How Activity Gets to Your Hotels Financial Statements
Most people on your team probably do not know where every number on the Income Statement comes from – or want to know! And I get that.
We may not all feel like “numbers people.”
BUT, for your hotel team to be able to understand how the hotel is performing and tweak and improve it each month, every person really does need to know how their efforts are impacting the bottom line.
It CAN be simple, and the best way to get started is to understand the different systems at play.
This week we’re talking about how data flows through your systems from the first swipe of a guest credit card all the way to the bottom line of the Income Statement
Hotel POS (Point of Sale)
The first system we’ll talk about is the Point Of Sale System.
That is where all the credit card swipes and room charges happen that are outside of the front desk. Like in a restaurant, bar, or spa.
Hotel PMS (Property Management System)
Those sales numbers then flow to the Property Management System (PMS) or reservations system. This is the system at the front desk. It's also where all the reservations are made.
Hotel Accounting Systems
The sales, payments, and taxes from the PMS go from the front desk to your back office accounting software on a daily report. This is something like Hotel Investor Apps, M3, or Quickbooks, but hopefully something hotel specific like Hotel Investor Apps or M3.
So if you’ve ever heard someone talk about a hotel’s “daily report” before, they’re talking about getting those daily sales from the front office system to the back office system.
Your back office software is what is eventually going to produce the financial statements.
It is where your accountant is doing their work.
So the sales or revenue comes in from the PMS, the taxes come in from the PMS, and the payments come in from the PMS.
The other big piece of the puzzle that’s missing is expenses.
Those are going to get recorded in 2 ways:
Through the Accounts Payable module where all the invoices are posted to be paid.
And 2, through journal entries. Journal entries will be used to record things like the bank reconciliation, and payroll expenses.
Whether they come in through the daily report, or the AP module, or a journal entry, ALL of the items we’ve discussed are being posted to the General Ledger.
The General Ledger is a list of all the accounts that make up your accounting system.
And those accounts are organized to create the financial statements!
That is a very broad overview of the different systems at play in a hotel!
It is the perfect place to start in helping your team understand how their part in the operation impacts the bottom line!
I’ve created a simple free graphic to show the flow of data through these systems and explain what we just went over here.
Click here to grab a copy for your team and add it to any new hire training in the future.
So your tip for the week is to make sure your team understands the different systems at play in the company and how all the inputs come together to help the team win!