Quality hotel management practices by a Hotel General Manager include reviewing the financial performance monthly, however it is not all about internal financial control, one must when going about an analysis of expenditure take into account what is most appropriate for that unique property and its positioning in the market place, in relation to similar ones, keeping in mind the intention is to maximize profits, not just control costs.
This is called a variance analysis, reviewing each single line expense as per the hotel system of accounts to budgeted and prior performance, together with a revenue management overview comparing the hotel’s income performance to that of the competitive set.
What sometimes is missed in this process is a check of some accounting control measures, work that needed to be done correctly by the Financial Controller and team during the month.
My list is as follows, additions are most welcome as I expand it if needed.
- That proper bank reconciliations have been completed and no non-reconciled values are shown on the bank reconciliations.
- That all major reconciled items are current and that all necessary steps have been taken to clear non-current reconciled items.
- That all cash in hand and house floats have been counted at least once during the month, that differences have been fully and conclusively investigated and that appropriate accounting entry has been made in the hotel books.
- That all trade debtor sub/ledgers reconcile with the related accounts in the general ledger.
- That the aged balance of the trade debtors has been reviewed, that proper actions are being carried out to ensure prompt collection of outstanding balances.
- That all disputes and litigation are properly monitored, that a review of all outstanding balances above 60 days has been carried out, and that the monthly provision for doubtful accounts has been appropriately adjusted in accordance with the overall risk of non collection.
- That guest ledger balances are all current.
- That physical inventory has been carried out at least once in the month in the presence of an employee external to the store-keeping department, that all differences have been fully investigated and that appropriate accounting entry or entries have been made.
- That any perished or obsolete item of no value has been properly written-off in the accounts.
- That all Trade Creditors sub ledgers reconcile fully with the related accounts in the General Ledger.
- That statements received from Creditors have been properly reconciled with the related amounts payable in the books.
- That the aged balance of the trade creditors has been reviewed and that appropriate actions have been taken regarding long outstanding amounts.
- That proper accruals have been made and that all balances held as accruals and prepayments are adequately supported.
- With the exception of normal accruals and deferred items arising from cut-off procedures, that no balance of revenue or cost nature is held in the balance sheet.
- That inter company balances have been reconciled and confirmed with the other parties.
- That the payroll cost recorded in the general ledger reconciles with the payroll report for the month.
- That all other balances held in the balance sheet have been properly reconciled.
After all it is all about cash collected banked with correct accounting procedures.