CHECK-OUT AND SETTLEMENT

DEPARTURE PROCEDURE
KEY STEPS DURING CHECK-OUT
1. Check-out request
2. Luggage handling
3. Accounting all transactions
4. Updating guest folio
5. Preparing guest bill
6. Determination of mode of payment
7. Receiving payment
8. Marketing activity
9. Communicating departure to all departments
10. Updating front office records
1. CHECK OUT REQUEST

Check Out request is received from the guest either

at the front desk or bell desk. The information is
communicated to all the concerned departments
and points of sale.

The employee must ask details like guest name,

room number etc. and check the departure date. In
case of early departures other departments should
be informed.
2. LUGGAGE HANDLING
 The front desk requests the bell captain to send a
bell boy to bring the guest luggage to the lobby.
 The bell boy fills the departure errand card and
the bell captain makes the entry in the control
sheet.
LUGGAGE HANDLING CONTD……
 Look around the room for signs of any damage to the
hotel property.
 Draw the curtains and lock the balcony and windows
 Check for any guest belongings left behind by
mistake
 Collect the room keys from the guest
 Lock the room and hang “Clean my room” tag on the
door knob.
3. ACCOUNTING ALL TRANSACTIONS
 The front desk informs housekeeping and all points
of sale to rush the latest credit transactions to the
front desk, so that the cashier may add them to the
guest account.

 As the guest may refuse to pay any charges after

she/he has checked out, the hotel should ensure
that all the transactions have been billed to the
guest at the time of account settlement
4. UPDATING GUEST FOLIO
 Front Desk cashier updates the guest folio:

 Adding the latest credit transactions received

from the points of sale.
 Checking if any late check out charges are
applicable Examining the current entries in guest
account
 5. PREPARE BILL
 Bills are prepared on the basis of guest folios.
 Prepare bills in duplicate
 Check the room number
 Take out the guest folio
 Enter the method of payment
 Present the bills along with supporting vouchers
6. DETERMINATION OF MODE OF PAYMENT
 The methods of payment of bills may be cash – in
local and foreign currency; cash equivalents like
demand draft, traveler's cheque and debit card or
through credit modes like credit card, travel agent
voucher and corporate billing
7. RECEIVING PAYMENT
 The guest reviews the bill and makes the payment
in the pre decided mode.
 Follow the house policy to collect payment either
by TC’s. debit/credit cards, forex etc.
8. MARKETING ACTIVITY
 During the check out the cashier should:
 Ask guest about their experience at the hotel and ask
them to fill a feedback form
 If guests have any complaints, the cashier should
note the same and apologize
 The cashier must inform the guest about the
upcoming offers.
 The cashier may suggest future reservation for the
guest’s return trip
9. UPDATING FRONT OFFICE RECORDS
 Room Status records
 Guest History Card – demographical data of
guest, likes/dislikes, frequency of his visits
 Arrival / Departure Register
Mode of Settlement of Bills
1) FOREIGN EXCHANGE
 All the foreign visitor’s in a hotel can settle their
accounts in the currency of their country – dollar,
euro, pound etc. Hotels have to take a valid
license from RBI to deal with foreign currency.
 Hotels can buy and sell foreign currency after
obtaining the purchase/buyers license.
CURRENCY EXCHANGE PROCEDURE
 Guest contacts the F.O. cashier for currency exchange
 The cashier requests the guest for passport to verify his
identity
 The cashier asks the guest the amount to be exchanged
 The cashier checks the exchange rate from RBI
 The cashier prepares the currency exchange certificate
 The cashier requests the guest to sign the certificate
CURRENCY EXCHANGE CONTD….
 The guest gives the foreign currency to the cashier
 The cashier calculates the total amount to be paid
in local currency
 The cashier gives the amount to the guest along
with the original currency certificate. The 2nd copy
is attached with the currency
 The cashier fills the details of the currency
exchange in the control sheet.
2) CASH SETTLEMENT
 The cash payment is one of the most preferred
modes of settlement of guest accounts. At the
time of settlement, the cashier zeroes the balance
in the guest account.
 If there is a credit balance in the guest folio, the
cashier requests the guest to sign the certificate.
 If there is a debit balance, the hotel requests the
guest to pay the balance.
3) TRAVELLER’S CHEQUE
 A Traveler's cheque is an internationally accepted
cheque for a sum in a specific currency that can
be exchanged for local currency.
 It is issued by a financial institution and can be
protected against loss or theft.
 It is useful specially in the case of overseas travel
where all credit and debit cards are not accepted.
PROCEDURE FOR SETTLING THE BILL THROUGH TC

 Ensure that the 2nd signature is put in front of the

cashier on the TC
 Check the guest’s passport to establish identity
 Note down the passport number behind the TC
 Calculate the value as per the daily rate
 Return the balance to the guest in local currency
4) DEBIT CARD
 It is a card that allows customers to access their
funds immediately, electronically.
 It enables the holder to withdraw money or to have
the cost of purchases charged directly to the bank
account without paying by cash or writing a
cheque.
 In case of insufficient funds, the bank does not
authorise the transaction and the guest is requested
for an alternate mode of payment.
 When swiped EFTPOS terminal contacts the
computer network of the bank to verify and
authorize the transaction
CREDIT SETTLEMENT
 Its an arrangement for deferred payment of goods
and services
 Deferred payment refers to a settlement in which
a hotel does not receive any payment on the day
of departure of the guest but would receive it
later
CREDIT CARD
 Credit Card It is a payment card that allows the owner to
obtain goods and services on credit terms.
 Used repeatedly to borrow / buy goods and services on
credit.
 The issuer( bank) assures the seller (hotel) that the owner
(guest) has a satisfactory credit rating which lets the bank
to settle the payment at merchandise establishment.
 It is amongst the most preferred mode of settlement for
the guest.
• Transactions per month are totalled and
sent to the card holder for settlement on a a
monthly basis.

• The balance amount can also be extended

to the next month and so on

• Usually the interest rate is 2% monthly or

upto 27% annually
PROCEDURE
 Check the card holder’s name on the card
 Check the expiry date of the card
 Swipe the card through the EFTPOS for verification
and authorization from the issuer of the card
 Ask the guest to sign on the transaction slip
 Verify the guest signature with the signature on the
backside of the card
 Return the credit card and a copy of the transaction
slip to the guest.
 Follow the SOP to process the payment for guest
folio.
CHARGE CARD

The between credit card and charge card is

• The monthly account settlement by the
card holder must be done in Full
•The balance in charge card cannot be
rolled over from one billing to the next
Ex ; American express, Diners club etc
TRAVEL AGENT VOUCHER ( TAV)
 The tour operators/ travel agencies receive advance
payment from traveler's at the time of selling the tour
package.
 The TA sends a voucher to the hotel with the details of the
billing procedure and the services to be provided to the
guest.
 Airlines also send MAO’s ( meals and accommodation
orders ) that have contracts with hotel.
 Airlines also issues PSO’s (Passenger service orders) to lay
over passengers in case of flight delays.
 In such cases the hotel gets the payment from Airlines or
TA’s
PROCESSING TAV/MAO/PSO
 While Check Out the cashier must:
 Read the voucher carefully. Check the billing instructions
 Refer the list of approved TA’s by the hotel.
 Check the billing instructions carefully
 Incase of a foreign travel agency get the necessary
authorization
 Check the expenses covered by the voucher
 Collect payment for the services not covered. Egs spa /
bar bills
 Attach all the vouchers signed by the guest with
the master bill and ask the guest to sign the bill.
 Do not give the copies of the signed bill to the
guest as they need to be given to the TA upon
which the payment is made to the hotel.
 Send the guest bill and vouchers to the accounts
department for the collection of the amount from
the TA.
CORPORATE BILLING/ BTC LETTER
 Some companies, whose executives, travel at the
expense of the company, make a deal with hotels,
whereby they determine the rates for different types of
rooms and meal plans to be offered to their executives.
 The reservations are made by the company on behalf of
the travelling executives.
 The executives carry a letter from their company,
which is called a bill to company letter, as a proof of
their identity.
PROCEDURE FOR BTC
 Establish identity - Ask the guest to show his identity card /
BTC letter which is prepared on company letter head.
 Verify that the company is listed in the CVGR (Company
volume guarantee rate) list of the hotel
 Check the billing instructions - services/ facilities that will
be covered or not covered by the company payment
 Prepare the guest bill along with support vouchers and ask
the guest to verify and sign
 Do not give the bill to the guest ( they have to be sent to the
company against which the hotel receives the payment)
 Send the bill to the accounts department for collecting
payment from the company.
 Collect any direct payments from the guest. Split folio.
 ENCASHMENT CERTIFICATE
 
When a foreign currency is being exchanged at a bank or a hotel the cashier / banker will
give a piece of paper called as encashment certificate. It is a record of money that has been
exchanged.

Procedure for accepting foreign exchange in a hotel: -

 
 Request the guest to produce the passport and determine the credentials.
 Ask the guest for his room no.
 In case of a non resident guest, request him to contact the lobby manager for an

authorization for the transaction.

 Find out the type of currency to be exchanged and determine whether it is exchangeable as

per the government banking regulations.

 Fill all the details in the foreign exchange encashment certificate.

 Request the guest to produce the travelers’ cheque and voucher in person and compare the

signatures.
 
 
 Receive the amount of foreign currency in cash / travelers’ cheque and calculate the total amount to be paid in
local currency by multiplying the foreign currency amount by the rate of exchange.
 Give the original copy of the certificate and the total in local currency to the guest.
 Attach the second copy of the encashment certificate to the travelers’ cheque and leave the third copy in the
book.
 Fill in the details in the reception cashier report and foreign currency control sheet.

Advantages:

Each guest name and room no. appears in the sheet in one column and all the transaction made by him is
recorded in the same time. At anytime his account can be noted. Since personal account is debited directly fewer
mistakes are made and it is a last system. In case of any controversy cross checking can be done through
vouchers. ‘Income’ can be bifurcated department wise. Allowances can be checked. Credit limit can be checked.
All the term is easily visible.
 
 
Disadvantages:
 
The size is too big. Since columns are many and short, possibilities of wrong postings are there and the location
of mistakes becomes difficult.
VISITORS TABULAR LEDGER
 

It is a loose large sheet in which the daily transactions of the hotel with guest
are recorded. All the credit sales vouchers which are made by the various
departments of the hotel when guest makes transaction are collected in bills
department and the entries are made in the visitors’ tabular ledger against each
guest account respectively. The entries in the visitors’ tabular ledger must be
kept up to date so that at any moment an updated guest bill may be made and
presented to the checking out guest.
 
Generally a tabular ledger has set of columns with details of the room and its
occupant, such as room no, rate, terms, number of sleepers, etc. and second set
of columns are charges of accommodation and food.
 
In addition to daily charges the tab sheet shows the daily sales under respective
heads and includes breakfast, lunch, afternoon tea, snacks, beverages, service
charges, telephone call charges, VPO sundry charges and transferee and sales
tax etc. which give the daily total. This is followed by credit columns deposits,
allowances, transfer and ledger balance to the next day.
 Preparation and posting of the visitors’ tabular ledger is done by writing the guest name in
capitals, and record all details of the transactions immediately. The ledger has 2 sides i.e. debit and
credit, all the charges are written in debit side and cash deposits on the credit side. Service charges and
sales charges should be written in appropriate column. At the end of the day the total for that day must
be made and to this any brought over from previous day must be added to get the grand total.
  
  
  
 Advantages:


 Each guest name and room no. appears in the sheet in one column and all the transaction made by
him is recorded in the same time. At anytime his account can be noted. Since personal account is
debited directly fewer mistakes are made and it is a last system. In case of any controversy cross
checking can be done through vouchers. ‘Income’ can be bifurcated department wise. Allowances can
be checked. Credit limit can be checked. All the term is easily visible.
  
 Disadvantages:
The size is too big. Since columns are many and
short, possibilities of wrong postings are there
and the location of mistakes becomes difficult.
  
HOUSE COUNT

 The total no. of guest staying in the hotel for 1 night is called
as house count. It is called as house count. It is calculated
every day.
 
 HC = previous HC + Arrivals - Expected departure

 It can also be calculated as.

 Total No. of guest in the hotel = single rooms + 2 * double

rooms + extra beds
FORMULAS

 Room Occupancy Percentage:

No. of rooms sold / No. of rooms available for sale X 100

 Double Occupancy:
House count – No. of rooms sold / total no. of rooms sold X 100

 Single Occupancy:
2 – House count / no. of rooms sold X 100

 House Count:
Previous house count + arrival – departure.

 Room Count:
Total no. of rooms available – no. of vacant rooms
  
FORMULAS

 Bed Occupancy Percentage:

No. of beds sold / no. of beds available for sale * 100

 Average Room Rate:

Total room revenue / no. of rooms sold * 100

 Revenue per Available Room:

Total room revenue / total no. of rooms available

 Over Stay:
No. of overstays / total no. of scheduled departures * 100

 Under Stay:
Under stays / stay over * 100
FORMULAS
 No Show:
No. of did not arrive (DNA) Guest / no. of confirmed reservation guest * 100

 Cancellation Percentage:
Total no. of cancellations / total no. of confirmed reservations * 100

 Potential Capacity of the Hotel:

Total capacity of the hotel (no. of rooms) – rooms occupied by the staff +
complimentary rooms.
 

 Calculation of Available Capacity:

Potential capacity – rooms under repair

 Calculation of foreign guest:

No. of foreign guest in the hotel / total no. of guest in the hotel * 100
 
 Potential Capacity of the Hotel:
Total capacity of the hotel (no. of rooms) – rooms occupied by
the staff + complimentary rooms.

 Calculation of Available Capacity:

Potential capacity – rooms under repair

Calculation of foreign guest percentage:

No. of foreign guest in the hotel / total no. of guest in the hotel *
100
POTENTIAL CHECK OUT PROBLEMS
 Check out is a very critical step in guest cycle.
 Departure procedure to be simple and short
 Keep in mind that guest checking out have time
schedules to catch a train/flight.
 Hotels take measures to avoid long queues during
peak check out periods
 Speedy check out leaves a lasting good impression
on the guest who might become our word-of-mouth
publicity.
PROBLEMS & SOME SOLUTIONS
 Despite measures taken the following problems
occur during check out
1. Late check out
2. Long queues at the cashier counter
3. Improper posting of charges in guest folio
 These can be rectified by informing guests about
check-in /check-out times at registration
 Installing self check-out terminals
 Implementing accurate guest accounting systems
1. LATE CHECK-OUTS
 If a guest vacates his room after the check out time, it is considered
late check out. This may create a problem specially during high
occupancy periods as the guests with confirmed reservations will
have to wait for the room to be vacated and cleaned

A hotel may take the following preventive measures:

Inform the guest about the late C/O charges at reservation &
registration.
Display the C/O timings on the key card cover/ at the back of room
doors.
Add the late C/O charges in the guest bill
Offer to keep the luggage in the “left luggage room” if guests ask for
a late check out
Incase of groups, provide hospitality rooms without any charges
2. LONG QUEUES AT THE CASHIER
 A SOP for a check out involves many steps in
presentation and settlement of bills.
 The need for a speedy/ queue free check out
forced the hotels to have alternative such as
Express check out & self check out terminals
EXPRESS CHECK OUT
 During the standard check out time the front desk
is usually flooded with guests waiting to settle
their bills.
 The solution – speedier check out
STEP BY STEP PROCEDURE FOR ECO
1. Distribute guest folios to those guests expected to check out
(by slipping printed folios under guestroom doors, for
example)
2. Express check-out forms can be distributed to those guests
expected to check out.
3. By signing the ECO form, the guest authorizes the front
office to transfer his or her outstanding folio balance to the
payment card that the guest presented during registration. (If
the guest did not establish credit at registration, express
check-out may not be offered.)
4. After completing the express check-out form, the guest
deposits the form at the designated front desk container and
can depart without having to wait in line to check out. 
EXPRESS CHECK-OUT CONTINUED

• After the guest has left the hotel, the front desk staff
completes the guest’s check-out by transferring the
outstanding guest folio balance , include any late charges
to a previously authorized method of settlement.
 The guest sign on the ECO form replaces the sign on the

credit card voucher as the guest’s agreement to make the

payment.
• A copy of the guest folio showing charges and payment
should be mailed or e-mailed to the guest, another copy
sent to the credit card company/bank.
• Express check-out must not be offered to guests who
paid in advance using cash. 
EXPRESS CHECK OUT
SELF CHECK-OUT
 In fully automated hotels, guests can check out by using self
check-out terminals in the hotel’s lobby/meeting areas or by
using a mobile or in-room device.
 Self check-out machines interact with the front office system
/PMS to reduce check-out time and minimize front desk traffic.
 They have options like check-out only, check-in/check-out,
accept cash.
 To use a self check-out terminal, the guest accesses the proper
folio, reviews its contents, then settles the account with a
payment card. 
SELF CHECK-OUT … CONTD…
 Some kiosks are designed to print Guest’s
boarding passes during check out.
 Kiosks identify guest by room card keys/credit
cards/
 New innovations allow credit cards to be coded
as their room keys
 Kiosks allow guests to access and review their
folios, settle their accounts.
SELF CHECK-OUT … CONTD..
 Check-out is completed when the folios outstanding
balance is posted into the guest credit card account
 After payment, the guest receives an itemized
account statement.
 the kiosk communicates the room status
information to the front desk system
 The FO PMS module updates the room status to
HK and updates the guest history card.
BENEFITS OF SELF CHECK OUT TERMINALS

1. Minimize waiting time, allows guests to check-out

themselves without going to the front desk cashier
2. Simplify check-in/check-out as guests can easily
follow the interactive instructions on the screen.
3. Eliminate the scope of human error, as they
directly interact with PMS and lets the guest track
all the transactions at POS and other sections.
SELF CHECK-OUT … CONTD..

 In-room folio review and check-out often relies

on an in-room television set with a remote control
advice; guests can pick up a copy of their printed
folios at the front desk after completing their self
check-out, or request that one be e-mailed to
them
3. IMPROPER POSTING OF CHARGES
 Human error or system error leads to improper posting in guest
folio making the final bill inaccurate.

 When the front desk is flooded with check out requests at peak
check out times, the cashiers tend to make mistakes in posting
or calculation of bills

 This leads to dispute with guests and delay other guests in queue

 The whole experience is quite damaging to the hotel.

 To avoid this hotels should install more accurate and faster guest
accounting systems, leading to higher guest satisfaction
UNPAID ACCOUNT BALANCES
 Unpaid account balances are after-departure charges
(late charges) or outstanding guest account balances.
 A late charge is a charge that does not reach the front
desk or front desk system for posting until after the
guest has checked out and closed his or her account.
 It is often difficult to collect late charges, and the
hotel incurs additional costs in attempting to do so. 
Eg- charges for postage, stationery, special statements
may cost more than the late charge.
 Many hotels set a minimum range between 8 to
15$ above which they send the bill to departed
guest, lesser than this amount the hotel writes off
and zeroes the balance through accounting.
Reducing the number of late charges is important
for profitability.
UNPAID ACCOUNT BALANCES.. CONTD..
 A front office automated system that interfaces with the
hotel’s revenue center outlets is often the most effective
means of reducing or eliminating late charges.
 post transactional vouchers as soon as they are received
 survey front office vouchers and folio racks for unposted
charges before checking guests out
 Ask departing guests whether they have incurred any
charges not listed on their final folios.
 Payment card companies may allow hotel personnel to
write “signature on file” on the signature line of a payment
card voucher in order to collect payment for late charges.
ACCOUNT COLLECTION
 Late charges billed to departed guests should not be
classified as uncollectible until all billing and collection
procedures have been exhausted.
 Guests who paid with a payment card will be billed
according to the policies and procedures of the payment
card company; guests who paid with cash may have their
accounts transferred to the hotel’s accounting division
for collection.
 The sooner the collection process is started, the more
likely the hotel will receive payment on unpaid, overdue
accounts.
ACCOUNT COLLECTION……CONTD
 Each hotel must develop its own collection
schedule (number of days between account
billings), ranging from aggressive (short-cycle) to
lenient (long-cycle).
 In all collection cases, it is important for staff to
be polite but firm; care must be taken to not
violate a consumer’s rights.
 TYPICAL CITY LEDGER ACCOUNTS

 Payment card billings

 BTC billings
 Travel agency accounts
 Bad check accounts
 Skipper accounts
 Disputed bills
 Guaranteed reservation accounts
 Late charges accounts
 House accounts 
MASTER FOLIO ACCOUNTS FOR GROUPS
 Credit arrangements for groups should be established
well before their arrival.
 Front office staff may prepare a preliminary master folio
account statement prior to the group’s departure and
review it with the group leader to expedite the final
payment process.
 Master folio accounts can be complex; for this reason,
billing arrangements are usually clearly specified in the
group function contract and reviewed/confirmed with the
group leader before the group’s arrival.
MASTER FOLIO ACCOUNTS FOR GROUPS CONTINUED FROM
PREVIOUS SLIDE…

 It is customary for the front office manager to

meet daily with the group leader to review group
transactions and get his or her approval.
 When the final master account statement is
presented to the accounting department, all
previously authorized invoices, vouchers, and
related documentation should be attached to verify
that the group leader has approved the charges.
 ACCOUNT AGING
 The time between billing an payment varies from
immediate to several days or more.
 The length of this period is determined by volume
of transactions, frequency of voucher submission,
etc.
 Most city ledger accounts are settled within 30
days, but some may exceed 30 days
 This practice of tracking past due accounts
according to the date the charges originated is
termed as account aging.
 Monitoring - At large properties – Accounting
division, smaller properties by Night auditor
 Accounts less than 30 days – Current
above 30 days – overdue
above 90 days – delinquent (lax/slack,
tough to recover)
 An account age analysis sheet explains the time
delay in account receivables.
 AGED ACCOUNTS RECEIVABLE REPORT

AGED ACCOUNTS RECEIVABLE

As of October, 2015
NAME BALANCE CURRENT OUTSTANDING
30-60 60-90 90-120 120+
ELIZABETH $125 $125
PENNY
HENNERY MIMI $235 $235
M/M PHIL $486 $100 $386
DAMMON
HARRISSON $999 $999
TAYLOR

TOTALS $1,845 $100 $386 $1,234 $125

 https://www.youtube.com/watch?v=9MX7Mo4f
DdY

 https://www.youtube.com/watch?
v=vIwj7B9XgFM
DISCUSSION/ TERMINOLOGY
 Account receivable – amount owed to the hotel.
 Account receivable ledger?
 Allowance voucher
 Cash bank
 Cash voucher
 Ledger – a group of accounts
 FO accounting formula
previous balance+debits –credits = Net outstanding
balance
 Floor limit
 Guest ledger
 Late charge
 Split folio
 Net cash receipts – Cash & checks in the cashiers
drawer-initial cash bank
 Paid-in-advance (PIA) guest – pays in advance for
room and incidentals by cash, often denied in-house
credit
 Current account – city ledger within the current
billing period
 Late charge vs late check-out fee