17 METHODS OF GUEST SETTLEMENT

S. Thilagamani

Introduction

Over the last decade the forms of payment accepted in hotel have changed quite dramatically. Most hotels still accept a variety of methods of payment mainly to provide service to the clients either cash or credit settlements

Objectives:

This module will enable the learners to

• Compile the different methods of guest settlement
•  Understand the different records to be maintained for guests
• Differentiate the guest settlement methods and their procedure

Cash floats

Every hotel will need a store or ‘float’ of money to enable it to provide service to the customer, to give change for bills, to allow the bars and other sales areas to operate, and to carry out foreign exchange transactions within policy limits).

Size of floats

The number of floats in a hotel will vary according to the number of sales outlets. A very small hotel may have just one float, whilst a large hotel with many restaurants may have ten or more separate floats, one for each sales point. The amount of money needed in the float will be a reflection of two things: firstly, the prices changed in department; and secondly, the number of transaction, the greater the size of the float.

Composition of floats

Individual floats are made up of the agreed amounts in a predetermined way. This composition will again reflect the tariff of the department concerned. The main cash float of a large hotel will not have a great need for low value coins, for most items will come to round figures.

Security

Cash float are signed for as they are issued, and signed back in against at the end of the day. If there is a handover from one shift to another, then the total amount in the cash drawer is counted and agreed, and the float is passed on to the incoming cashier.

Cost of money

The aim of the hotel should be to keep the lowest number of floats and the amount of money in them to the lowest level possible, while still allowing the business to run smoothly. The first reason for this is the risk of theft or robbery. The large amount of money will be more attractive to a theft. In the event of a robbery, a small float wills minimum the loss.

Methods of Payment

Upon departure guests can their account in one of a number of different ways as cash settlements.

Settlements by Cash

• Cash
• Foreign currency
• Cheque
•  Traveller’s cheque
• Foreign cheque
• Debit card
• Credit card

In dealing with each of these methods of payment, the hotelier must assess the impact of three major factors: liquidity, security and worth.

Liquidity

If a bill is paid in cash, the hotel can immediately use the money to purchase goods itself, or bank the money and earn interest on it.

Security

There are two sides to security. The first is the likelihood of for forgery or fraud by each of the payment methods; the second is the subsequent risk of theft once the hotel has the money.

Worth

Finally, there is the total amount of money the hotel eventually receives in payment. This will not be the same in every case. Handling charges, commission and delays in payment all cost the hotel money.

Cash

Cash was traditionally in the most popular method of paying bills, but as prices have risen and other methods become so readily available it is used much less in hotels where bills for a few days’ stay can often amount to hundreds of pounds.

Foreign currency

Tourists and overseas visitors may wish to settle their bill in their own currency. A list of currencies accepted and the exchange rate is kept in the cashier’s department. The currencies which are subject to severe exchange rate fluctuations are not accepted.

Cheques

For a while, payment by cheque was one of the most common methods used, and reflected the decline of cash as a method of payment in recent years. This has been aided by the cheque guarantee card.

• Cheque guarantee cards guarantee payment provides that
• Only one cheque is used per transaction;
• It is signed in the presence of the cashier;
• The bank code on the cheque and the guarantee card agree;
• The card number is written on the reverse side of the cheque;
• The card has not expired;

Code number

The bank sorting code number must agree with the code of the issuing cheque.

Card number

The card number is written on the reverse of the cheque by the accepting cashier.

Expiry date

The card will not be valid if it is out of date.

Signature

The signature must be checked against the signature written on the back of the

cheque.

Date

When accepting a cheque, the cashier should check a number of points, one of the most important being the date.

Blank cheques

Blank cheques use to be held by some hotels so that a customer could fill in details of their own bank account number while paying the bill.

Crossing cheque

There are a number of rules about crossing cheques. The two most important are as follows:

1. A/c payee: this means that the cheque can only be paid into the account of the person nominated.

2.Not to exceed xxx: this crossing establishes a maximum value to the cheque and guards against fraud by making it more difficult to change the amount payable.

Traveller’s cheque

Traveller’s cheques are issued in fixed denominations by major banks travel agents and now building societies throughout the world. The customer buys before leaving home, in their own currency, or in the currency of the country being visited.

Foreign cheques

Some hotels accept payment by foreign cheques, especially those drawn on banks in Europe which are written sterling. Those hotels which do accept foreign personal cheques

Often have the rule that they must be approved by senior staffs unless the client is a regular one for whom there is an established policy.

Debit cards

Debit cards such as switch and delta are now a common alternative to cheques. The outstanding sum is taken directly from the client’s account, in the same way that a cheque payment would be, but the transfer is through an electronic point-of-sale system, and no cheque is necessary. \

Bank credit cards

The cards are issued by banks to its customers with varied credit limits. The customer uses the card to purchase goods and services by signing a sales voucher for the total amount of the bill. The card holder is entitled to use the card for the services at the hotels below the available credit limit entitled in the card

Foreign exchange

Large hotels with the high proportion of overseas visitors will make a contribution to their annual profit by offering foreign exchange facilities to0 their guests. The service is offered on a one-way basis only: the hotel may sell sterling for a foreign currency. If a guest wishes to buy foreign currency then they have to use a bank. There is no legislation about exchange rates, so the hotel is free to offer whatever price it wishes. Hotels which operate a computerised system frequently incorporate the updated exchange rates within the front office program. This facilitates the more complex transaction such as part-payment of account in foreign currency, and lessens the likelihood of errors occurring.

Petty cash

Taxi fares, laundry and dry cleaning, and other small items are often paid by the cashier’s department from a separate petty cash float. This float is reimbursed daily by the hotel’s income and individual petty cash vouchers are allowed against the day’s takings.

Visitors’ paid out (VPO)

This is a payment made on behalf of the guest, and is usually done by prior arrangement which ensures that the client has in fact ordered the payment to be made. For example, a guest may authorize the cashier to payout a sum of money for an airline ticket that is being delivered to the hotel.

Banking

All cash forms of settlements should be paid into the banking each day, so that the hotel receives full benefit from its earnings as quickly as possible. The risk of theft is also lessened. Departments will pay into the cashier’s office or to a general cashier in a large hotel. The paying-in of each department will be summarised on an internal paying-in slip which can be checked for control purposes. These paying-in slips are split into two sections detailing UK and foreign takings. Departmental takings are then consolidated for paying into the bank.

Receipts

Guest who pays by cash or cheque upon departure will be given a receipt by the hotel. The system in use will depend upon the accounting method of the hotel. Manual system of billing will either use a separate receipt book, or a ’paid’ rubber stamp. A receipt book is preferable, for the hotel can keep a tight check on the number of receipt issued and the amount of each one.

Receipts from other department

The cashier is usually responsible for accepting and recording money taken from other sale points, and may also be responsible for reading and checking the tills. A receipt should be issued and given to the member of staff, the money placed in the drawer or till, and the details recorded according to the system in use in the hotel.

Advance deposits and prepayments

Advance deposits and prepayment are particular important in resort hotels where guest may book a substantial length of time ahead. The system varies slightly from one hotel to another, but usually involves the following tasks:

1.      A receipt is made out and sent the client.

2.      The amount of the deposit is recorded in the diary (or the equivalent record)

3.      The deposit is recorded in the advance deposit ledger.

4.      On arrival (or departure), the guest’s account is credited with the deposit.

Pre-authorisation

This method of allowing a guest credit is very simple, both for the hotel and for the customer. The guest’s credit card is swiped on arrival, and the credit card company reserves a predetermined amount of money for that particular transaction, so the hotel is assured that it will get its money.

Refunds

Occasionally it may be necessary to refund money to a guest, usually because they have paid in advance and have to leave earlier than planned. The bill will carry a credit balance and usual way of dealing with this is to obtain a VPO for the amount refund and post the VPO to the guest’s account, thus reducing the bill to zero. The guest may be given the cash and asked to sign the voucher, which can then be treated in the usual way.

Rapid/speedy check-out

Many hotels have introduced these facilities as an extra service for those clients who want to make a ‘quick getaway’ on departure.

It is essential to ensure that the client is made aware of the facility, and some hotels leave notification of the service in the room, while other advise guests at the check-in point.

The client may be invited to fill out a card giving permission for the hotel to charge the entire account to the guest’s credit card. The card has space for the guest’s signature, name, room number and credit card number, or alternatively the cashier may take an imprint of an acceptable credit card. When the client leaves, they need only to deposit the card in a special box, or in the key drop, and the account is finalised in their absence. The same facility can be extended to allow the guest to check out by swiping their own card once they have viewed and agreed the bill. As above, the hotel would under taken to send a copy bill to the client after departure.

SETTLEMENTS BY CREDIT

Credit settlements are settlements for which a hotel does not receive immediate payment on the day of departure. these includes:

• Settlements by charge card
• Settlements of corporate accounts
• Travel agent vouchers

Charge cards are credit cards which are issued by private credit card organizations .When a guest settles their accounts with a charge card , the hotel does not receive payment on the same day. Instead, at the end of each shift the cashier will transfer all of the bills settled by charge card to the accounts department for them to follows up.

At the end of the week or month, the accounts department will send out statements of the total amount charged to the private credit card organization , together with copies of all the imprints. On receiving the statement and imprints , the credit card company will pay the amount to the hotel less its commission.

In the case of corporate accounts and travel agent vouchers, the bills will also be transferred to the accounts department . the accounts department will then mail the account and invoice to the company are a agent , and later received a cheque in settlement. Once again the travel agencies will send its settlement less their commissions.

CONCLUSION

It is important that all the employees of the hotel handle the accounting process very much precise and is within the reach of the guests throughout their stay and later for the accounting purpose of the hotel. Whether the employees are working behind the front desk, at the housekeeping department or in the restaurant or café, each employee should treat every hotel guest with the kind of hospitality and remember the rule that the customer is the king of the service industry and maintain accurate accounting process in order to maintain the brand name of the hotel.