SOP For Guest Ledger and City Ledger

SOP Number: Finance and Accounting – 34

Department: Accounts Receivable

Time to Train: 30 Minutes

Purpose of Guest And City Ledger:

The purpose of this policy is to define receivables and collection responsibility.All Receivables residing in the Guest Ledger are the responsibility of the Front Office and those in City Ledger are the responsibility of the Accounting Office.

Guest And City Ledger SOP Procedures:

1. Guest Ledger represents the unbilled accounts of guests who are currently in the Hotel, advance deposits, master accounts and house accounts. These receivables will remain at the Front Desk and are the responsibility of the Front Office Manager.

2. City Ledger represents the billed but uncollected accounts of guests who have departed from the Hotel. These receivables are the end result of Guest Ledger and become the responsibility of the Accounting Department, with the Controller ultimately responsible.

A. TRANSFERS TO CITY LEDGER

All accounts for direct bill must be approved and authorized by the Credit Supervisor before the Front Office cashiers can transfer the completed Guest Ledger accounts to City Ledger. The approval for credit should be done prior to arrival. The transfer to City Ledger should be done on the day of check-out for individual and voucher accounts and on the third day for group masters.

A thorough review of each account transferred to City Ledger is the direct responsibility of the Front Office Manager in conjunction with the Accounting Department Credit Supervisor. Under no circumstances should undocumented items be transferred to City Ledger to clear the Guest Ledger.

Once items have been transferred to City Ledger, it is the responsibility of the Accounting Department to follow up on collections on all accounts. Any adjustments that are to be made to these accounts are

to be properly documented and approved by the Controller or General Manager and Manager of the department whose revenue is affected.

B. PAYMENTS

On a daily basis, all accounts receivable payments will be received by someone other than an accounting staff member. They will be logged and a duplicate of this Log and copies of the checks will be given to Accounts Receivable. The checks will be dropped in the drop safe.

Payments are then posted to the subsidiary City Ledger by the Credit Supervisor. The last page on the aging is then displayed or printed and compared to the General Ledger City Ledger balance to ensure the two are in balance. All discrepancies are to be identified and corrected immediately.

If a payment is partial, the customer will be contacted immediately to determine how the payment is to be applied. If the payment is an over payment or duplicate payment, a refund check will be sent immediately.

If a payment is received and an account cannot be located, the customer will be contacted immediately to determine the disposition of the payment.

When clearing credit balances from the accounts receivable again. whether arising from over payment or non-utilization of advance deposits (excluding forfeited deposits due to insufficient notification by the quest), every effort must be made to locate the proper recipient. In the unusual circumstance where this cannot be accomplished, the remaining credit balance would be recognized as miscellaneous income after six months. At month-end a copy of the aging should be retained (as backup) with the General Ledger account.

C. BILLING

The billing of accounts receivable is to be maintained on a daily basis. with no more than three (3) working days between the date the guest account is transferred to City Ledger and the date it is placed into the mail, except for Banquet Master Accounts which should be in the mail no later than five (5) working days.

The initial billing on all accounts will include a statement and backup invoices (l.e. folios, etc.) to support each current transaction reflected on the statement. All bills over $10,000.00 should be sent via certified mail.

D. COLLECTION

1. The first billing from the property will be within 3 days of the guest's departure from the Hotel. All group billings should contain a pre- printed card identifying Accounts Receivable Supervisor or Credit Manager as the person to contact to discuss billing.

10 days after the first bill is mailed, all accounts should be telephoned to confirm that the bill has been received and to determine the status. The results of this call should be recorded in the guest's file. If it is determined that the bill was not received or is incorrect, a corrected billing will be sent out by overnight mail with a follow up phone call to verify receipt and expected payment date.

2. Every 10 days communication should be attempted to determine status of the account and documented. The results of this call should be recorded in the guest's file.

3. When the account has aged 70 days, the Controller will then decide:

a. Write-off the account as uncollectible;

b. Continue collection efforts from the property: or

c. Send to collection.

Training Summary Questions:

Q1. Who is responsible for all receivables residing in the Guest and City Ledger?

Q2. What do Guest Ledger and City represent? 

Q3. What is the billing cycle for accounts receivable?

Q4. What happens when an account ages 70 days?