Account Settlement in Hotels 

1. Introduction

Account Settlement refers to the process of closing a guest’s account in a hotel by receiving payment for all services used during their stay. It is usually done at the time of check-out, but it can also happen during the stay if guests make interim payments.

This process is crucial for financial accuracy, guest satisfaction, and hotel revenue management.

2. Objectives of Account Settlement

• To ensure payment for services and facilities used by the guest.

• To finalize the guest folio in the Property Management System (PMS).

• To maintain accurate financial records.

• To detect and resolve any billing discrepancies.

• To improve guest satisfaction with a smooth check-out experience.

3. When is Account Settlement Required?

• At guest check-out.

• During early departure.

• For walk-in guests (who use services but do not stay).

• When companies or travel agents need bulk billing.

• When handling split payments or disputed bills.

4. Steps Involved in Account Settlement

a. Guest Informs Check-Out

Guest informs the front desk or reception about the departure.

b. Folio Review

• All charges (room, food, beverages, telephone, laundry, etc.) are reviewed and posted.

• The bill is printed for guest approval.
  
  

c. Guest Verification

• Guest is shown the final bill for verification.

• Any disputes are resolved politely.
  
  

d. Payment Collection

• Payment is received through cash, credit card, UPI, digital wallets, or direct billing.

• In case of a company guest, charges may be transferred to the company account.
  
  

e. Issuing Receipt

A receipt or invoice is issued to the guest.

f. Folio Closure

• The guest folio is marked as settled or paid in the PMS.

• The room is updated as vacant.
  
  

5. Modes of Payment in Account Settlement

Payment Mode Details

Cash Most direct and immediate method. Requires physical currency.

Credit Card Most common in hotels. Needs card machine verification and authorization.

Debit Card Direct deduction from guest’s bank account.

UPI/QR Code Digital payment via apps like Google Pay, Paytm, PhonePe.

Bank Transfer/NEFT Used in corporate and pre-bookings. Requires confirmation.

City Ledger (Direct Billing) Payment responsibility lies with a company, travel agent, or institution.

Mixed/Part Payments Guest may pay with multiple methods (e.g., part cash, part card).

6. Types of Settlement Accounts

a. Guest Ledger

Active folios during a guest’s stay. All charges are posted here.

b. City Ledger

Used for non-resident accounts (companies, travel agencies, etc.) that are billed later.

c. Master Folio

Used for group billing or tour operators where one party pays for multiple rooms.

7. Important Terms in Account Settlement

Term Meaning

Folio Record of a guest’s financial transactions.

Postings Entries (charges or credits) made to the folio.

Settlement Payment of all outstanding charges.

Transfer Moving charges from one folio/account to another (e.g., room to master).

Adjustment Corrections in case of overcharging or errors.

No Show Charge Charges posted when a guest doesn’t check-in despite a reservation.

Late Check-Out Extra charges posted if guest delays check-out time.

8. Settlement Scenarios

a. Individual Guest

Settles personally by cash/card before departure.

b. Corporate Guest

Bills are settled by the company as per the agreement.

c. Travel Agent Booking

Agent or OTA pays the bill after guest departs.

d. Split Billing

Charges divided between guest and company or multiple people.

e. Disputed Bills

Front office staff addresses the dispute tactfully, may involve supervisor.

9. Role of Front Office in Account Settlement

• Prepare final bills accurately.

• Ensure all postings (F&B, laundry, minibar, etc.) are made before settlement.

• Politely clarify and justify charges if asked by guest.

• Guide the guest through payment options.

• Issue professional, clear receipts.

• Update room status to "Vacant & Clean".
  
  

10. Challenges in Account Settlement

• Late postings from other departments (e.g., restaurant or spa).

• Discrepancies or billing disputes.

• Card declines or insufficient funds.

• Handling foreign currency or multiple currencies.

• Last-minute guest complaints about charges.

• Coordinating with other departments for confirmations.

11. Tips for Smooth Account Settlement

• Double-check minibar, laundry, room service charges before preparing bill.

• Ensure pre-authorized payments are captured on card machines.

• Maintain clear communication with housekeeping and F&B.

• Be polite and professional even if the guest is upset.

• Keep payment devices ready and functional (card reader, QR code, etc.).