Question

One of the major problems with front office accounting at the Royal Crest Hotel is monitoring guest and non-guest accounts using their manual system. Management has always extended local businesses and government officials charge privileges, the idea being that, with the convenience of deferred payments, local patrons would be more likely to dine and/or host clients at the hotel. This program has proved to be highly successful. The volume of purchases charged to such non-guest accounts now approximates the level of sales incurred by registered guests. Unsure if this is a good or bad situation, Mr. Osei, the front office manager, requests the front office accounting staff to study the problem and to report its findings at next week's front office meeting. At the weekly front office meeting, the hotel's accountant, Ms. Pokua, reports that there are at least three problems related to the hotel's non- guest charge purchasing policies: its impact on the daily hotel audit, the billing procedures to collect payment, and the number of applications for additional non-guest accounts. When asked to be more specific, she begins with a review of the daily hotel audit. She states that since the front office receives charge vouchers from the hotel's revenue centers, it is the front desk agent's responsibility to separate guest from non-guest accounts. Since registered guest charges are posted by room number, one would think it easy to sort those charges from the others. Unfortunately, both the hotel's guest account numbers and the non-guest account numbers are three digits, thereby making the sorting more time-consuming. Mr. Osei asks if it is really necessary to separate the charges. Ms. Pokua explains that it is, since the hotel must maintain accurate guest folio Page 2 of 1 G. N. Baah balances. She further states that the non-guest vouchers are accumulated and posted on Saturday afternoons, when the hotel's business is less hectic. The billing procedures to collect non-guest account balances are tricky, Ms. Pokua said. Since the hotel bills non-guest accounts on the last day of each month, some charges occurring in a particular month may not be posted in time to appear on that month's bill. In addition, non-guest accounts usually are not paid in time. In fact, 47 percent of last month's non-guest account balances remain unpaid and tomorrow is the date of the next billing cycle. Mr. Osei explains that the local customers are important to the hotel and suggests that maybe Ms. Pokua is over-sensitive to the billing problems. Lastly, Ms. Pokua relates the fact that there are at least ten new applications for non-guest accounts. She has instructed her staff not to authorize any new non-guest accounts without her written approval. She further states that she is reluctant to authorize any additional non-guest accounts, and looks to Mr. Osei for advice. Convinced of the positive aspects of such business, Mr. Osei directs her to approve the requests and to assign account numbers effective the first day of next month.

1). State four things that could be done to improve collection of outstanding balances? .    

2). What are the two (2) advantages and two (2) disadvantages to having a high volume of non- guest accounts? NOTE; PLEASE I NEED DIFFERENT ANSWERS.

Answer 1

1.

Answer:- Four things that could be done to improve the collection of outstanding balances are:-

1) Apply for interest:- Suppose a member has not paid their bills on a certain date then there should be some amount of interest that should be added on the current balance and notify the non-guests members about the balance due.

2) Automatic reminders:- Through some software send an automatic reminder when someone is late for the payment. This software will be able to track who has paid and whose account needs to watch out.

3) More strict rules:- Make the collection process more strict like advance payment, more payment options, or some penalty if fails to pay on time.

4) Contact the person before the due date:- Call the members before the invoice is due and give accurate information about the late fine. Also, get a commitment on when to expect payment.

2)

Answer:- Two advantages of a high volume of non-guest accounts are:-

1) It has increased the level of revenue.

2) With better relationships, will help and benefits them in the long term business.

Two disadvantages are:-

1) Since the non-guests account and hotel guests account numbers are three digits its making the sorting more time consuming and thus impact the daily hotel audit.

2) Delay in payment time.

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