CASH CONTROL

Introduction, Frauds & Internal Control, Cash Receipt Control, Physical Control Measures

Introduction to Cash Control in Front Office

Cash control is one of the most important activities of the Front Office Department in a hotel. The front office is the main point where guests interact with the hotel and make payments for various services. Since the front office handles a large amount of money every day, proper control and monitoring of cash transactions are essential.

In hotels, the front office cashier is responsible for receiving payments from guests, maintaining guest accounts, preparing bills, issuing receipts, and ensuring that all financial transactions are recorded accurately.

Cash Control refers to the systematic procedures and practices followed by a hotel to receive, record, protect, and monitor cash transactions. It ensures that all money collected from guests is properly accounted for and deposited into the hotel’s accounts.

The main purpose of cash control is to:

Protect hotel revenue
Prevent theft and fraud
Maintain accurate financial records
Ensure accountability of employees
Improve financial management
Provide reliable information for decision-making

Cash control involves the combined efforts of:

Front Office Cashier
Reception Staff
Night Auditor
Front Office Manager
Accounts Department

Importance of Cash Control in Front Office

Cash control is important because the front office handles different types of financial transactions throughout the day. Any mistake or carelessness in cash handling can result in financial loss and damage the reputation of the hotel.

Protection of Hotel Revenue

The major income source of a hotel is room revenue and guest services. Proper cash control ensures that all charges collected from guests reach the hotel accounts.

Example:

A guest stays for three nights:

Room Charges = ₹18,000
Restaurant Charges = ₹4,000
Laundry Charges = ₹1,000

Total Amount = ₹23,000

The cashier must ensure that the complete amount is recorded and collected correctly.

Accurate Guest Billing

Cash control helps maintain correct guest accounts or guest folios. Every service used by the guest must be posted correctly.

Examples:

Room rent
Food and beverage charges
Laundry services
Telephone charges
Transportation charges

Correct billing increases guest satisfaction and reduces disputes during check-out.

Frauds in Front Office Cash Handling

Fraud means dishonest activities performed by employees or individuals to obtain financial benefits illegally. Since front office employees directly handle money, there is a possibility of fraud if proper control systems are not followed.

Cash Theft

Cash theft occurs when an employee takes hotel money for personal use.

Example:

A guest pays ₹15,000 for accommodation. The cashier records only ₹12,000 in the system and keeps ₹3,000 personally.

Prevention:

Regular cash checking
Proper supervision
Daily auditing
Separation of duties

Undercharging

Undercharging means charging less than the actual amount without proper approval.

Example:

Actual room tariff = ₹6,000 per night

Employee charges guest = ₹4,000

The difference causes revenue loss to the hotel.

Internal Control in Front Office

Internal control refers to the rules, procedures, and systems established by a hotel to protect cash, prevent fraud, and maintain accurate financial records.

Separation of Duties

One employee should not control the complete financial process.

Different employees should perform different responsibilities.

Example:

Employee Responsibility

Receptionist Guest registration and room allocation

Cashier Receiving payments

Night Auditor Checking and verifying transactions

Accounts Department Financial recording

Proper Documentation

Every financial transaction should have supporting documents.

Important documents include:

Payment receipts
Refund vouchers
Discount approval forms
Credit card slips
Guest folios

Cash Receipt Control

Cash receipt control refers to the procedures followed by the hotel while receiving money from guests.

It ensures that all payments are collected, recorded, and deposited properly.

Issuing Proper Receipts

Every payment received from a guest must have an official receipt.

A receipt should include:

Hotel name
Guest name
Room number
Date
Amount received
Payment method

Immediate Recording of Transactions

All payments should be recorded immediately in:

Property Management System (PMS)
Cash register
Guest folio

Physical Control Measures

Physical control measures are security methods used by hotels to protect cash, documents, and financial records from theft or unauthorized access.

Cash Drawer Control

The cashier should keep cash in a secure cash drawer.

Rules:

Drawer should remain locked
Only authorized staff should access it
Cash should not be left unattended

Safe Deposit System

Large amounts of cash should be stored in the hotel safe.

CCTV Monitoring

Security cameras should be installed in:

Front desk area
Cashier counter
Cash storage area

Password Protection

Hotel financial systems should be protected through individual user IDs and passwords.

Role of Front Office Cashier in Cash Control

The front office cashier plays an important role in maintaining cash control.

Responsibilities include:

Receiving guest payments
Issuing receipts
Maintaining guest folios
Recording transactions
Handling cash safely
Preparing cashier reports

Role of Night Auditor in Cash Control

The night auditor verifies the accuracy of all financial transactions completed during the day.

Responsibilities include:

Checking cashier reports
Matching receipts with transactions
Verifying guest accounts
Checking revenue records
Preparing audit reports

CREDIT CONTROL IN FRONT OFFICE DEPARTMENT

Meaning, Objectives and Methods, Hotel Credit Policy, Control Measures During Occupancy, Checkout and After Departure, Prevention of Skippers

Introduction to Credit Control in Front Office

Credit control is an important function of the Front Office Department of a hotel. In hotel operations, many guests do not make immediate payments for all services used during their stay. They may pay at the time of check-out or their bills may be settled by companies, travel agencies, or other organizations. Therefore, hotels need a proper credit control system to ensure that all payments are received on time and financial losses are avoided.

The front office handles guest accounts from the time of arrival until departure. During this period, various charges are added to the guest account, such as:

Room charges
Food and beverage charges
Laundry services
Telephone charges
Transportation charges
Banquet services
Other hotel facilities

A proper credit control system helps the hotel monitor guest accounts, reduce unpaid bills, prevent fraud, and maintain healthy financial operations.

Credit control is mainly managed by:

Front Office Cashier
Front Office Manager
Night Auditor
Credit Manager
Accounts Department

Meaning of Credit Control

Credit control refers to the system and procedures used by a hotel to manage, monitor, and recover payments from guests or organizations that receive hotel services on credit.

In simple words, credit control means allowing credit facilities to guests only after proper checking and ensuring that payments are collected within the required time.

When a hotel provides services without receiving immediate payment, it creates a credit relationship between the hotel and the guest. Proper control is required to reduce the chances of unpaid bills.

Example:

A company books 20 rooms for its employees and requests payment after 30 days. The hotel provides accommodation but records the amount as credit. The credit department must ensure that the company pays the bill within the agreed period.

Objectives of Credit Control

Protection of Hotel Revenue

The main objective of credit control is to protect hotel income. It ensures that every service provided by the hotel is properly charged and collected.

Prevention of Bad Debts

Bad debts occur when guests or organizations fail to pay their bills. Credit control helps identify risky customers and reduces unpaid accounts.

Maintaining Proper Guest Accounts

Credit control ensures that all guest transactions are recorded accurately in the guest folio.

It includes:

Room charges
Additional services
Payments received
Outstanding balance

Providing Credit Facilities Safely

Hotels want to provide convenient payment options to guests, but credit should only be given after proper verification.

Improving Cash Flow

A good credit control system helps hotels receive payments on time and maintain smooth financial operations.

Reducing Fraud and Financial Loss

Proper credit checking prevents:

Fake bookings
Unpaid bills
Unauthorized credit facilities
Guest departure without payment

Methods of Credit Control

Hotels use different methods to control credit and ensure payment security

Guest Credit Verification

Before providing credit facilities, hotels check the financial reliability of guests or companies.

Verification may include:

Previous payment records
Company reputation
Credit history
Authorization letters

Advance Deposit System

Many hotels collect advance payments before providing services.

Advance deposits may be collected through:

Cash
Credit card
Online payment
Bank transfer

This reduces the risk of unpaid bills.

Credit Limit System

Hotels may set a maximum credit limit for guests.

Example:

A guest may be allowed to use hotel services up to ₹20,000. If the amount exceeds the limit, payment may be requested.

Regular Monitoring of Guest Accounts

Guest accounts should be checked regularly during the stay.

The front office staff should monitor:

Current balance
Additional charges
Payment status

Daily Credit Report

The hotel prepares daily reports showing:

Guest outstanding balances
Credit transactions
Pending payments

These reports help management take timely action.

Hotel Credit Policy

A hotel credit policy is a set of rules and guidelines that explain how credit facilities are provided and controlled.

Every hotel should have a clear credit policy to protect its financial interests.

Objectives of Hotel Credit Policy

To Define Credit Eligibility

The policy explains who can receive credit facilities.

Examples:

Corporate companies
Travel agencies
Government organizations
Regular guests

To Establish Payment Terms

The credit policy defines payment conditions such as:

Payment deadline
Accepted payment methods
Required documents

To Set Credit Limits

The policy determines the maximum credit amount allowed to guests or companies.

To Control Outstanding Accounts

The hotel regularly reviews unpaid accounts and takes necessary action.

Important Elements of Hotel Credit Policy

Guest Identification

The hotel should collect proper guest information:

Full name
Address
Contact details
Identification proof

Authorization

Credit facilities should be approved by authorized management personnel.

Written Agreement

Corporate clients and travel agencies should have written agreements mentioning:

Credit period
Payment terms
Responsibilities

Follow-up Procedure

The hotel should follow up on pending payments through:

Reminder emails
Phone calls
Account statements

Credit Control Measures During Occupancy

During occupancy means the period when the guest is staying in the hotel.

The front office must continuously monitor guest accounts.

Regular Checking of Guest Folio

The guest folio should be updated regularly with all charges.

The cashier should check:

Room charges
Restaurant bills
Additional services

Monitoring High Balance Accounts

Guests with large outstanding balances should be monitored carefully.

Example:

A guest staying for one month with high room service usage should be contacted for payment arrangements

Requesting Interim Payment

For long-stay guests, hotels may request partial payments during the stay.

Example:

A guest staying for 30 days may be asked to clear payment after 15 days.

Credit Limit Monitoring

The hotel should ensure that guests do not exceed their approved credit limit.

Communication Between Departments

Different departments should communicate with the front office regarding guest charges.

Examples:

Restaurant sends food bills
Laundry sends service charges
Housekeeping reports minibar usage

Credit Control Measures During Checkout

Checkout is the most important stage for collecting payment from guests.

Verification of Guest Account

Before checkout, the cashier verifies:

Total charges
Payments received
Outstanding balance

Preparation of Final Bill

The final bill should include:

Room charges
Taxes
Additional services
Previous payments

The guest should check and approve the bill.

Collecting Complete Payment

The hotel should ensure that all outstanding amounts are cleared before departure.

Payment methods may include:

Cash
Credit card
Debit card
Online transfer

Checking Company Billing Authorization

For company-paid guests, the hotel should verify:

Company approval letter
Billing instructions
Authorized person details

Handling Late Payment Cases

If payment cannot be collected immediately:

Obtain guest contact details
Take written confirmation
Inform accounts department

Credit Control Measures After Departure

Credit control does not end after the guest leaves the hotel. The hotel must continue monitoring unpaid accounts.

Maintaining Guest Records

Hotels maintain records of:

Guest details
Payment history
Outstanding amounts

Sending Bills and Statements

For credit customers, hotels send:

Invoices
Account statements
Payment reminders

Follow-up of Outstanding Payments

The accounts department regularly contacts customers for pending payments.

Legal Action Against Defaulters

If payment is not received after repeated reminders, the hotel may take legal action according to company policy.

Prevention of Skippers in Hotels

A skipper is a guest who leaves the hotel without paying the outstanding bill.

Skippers create financial losses for hotels. Therefore, hotels follow special procedures to prevent them.

Prevention of Skippers on Arrival

Proper Guest Registration

At the time of arrival, the hotel should collect complete guest information.

Required details:

Name
Address
Contact number
Identification proof

Advance Payment or Deposit

Hotels should collect:

Advance room payment
Security deposit
Credit card details

Verification of Identity

Guest identity should be verified through valid documents.

Examples:

Passport
Driving license
Government ID

Credit Checking

The hotel should check whether the guest is eligible for credit facilities.

Prevention of Skippers During Stay

Regular Monitoring of Guest Accounts

The front office should regularly check guest balances

Immediate Posting of Charges

All charges should be entered immediately into the guest folio.

Communication with High Balance Guests

Guests with increasing balances should be informed politely.

Example:

"Sir/Madam, your current outstanding balance has reached ₹25,000. Kindly arrange partial payment."

Security Awareness

Front office staff should observe suspicious activities:

Frequent room changes
Avoiding communication
Refusing payment discussions

Prevention of Skippers on Departure Day

Checking Outstanding Balance

Before checkout, the cashier should verify the final account.

Quick Billing Process

A fast and accurate billing process reduces chances of guests leaving without payment.

Collecting Payment Before Departure

The guest should clear all dues before leaving the hotel.

Coordination with Security Department

If a guest attempts to leave without payment, security staff should be informed according to hotel policy.

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