Manual and Computerized Accounting in Front Office

In the front office of a hotel, accounting is crucial for tracking financial transactions, including guest billing, payments, and financial reporting. There are two primary methods of accounting: manual accounting and computerized accounting. Both have their advantages and limitations, and hotels often use a combination of both depending on their size, needs, and technological resources.

Manual Accounting in Front Office:

Manual accounting in the front office involves recording all financial transactions by hand on paper ledgers or registers. This method is often used in smaller hotels or those with limited resources. The process is labor-intensive, and staff must maintain accuracy to avoid errors.

Steps Involved in Manual Accounting:

1. Guest Registration: Upon check-in, the guest’s details and the room charges are recorded manually in a registration book.

2. Billing: As the guest consumes services (room, food, amenities), charges are manually entered into the guest folio. The folio is a record of all transactions related to the guest’s stay.

3. Receipt of Payments: Payments received (cash, check, or credit) are recorded in the cashbook or another appropriate ledger. Receipts are manually written for guest payments.

4. Guest Check-out: When the guest checks out, the final bill is calculated, and the total charges (including any extras) are manually totaled. Payments are reconciled with the guest folio.

5. Daily Balancing: The front office cashier manually tallies the total amount of money received during the day and checks it against the records in the cashbook to ensure that the accounts balance.

6. Reporting: At the end of each day, the daily report is prepared manually, summarizing all transactions, revenue, and payments. This information is transferred to the hotel’s general ledger for accounting purposes.

Advantages of Manual Accounting:

• Low initial setup cost.

• Simple to implement and manage without specialized software.

• Offers complete control over financial records for smaller establishments.

Limitations of Manual Accounting:

• Time-consuming and prone to human error.

• Difficult to keep track of multiple transactions or generate reports quickly.

• High risk of data loss or misplacement of records.

• Limited capacity to manage large volumes of data efficiently.

Computerized Accounting in Front Office:

Computerized accounting systems have revolutionized the way financial transactions are managed in the front office. This method uses specialized software that automates and simplifies most accounting tasks. Hotel properties with larger operations or a high volume of transactions generally prefer computerized accounting systems as they offer numerous benefits over manual systems.

Steps Involved in Computerized Accounting:

1. Guest Registration: The front desk staff inputs guest details into the property management system (PMS), which automatically creates a guest folio and assigns room charges based on the rate type and reservation details.

2. Billing: As the guest utilizes hotel services (e.g., food, beverages, spa, etc.), charges are automatically posted to the guest folio through integration with other hotel systems, such as point-of-sale (POS) and housekeeping systems.

3. Receipt of Payments: Payments are entered into the system, where the cashier can quickly process cash, card payments, or adjustments. The system automatically updates the guest’s balance and generates receipts.

4. Guest Check-out: Upon check-out, the final bill is automatically calculated by the system, including room charges, taxes, and any additional services. The payment is processed and recorded instantly in the accounting system.

5. Daily Balancing: The computerized system automatically reconciles daily transactions, generating reports for the front office team to ensure the accounts balance. It also allows for real-time data checking, reducing errors and speeding up the process.

6. Reporting: Financial reports (e.g., revenue, payments, guest balances, etc.) are automatically generated by the system, making it easier for management to track financial performance and make data-driven decisions.

Advantages of Computerized Accounting:

• Increased accuracy and reduced risk of human error.

• Faster transaction processing and real-time updates.

• Seamless integration with other hotel systems (e.g., PMS, POS, housekeeping).

• Automated generation of financial reports, reducing manual effort and time.

• Easier tracking of guest folios, payments, and credits.

• Enhanced data security, with backup systems in place to prevent data loss.

Limitations of Computerized Accounting:

• High initial setup costs for software and training.

• Requires skilled personnel to operate and troubleshoot.

• Vulnerable to technical issues or system malfunctions.

• Ongoing maintenance and software updates are necessary.