Chapter  11 Cash or Credit: The City Ledger
14K - views

Chapter 11 Cash or Credit: The City Ledger

Similar presentations


Download Presentation

Chapter 11 Cash or Credit: The City Ledger




Download Presentation - The PPT/PDF document "Chapter 11 Cash or Credit: The City Led..." is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.



Presentation on theme: "Chapter 11 Cash or Credit: The City Ledger"— Presentation transcript:

Slide1

Chapter

11

Cash or Credit: The City Ledger

Slide2

Learning Objectives

Slide3

Cash (1 of 7)

Cash Paid Outs

When cash is taken out of the F.O. cash and

paid out

to someone (Employee, Guest, Vendor, Manager etc.,)

Tips to employees

Most common form of cash

paid out

at FO

Guest adds the tip amount and signs the check.

Tip is paid out on the same day to the employee

Employee signs the

Cash Advance Voucher

for this

Cost to the Hotel: Float

Hotel gets money later, pays employee up-front!

Cost to the Hotel: Discount fees

Hotel has to pay fee to VISA or AMEX, but does not reduce tip!

Slide4

Cash (2 of 7)

Cost to the Hotel: uncollectible

accounts

If the bill is not paid, hotel cannot recover tip already paid out!

Another look at the employee tips

All

the above can end up costing the hotel a lot of money!

Cash Loans

A loan given to a guest from FO cash

Common earlier for taxi fare, similar small amounts

Not a good idea for large amounts

Very rare these days with ATMs and Credit Cards

Third party sources of cash

Encourage guests to use ATMs, get a loan on their credit card, or use wire services like Western Union

Slide5

Cash (3 of 7)

Automatic Teller Machines(

ATMS

)

Dispense cash world-wide in local currencies

ATMS in Hotel Lobbies

Source of revenue for hotel as ATM company pays a fee

Encourages guests to spend more money in the hotel!

Paid outs to concessionaries

Hotel pays the Dry-Cleaner or Hairdresser and charges it to guest account as a

Paid Out

Guest pays on departure

Refunds at Check-out

If the guest paid a large advance up-front and has money left over, they are refunded as a

paid out

Have a limit of $100 or so in cash to avoid fraud!

Slide6

Cash (4 of 7)

House

expenses

Cash Receipts

House Receipts

The Cashier’s Daily Report

The Bank

A permanent supply of cash received by the FO cashier for daily use

Net Receipts

The difference between money taken in and paid out

Total Receipts – Total Payments = Net

Receipts

Slide7

Cash (5 of 7)

Over or Short

Difference between

What should be

and

What is

What should be

= Cash according to accounts

What is

= Actual cash in dollars and cents in the cash drawer

Over

= More money in cash drawer than should be

Short

= Less money in cash drawer than should be

Differences due to errors, over/under payments, fraud

The

Turn-

In

The cashier turns in the actual cash, along with the Cashiers Report, accounting for

over

and

short

The cashier turns in the actual cash and an auditor does the

accounts

Slide8

Cash (6 of 7)

Due Back

Refunding the Due Back

Refunding House Vouchers

Other Related Issues

Tour Package Coupons

Coupons used by members of tour groups to

pay

for meals, etc.

Must be accounted for like regular

cash

Slide9

Cash (7 of 7)

Foreign Currency

Normally not accepted in US hotels

Canadian $ may be accepted close to Canadian border

Online reservation systems generally show the rates to the potential guests in the currency of their choices

Some hotels provide money-changing facilities at FO

Rarer in US than in most other countries

In India, even small hotels change currency at FO

Currency exchange restricted to

major

currencies

Can be profitable for hotel, but has its own risks!

USA hotels refer customers to specialized money changers

Automated Currency Conversion Systems

Example from the Land of

Nod

Slide10

Credit and The City Ledger (1 of 2)

Review of the City Ledger

Credit Cards

History

Started in the USA in 1915

Became big in 1950 with the founding of Diners Club

American Express (AMEX) founded in 1958

BankAmericard

in 1960, becoming VISA later

MasterCard in 1970

Hotel chains started issuing their own credit cards, but dropped the idea later with increasing acceptance of general

cards

Slide11

Credit and The City Ledger (2 of 2)

Kinds of Credit cards

How the system

works

Customers get convenience, float, credit,

security

Debit cards and smart cards

Debit

cards

Transfer funds instantly from customers bank account

No float for customer, less fees for

merchants

Smart

cards

Credit cards with memory chips that can store other information

ID, medical info, insurance

info, etc.;

becoming more

popular

Still other

cards

Slide12

Other City-Ledger Categories (1 of 4)

Master Accounts

Accumulate charges for groups

Four common errors that irritate meeting planners

Split billing

Unauthorized signatures

The sequence of posting

Comp rooms

Groups, Packages, and Company Sponsored Functions

Slide13

Other City-Ledger Categories (2 of 4)

Individual “Direct Bill” City-Leger Receivables

The Original City-Ledger Accounts

Travel Agencies (TAs)

A travel agency can become an account receivable in the city ledger when guest pays the first night

s room charge with the travel agency

s coupon

Banquet Charges

An open account created by a catered party in the hotel, that a guest pays after-the-fact

Credit Cards are increasingly replacing this

Late Charges

Charges that appear on the folio after the guest has checked out

May be

written off

as un-collectible if amount is to small to

pursue

Slide14

Other City-Ledger Categories (3 of 4)

Delinquent Accounts

Accounts that have not been paid in a long time

May be transferred to

Bad Debts

account and

written off

if found to be uncollectible

Executive Accounts

Personal account of Managers in the hotel

May receive discounts for hotel services

Need to distinguish

personal

and official entertainment

Due bills or Trade Advertising Contracts or Trade-outs or Reciprocal Trade Agreements

Hotels trade their room nights for other services like newspaper or TV advertising

The voucher issued by the hotel is often traded like real money!

The guests presents the Due Bill on check-in for

payment

Slide15

Other City-Ledger Categories (4 of 4)

Frequent (Preferred) Guest Programs

Hotel company is billed for the room rate on the A folio

Guest is billed for other personal charges on B folio

Slide16

Managing Cash and Credit (1 of 2)

Managing Cash

Counterfeit Currency

It is a very real problem

Hotels are targets as FO is busy and easy to cheat

Important to train cashiers to detect fake currency

Can buy devices that detect fake bills

Managing Check

Three Quickies

Simple Deterrents

Slide17

Managing Cash and Credit (2 of 2)

Traveler

s

Checks

Issued by AMEX and other issuers, As good as cash

Cashed with a verifying signature

Train employees in proper procedures, fraud detection

Be careful about Canadian/Australian/ other dollars!

Less popular now with increasing ATM, credit card use

.

Slide18

A Cost/Benefit Decision (1 of 2)

If you do not extend credit you will certainly have no losses due to

bad debts

,

skippers, etc.

However, you will also miss out on good business that was turned or scared away by your rigid credit policies

Collecting, Billing, and

Dunning

Slide19

A Cost/Benefit Decision (2 of

2)

Minimizing Chargebacks

Chargebacks

When

the credit card company refuses to pay the bill

The guest refuses to pay (No-show fees etc.,)

The hotel did not follow card company procedures

How to minimize them…

Communicating

charges/fees clearly to the guest

Avoiding

late charges

by better training and good systems

Training employees in following correct

procedures