Now Is the Time to Improve Your Accounting Processes

Written by: Katie Paolino, CHAE | Cyber HITEC Guest Blogger

If your processes are not tight, you may be bleeding money. And who can afford that in 2020? PKF O’Connor Davies presented on Accounting Processes and Procedures at Cyber HITEC this year, and although they did an excellent job, it is still a tough topic. I mean, I am a total accounting nerd and I still have trouble getting excited about updating accounting processes. Truly, though, you get what you INspect, not what you EXpect. So, we cannot skip the inspection process and expect that everything will fall into place.

We will talk about a few highlights of the presentation for you to consider. Then, if you are feeling ambitious, you can go back and watch the entire session to make sure you don’t have any major gaps in your setup.


Cyber HITEC education sessions are available on-demand to all registered attendees until November 25. Haven’t registered yet? There’s still time. Active HFTP members receive 50 percent off full event access if they register between November 16-18, 2020.

Here we go.

Reconciliation to sub ledgers.

Make sure you have a process for verifying that the City Ledger, Guest Ledger, Advance Deposits, and Accounts Payable balances on your general ledger match the sub ledger.

That means for those specific accounts, you should have a detailed list to show the accounts that make up that balance.

The detailed list for the City Ledger, Guest Ledger, and Advance Deposits will come from your property management system. The AP list will come directly out of your accounting system (the AP subsidiary ledger report).

You should check these balances at the end of each month and keep these reports as backup.

Procedure in place for sales tax collection and payments.

The idea is to collect the exact amount of sales tax that you are going to need to pay the taxing agency. That doesn’t always happen, though. PKF O’Connor Davies suggests that you compare your tax collected to a calculated tax amount daily. A simple calculation multiplying your taxable revenue by the tax rates can be added to your daily report to make this practical.

At the very least, your collections need to be reconciled before the taxes are paid. If your collections are off, those taxes will be a straight expense, so you need to get this right.

Seems simple — but it is very often overlooked, and the collections account grows and grows until it has be reclassed at the end of the year as a huge expense.

Reconcile bank accounts within the system.

Many hotels still have bank reconciliations in Excel spreadsheets only. That can be effective, but the process is much more transparent if it is held within the accounting system. It builds in accountability and decreases the risk of a file being deleted or changed. 

Reconcile cash and credit cards daily.

This one is a good reason to use hotel specific software. You want to make sure your daily cash and credit card deposits are reconciled. The daily report module in a hotel specific software will automatically have daily receipts feeding to a bank reconciliation module to be reconciled.

This is key for recognizing if cash isn’t showing up to the bank in a timely manner, or if there is ever an error with the credit card processor.

Review Balance Sheet reconciliations.

It is not enough to check off all of the tasks needed to produce the financial statements each month. It is important to go a step further and really think through each balance and make sure it makes sense and is accounted for properly.

For instance, maybe the bank account is reconciled, but the outstanding checks and deposits in transit list has been growing for years and those items are not realistically ever going to hit the bank. Someone needs to notice that.

Or maybe the end of month entry was made to the prepaid account, and it is seemingly reconciled, but are you sure the ending balance makes sense? Is there a clear plan of how every item coded to prepaids will be expensed out and over what time period?

Time set aside for review is important, and I really challenge you to not just check off the list but to think through every balance.

The last point we’ll touch on is: document everything. Now, the folks at PKF O’Connor Davies mentioned how important it is to have all of your processes and procedures written down, but I want to add a little tip that is helping out our team.

Screen recording. Not revolutionary, I know — but are you doing it? Instead of trying to put everything in writing (and then expecting everyone on the team to read it), we are doing short video trainings.

It’s really simple to do — and it makes the idea of accounting processes a lot less daunting! We use Loom (a free screen recording software). And when we need to update a process, we simply record our screen when we complete the task and talk through the steps as we do it. Then, the recording is backed up in the cloud, and we can email the team a link to watch it or show new team members during training.

Sometimes we also just invite the whole team to a zoom meeting, and then go over the task in the meeting. We make sure to record the meeting and file it for new team members to watch during training. The added benefit of that method is that it tends to flow better when you are explaining it to people live. If you record yourself and you know you can stop it and start over, it may take you a LOT longer trying to get it perfect. (Or maybe that’s just me!)

One extra tip is to only cover one task in each video, then name and file them in a way that they are easy for the team to find later!

Don’t forget — if you are feeling inspired to update your own accounting processes, make sure to watch PKF O’Connor Davies’ entire presentation by November 25.

Happy updating!

Katie Paolino, CHAE is an official Cyber HITEC 2020 guest blogger. She is the co-founder of Hotel Solutions, LLC and received HFTP’s 2020 Certified Hospitality Accountant Executive (CHAE®) of the Year.

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