Notes on Modes of Payment | Grade 12 > Hotel Management > Front Desk | KULLABS.COM

Modes of Payment

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Modes of payment

The mode of payment refers to the various methods of payment by which the guest can settle or pay his/her bills in the hotel. Whenever guest checks in a hotel, he/she has to make clear about the modes of payment at the time of registration so that, it will greatly reduce the problem while settling the bills.

When the guests check out of the hotel usually they pay the bills by cash or credit card, but in some cases, the charges are billed to the company account, by traveler cheque, and through travel agent/ airlines voucher.

The different modes of payment through which guest can settle or pay their bills are as follows:

  1. Cash
  2. Cheques
  3. Credit card
  4. Company account
  5. Travelers cheque
  6. Voucher

  1. Cash

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    www.clipartpanda.com

It is the simplest and common method of payment which is done in local currencies as well as foreign currencies. It is the most simple and instant mode of payment used by the guests. While doing the payment the bill is presented by front office cashier to the guest and payment is done on hand through cash. The cashier must know the current rate of exchange details and skill to evaluate the rates. Different countries have a different restriction to hotel regarding foreign currencies. Mostly in many of the hotels, there are a lot of tourists guest than the guest of same countries and many of the tourists pay with their own country currency so it is very important for the front office cashier to handle foreign exchange carefully because we cannot upset the guests. There is some procedure for foreign exchange transactions which must be adopted by the front office cashier while handling foreign exchange receipts. The procedures are:

  • Collect the foreign exchange to be in crashed for the customer along with the passport
  • Ask the guest for his room number, verify the details with registration card
  • In most of the cases, hotels do not encash foreign exchange in case of non-resident. But it allows only up to 500 US$ against conversion
  • In most cases, the non-resident will be referred to lobby manager and their exchange will be encashed only after receiving authorization from him
  • Check the currency given for its acceptability with the list of currency provided by Nepal Rastra bank(NRS)
  • Check the currency note against fake, fraud, stolen and out of circulation from the respective current circulars issued by NRB
  • Fill up the encashment certificate with full details as required
  • Ask the guest to sign on encashment certificate
  • Calculate the total amount and remit in Nepalese currency after deducting the bill amount if any
  • Provide guest with the original copy of encashment certificate
  • Attach the foreign exchange to the second copy of encashment and deposit along with cash
  • Enter all the require details in the front office cashier report and record of foreign currency summary

  1. Cheque

    Source: http://www.sqa.org.uk/e-learning/ECIntro02CD/page_14.htm
    Source: www.sqa.org.uk

Every hotel has its bank account to facilitates business. Hotel accepts both company cheque and personal cheque up to a certain limit accompanied by the bank guarantee card. It is another form of cash. Payment through the cheque is the safer and convenient. So most of the customers prefer to the payment through the cheque.

  1. Credit card

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    Source:www.psdgraphics.com

A credit card is a wallet-size small card issued and guaranteed by the bank to its valuable customer that authorizes the person named on it to charge goods and services to his or her account.

It differs from a debit card with which money is automatically deducted from a bank account of the cardholder to pay for the goods and services. Use of credit card was originated in the U.S. in the 1920s. Early credit cards were issued by various firms (for example , oil companies and hotel chains) for the use of their outlets only. Credit cards are issued by banks and financial corporations after scrutinizing the customer creditability and repayment power. While considering an application for credit card, following details are called for;

  • To ascertain that the applicant is receiving a regular income above a minimum required the limit. Salary/income proof
  • To proof of residence. This is required for the safety of repayment. Under local laws, only a resident citizen is allowed credit card.
  • For proof of saving and assets. To assess the creditability and repayment power of a client, it is required to find out the total savings in different schemes and assets in the name of the applicant.

Benefits for credit card

  • Reduces the need to carry cash
  • Credit card can be only used by the card holder
  • Risk is lowered, if credit card is lost the liabilities are limited
  • Helps in urgent payments
  • Allows easy payment modes for male orders
  • Allows easy cash withdrawals (up to a limit) anytime anywhere from any ATM or branch of a bank
  • Allows the flexibility of the payment plan on an interest payment basis as per the convenience of the cardholder.

Benefits of accepting the card for the merchant

  • The merchant is assured for the payment by this mode
  • Risk of bad debt arising out of personal credit is not with credit card
  • Easy accepting and accounting system
  • No need to know the client personally
  • The service charge is cheaper than the interest lost in collecting credit payment
  • Provides more publicity through different schemes of the credit card companies from time to time

There are also procedures for accepting credit cards which must be followed by the cashier and they are:

  • Check the warning bulletins provided by the credit card companies. If the card is not in the bulletin the card cannot be accepted. In case it is listed in the bulletin then the card must be apprehended without offending the customer and inform the credit card company.
  • Take imprint of the card on a charge slip provided by the bank
  • Now fill up the amount and bill details on the charge slip, give the charge slip to the guest to sign in the specific place

  1. Company account

If the guest uses the hotel facilities and billing is instructed as per company account it means that the bill will be paid by the allied company. The big business organization makes an agreement with the hotel to provide services to their staff and customer of the company. Credit section of hotel sends a letter with the bill attached, to the respective company for payment. The bill should be signed by the guest who was sent by the company. The company may pay the bill through cash or by cheques.

  1. Travel cheque

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As the name suggests it is a cheque which is issued by a bank to the travelers in exchange for cash. When a traveler visits a long distance , they exchange their currency into traveler's cheque. The bank which issues the travelers cheque takes the signature of the traveler in the cheque undersigned. Traveler cheque is also another form of cash. It brings down the trouble of carrying a huge amount of cash, which does not seem to be safe for long distance travelers. Travelers check is encashed only when the cashier receives the specimen of the cheque holder signature and tallies it with the passport details. All uncashed travelers cheque are sent to the local bank for payment.

  1. Voucher

The special document which is printed form and issued by travel agencies and airlines stating the required services to be provided by the hotel to the guest. The hotel send a bill to a guest to respective travel agencies or airlines who issued the voucher for payment.

References:

Joshi, Basant Prasad et.al., Fundamentals of Hotel Management-XII, Sukunda Pustak Bhandar,Kathmandu

Bhandari, Saroj Sing et.al., Principle of Hotel Management-XII, Asmita Publication, Kathmandu

Oli, Gopal Singh et.al., Hotel Management Principle and practices-XII, Buddha Prakashan, Kathmandu



The different modes of payment through which guest can settle or pay their bills are:

  1. Cash
  2. Cheques
  3. Credit card
  4. Company account
  5. Travelers cheque
  6. Voucher
.

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