The front office desk is the face of the hotel. It is the point, where the interaction between the clients and Hotel staff takes place regarding inquiry, stay, facilities, and bill settlement. The main transactions between the hotel and the client are the sale of a service or product. These are purely financial transactions. For the recording of such transactions, various books known as front office ledgers are maintained by the front staff in the hotel.
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As per Arthur Field House,” Ledger is the permanent storehouse of all the transactions.” Ledger accounting is a systematic process of recording, sorting computing, verifying, and summarizing the financial transactions pertaining to one account in one place. Similar types of accounts are grouped together and recorded in one type of ledger. In hotels, the groups are generally named Guests or non-guest. So the Front Office Ledger are also made as per these groups. On one page of the ledger, the transaction of only one client is recorded to help the hotel keep the record properly.
A hotel is giving services such as room stay, laundry, club, spa, swimming pool facilities, shopping of various products if it has an in-house shopping area, etc. When a customer buys any good or service the point of sale generates a voucher. This voucher is duly signed by the customer for approval and record.
These vouchers are sent to the Front desk where they make Folios and then the detail of these transactions is posted in the Front Office Ledger. The client-wise statement is made where all the details of financial transaction related to one client is maintained.
It contains all debit: which means charges incurred on clients and credit: which means allowance or discounts provided to clients. Based on the ledger, the itemized bill is made. The client is charged as per the final payable amount shown in these Front Office Ledger. Barring some cases, these charges are generally paid at the time of check-out.
Earlier the Front Office Ledger in hotel were made manually in ‘T’ account, where one side pertained to room charges, rent, service charges, etc. and another to advance payment, part payments, discounts, or allowances that the hotel gives to customers. The difference between total charges and total payments amounted to the net payable by the customer.
Later the format of Front Office Ledger changed to Journal type where various columns were made for charges, payables, etc. These days the system is automated, so a computerized format is used. It is also in tabular form but has mainly two columns. One of description and another of amount. The debit and credit are shown with + and – sign for clarity. Automation has made the process of computation fast, Instant, and accurate.
Types Of Front Office Ledger In Hotels
- Guest ledger: This is also known as a transient Front Office Ledger. The first and foremost business of the hotel is guest accommodation. Guest ledger is maintained for people who are primarily taking the services of hotel rooms. During their stay whatever financial transaction they do i.e., paying advance for the room, taxes, availing services of laundry, food, pool, spa, etc are all recorded and computed to find out the net payable amount.
- Deposit ledger: This Front Office Ledger maintains the details of the deposits of customers who have paid for their accommodation in advance but have not arrived yet. Once they arrive then their detail will be switched to the Guest ledger.
- City ledger: It is the summary of financial transactions of non-guest customers of the hotel. Non-guest clients are the ones who have not opted for guest accommodation in that hotel, but they are using other services of the hotel. Generally, account department track and settle payments of city ledger accounts. The parties for whom the city ledger is maintained are as below:
- Locals/groups who are opting for swimming pool, banquet, conference hall, and spa facilities of the hotel.
- Sometimes customers do not settle the payments at the time of check-out. They still have a balance left to be paid. When any customer checks out without making full payment then their detail is shifted from guest ledger to city ledger.
- If any organization has an open account with the hotel which allows any traveling executive to stay in the hotel, the hotel doesn’t charge the executive of company. It instead makes the bill monthly and charges the company accordingly.
- When the Guest makes payment through a credit card then the hotel doesn’t consider it as an ‘account settled’ because the money is paid by the guest but the amount is not credited in hotel accounts yet . It is lying with the credit card company. Till the time the credit card company remits the amount, the hotel maintains the details in the city ledger.
Benefits Front Office Ledger In Hotels
- It records, sorts, summarizes, verifies, and computes all the financial transactions related to a client in one place which helps in making better analysis and saves time at the time of settlement of payments.
- It shows the financial position at any given time. If a guest’s bill increases pre-determined limit, then the Front Office Ledger can intimate the accounts department, and necessary actions be taken. It can lead to full or partial payment before the final check-out.
- Maintaining a ledger helps in avoiding the problem of omission. As one doesn’t have to depend solely on paper slips, meaning folios and vouchers, any loss occurring due to the omission of any transaction while calculating net payable, is avoided.
- It helps in making itemized bills easily.
- If proper accounts are maintained, then we can refer to them in the future also if the need arises.
- It helps in maintaining healthy relationships with clients as trust is built on clean transactions, thereby it helps in word-of-mouth advertisement to increase goodwill and sales.
- It helps in making a P/L account of the hotel easily.
- It stops the fraudulent activities of staff as the detail of every transaction is recorded.
- Consumables/ inventory can be cross-checked based on records mentioned in ledger.