2Handling Cash Transactions Cash Paid-OutsAre the exclusive right of the front-office cashier.Increases in assets, including accounts receivable and cash, are made with debits. Decreases in assets, including accounts receivable and cash, are made with credits.
3Tips to Employees Most common cash advance. Most hotels pay employees’ tips on receipt or at the end of the shift.Often results in the hotel subsidizing its employee gratuities in 3 common waysFloat – the time value of moneyMerchant discount fees on credit cardsPotential noncollectible accountsPage 458 Float- use book example.
4Cash Loans Third-Party Sources of Cash ATMsCredit-card advancesPerson-to-person pay servicesInternet money servicesPayday loan companiesExpedited money order servicesThese financial services are not free. Fees paid by the guest to the third parties range upward from a low of 10%.
5Paid-outs to Concessionaires Concessions – beauty salon, florist, gift store, valet cleaning, etcHotel acts as middleman in concessionaire-guest relationshipHotels earn 10% to 20% of the laundry and dry cleaning revenue (the other 80% to 90% accrues to the vendor)
6Refunds at Check-OutCash is never refunded if the original payment was not in cash!If credit card was used, hotels issue a refund against the credit card.Reasons for refund could be there was a substantial deposit with reservation or a large payment on account was made on or after arrival. Guest may have shortened the stay or hotel adjusted the rate downward.
7Cash Receipts At Check-out On Account Only small percentage of guests settle with cash.Very few use cash, traveler’s checks or personal checksOn AccountPayments may be requested at any time, not just at departureLong term guests are billed weekly.Guests decide to make payments against their account before checkout
8Cash Receipts cont’d At Check-In Reservation Deposit Receipts Guests are asked to establish credit at check-inMost guests prefer credit cardCash guests are asked to pay their room charges up frontReservation Deposit ReceiptsCash seldom used to secure a reservationEven advance deposit reservations are usually charged to credit card
9House Receipts and Expenses Assorted City- and General-Ledger ReceiptsSome hotels elect to funnel all cash and check receipts through the front office.Examples:Receipts for meetings or banquet functionsReimbursements or rebates for overpayment to vendorsRefunds or credits from taxesLease revenues from merchants or concessionaires
10Assorted House Paid-outs Front office cashier acts as a depository for the accounting department and also as the accounting department’s disbursing agent.The Imprest Petty Cash FundIf the front-office cashiers are only reimbursed when petty cash vouchers reach a sizable amount or at the end of each month, it is known as the imprest petty cash fundThis fund authorizes the front-office cashier to hold petty cash vouchers in the drawer day after day
11The Cashier’s Daily Report Every cashier in the hotel prepares a daily reportWith report, cashier turns in departmental monies.These combined funds (plus any that clear through the general cashier) constitute the hotel’s daily deposit made to the bank
12Preparing the Cashier’s Report The Cashier’s BankEach cashier receives and signs for a permanent supply of cash, called the bank.One major accounting firm reported that the total of a hotel’s house banks and cash on hand should be about 2% of total salesCashiers lock their banks in the safe or hotel vault after each shift.
13Net ReceiptsRepresent the difference between what the cashier took in (receipts) and what was paid out.Are computed by subtracting total advances (paid-outs), city and transient, from total receipts, city and transient.House paid-outs and miscellaneous receipts are not included because they’re counted as cash.
14Over or ShortOver or short is the difference between what the cashier should have in the cash drawer and what is actually there.It is the comparison of a mathematically generated net total against a physical count of the money in the drawer.The cashier should have the sum of the original starting bank plus the net receipts.
15The Turn-InFront-office bank is used to cash checks, make change, and advance cash as well as accept receipts.The objective of the cashier’s turn-in is to rebuild the starting bank in the proper amount and variety of denominations to be effective during the next day’s shift, and “drop” the rest of the contents of the cash drawer, i.e. checks, traveler’s checks, foreign funds, large bills, casino chips, cash in poor condition, vouchers for house expenses, etc.
16The Income Audit To process the cashier drops made the preceding day. Two purposes:To verify that each department’s cashiers have accurately dropped (turned in) the amount indicated on the deposit envelopes.To prepare the hotel’s daily bank depositGeneral cashier(s) & income auditor(s) make up the day audit team.
17The Income Audit cont’d Paying Off the Due BankDue bank is calculated by subtracting the amount of money retained by the cashier from the amount needed to open the next day’s bankThe income audit staff pays each cashier’s due bank from the growing pile of turned-in cash before preparing the hotel’s daily deposit.
18The Income Audit cont’d Paying Off the House VouchersIn hotels that utilize imprest petty cash fund, front-office cashiers are asked to hold their house vouchers until they reach some predetermined amount.Tour Package CouponsRedeemed coupons are proof that goods were exchanged and become the basis for the account receivable. They are part of the departmental cashier’s daily turn-in.
19Foreign Currency Not regularly accepted in the United States. Cities with large number of foreign visitors have adequate exchange facilities.Exchange agencies allow hotels to service the currency needs of the international guest with a reasonable ceiling on costs.Foreign traveler’s checks are more readily accepted than personal checks.
20Cash and Cash Equivalents Counterfeit CurrencyThere may be as much as $1 billion in counterfeit currency in worldwide circulation.Detecting Counterfeit CurrencyIn 1996, the US Treasury began issuing currency with new security features.Supernotes – Superior counterfeit fakesSearch the bill for magnetic ink
22Check-Cashing Safeguards Procedures for Minimizing FraudThe Old “One-Two-Three”Is the check perforated?Do the Federal Reserve district numbers 1 to 12 match the location of the issuing bank?Is the routing code printed in magnetic ink?Simple DeterrentsClosed-circuit televisionsPhotographing proceduresDual-lens cameras
23Check-Cashing Safeguards cont’d EndorsementsCashier should use a rubber stamp that includes ID, credit card number, room number and the initials of the person approving the checkCongress enacted legislation in 1988 that assigned the first 1.5 inches from the trailing edge of the check to endorsementsUse a check cashing checklist before approving a check
24Traveler’s Checks American Express pioneered the traveler’s check. The traveler’s check industry stalled in the late 1990’s at about $50 billion per year.Very acceptable and some hotels will cash them even for non-registered guestsPrompt refund of lost or stolen checks is their major appeal.
25SummaryEven as the quantity of cash circulating in hotels declines, the need for careful cash-handling practices increases.Front-office cashiers receive cash from a number of potential sources and is paid out by them for a number of reasons as well.Front-office managers need to carefully train cashiers to identify situations where fraudulent practices may occur