes with the credit (Cr) and debit (Dr) transactions.
The credit or debit balance can be known at any point of
time.

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Types of Folios

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Types of Folios (Cont.)

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Ledger

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A ledger is a collection of the same type of accounts.

The front office ledger has a collection of folios. There
are normally two ledgers maintained by the front
office. They are:
Guest Ledger
City Ledger

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Guest Ledger

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A guest ledger contains the details of all the financial

transactions between a resident guest and the hotel,
including charge purchases and the payments received
from the guest. It has two partsdebit and credit.
In a manual system, the financial transactions are
recorded in a tabular ledger, or tab ledger, which is of
two types:
Horizontal tabular ledger
Vertical tabular ledger

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Horizontal Tabular Ledger

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In a horizontal tabular ledger, all the credit expenses of

the guest are recorded in one horizontal row, and at the
end of the row, the guests credit or debit balance is
shown.
The vertical row of the table contains the room numbers.
At the end of vertical column, the daily sales balance can
be seen.

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Horizontal Tabular Ledger

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Vertical Tabular Ledger

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A vertical tabular ledger is a variation of the horizontal

tabular ledger.
It is also called visitors tabular ledger.
The rows depict the room numbers, and in the columns,
the details of the guests and their credit expenses as well
as payments are recorded.
At the end of every column, one can find the account
balance of individual guests staying in a particular room.
It is a loose sheet and is prepared on a daily basis by the
front desk cashier.
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Vertical Tabular Ledger

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City Ledger

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A city ledger contains the collective accounts of all the non-resident

individuals/agencies to whom the hotel extends credit facility. It is also called nonguest account.
City ledgers also contain the accounts of resident guests who have left the hotel
without settling their accounts, which would be settled at a later date by a third
party (may be a credit card company, an airline, a travel agency, or a corporate
house).
This account would be closed at the time of receiving the complete payment.
The account of skippers is also maintained in the city ledger for a specific period (as
per the hotel policy); at the expiry of this period the same is written off as bad debt
and the account is closed.
This ledger also includes bad cheque accounts (cheques that have bounced),
disputed bills account (bills that are in dispute), late charges accounts (bills that
could not be posted in the guest bill at the time of check-out), and retention
charges accounts (reservation was guaranteed but the same was cancelled or guest
did not show up).
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Front Office Accounting Cycle

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An important function of the front office accounting

system is to maintain an accurate and up-to-date record of
all the financial transactions (credit and debit) between
the hotel and each guest, so that all the outstanding
accounts are settled and the hotel does not lose any
revenue.
The front office accounting cycle has three distinct
phases:

Creation of accounts
Maintenance of accounts
Settlement of accounts

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Thank you..

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