City Ledger is a list of company/travel agent accounts that owe hotels money since their employees or representatives stayed at the hotel on a credit basis.
What Is the Primary Function of the City Ledger?
City ledger is a traditional term used only in the hotel industry for Accounts Receivables, and we know that Accounts Receivable or AR is credit sales.
In the early days, hotels only provided credit facilities to companies within the city limits wherever the hotels were located. They maintained the receivable records in the ledger, which they called the ‘city ledger’.
What is the Purpose of Maintaining a City Ledger in the Hotel Industry?
The hotels use the city ledger to record credit sales, track the aging of pending payments, and send reminders and statements to the companies that owe the hotels for collection purposes.
City Ledger Example: How Does City Ledger (Direct Billing) Work With Hotels?
- A company (travel agent or governmental organization) requests for direct billing (City ledger) privilege from the hotel.
- The hotel’s sales department works with the company to obtain relevant documents and checks the eligibility in line with the hotel’s credit policy. Note: Depending on the checks and eligibility of a company, the hotel determines the credit limit.
- Once approved after fulfilling the standard procedures, the hotel is ready to accept the guests sent by the company for direct billing.
- Individual guests, despite being booked by credit-approved companies, should be authorized by the hotel front office manager or supervisor before his/her charges can be settled to the company’s city ledger account (also called, AR accounts).
- City ledger authorized guests when checking out, the hotel cashier will settle the charges to the city ledger payment method instead of cash or credit card. These charges will automatically be transferred to guests’ company accounts in the city ledger.
Whether you are a beginner or already an expert hotelier, we recommend this book.
Note: If you buy we might get a commission.
Are All Charges Settled to the Company City Ledger?
It depends on the contract between the hotel and the company, and what has been authorized on an individual guest basis.
Usually, companies cover room, food and beverage, and laundry charges, while any incidental and miscellaneous charges are the responsibility of the guests.
In the above situation, the hotel will split the guest’s bill and settle the company’s part to the city ledger, while the guest will pay for other charges.
What is the Difference between A Guest Ledger and A City Ledger?
What is the guest ledger? Every time a guest consumes a hotel service or product, the charges are posted to the guest’s bill while the guest is still in-house and the bill is still not settled. These charges are recorded under the guest ledger (also called, the front office ledger).
When the guest checks out, the charges are transferred to the respective city ledger account of the guest’s company. From here on, the charges will reside in the city ledger (or accounts receivable ledger) until the company settles the due amount. This is the reason the city ledger is called the ledger of non-guest transactions.
Aging of City Ledger
Since transferring a guest’s balance to the city ledger, the aging process of the credit starts and is counted based on the number of days. It is the responsibility of a hotel’s Account Receivable team to collect the payment from the companies.
They send reminder letters such as 1st reminder for 30 days, 2nd reminder for 60 days, and so on. After a certain number of days and not settled (depending on hotel policy), the credit policy will be suspended.
City Ledger in Front Office
A hotel’s FO staff are not authorized to provision City Ledger facility to any guests. Providing credit facilities to a corporate client or a company has a long process and it differs from one hotel to another. Usually, it is handled by the hotel’s Sales team in conjunction with higher management.
Once the facility has been established with a company, hotel Front Office staff only checks out a guest on the ‘direct bill’ payment type just like cash or credit card checkouts.
City Ledger Payment Method
Typically, a city ledger payment method is called the Direct Bill. You cannot classify this payment method as cash, credit card, or debit card. Whenever a guest checks out using this payment method, all it does internally is transfer the bill from the Front Office Ledger to the City Ledger.
The rest is handled by the Accounts Receivable team at the finance department.
City Ledger Opera
Sample screen (obtained from https://docs.oracle.com/cd/E98457_01/opera_5_6_core_help/account_maintenance.htm):
- Oracle’s Opera PMS has a comprehensive AR module with detailed reporting.
- For assistance (free of charge) or paid training, you can contact us.
Frequently Asked Questions (FAQ)
| What do you mean by ledger? | A Ledger is simply a list of entries of financial transactions. Each entry in the list sits under the Debit or Credit side of the column. |
| What is a city account in front office? | It is the same (early days) term used to refer City Ledger. |
| What are the 3 main ledgers? | In the hotel industry, 1. Deposit Ledger that maintains guests’ deposits in daily operation. 2. Guest Ledger or Front Office Ledger that holds all charges and payments posted to guests during the stay. 3. City Ledger that maintains guests’ charges settled on a credit basis. |
| Who in the hotel handles the city ledger? | Hotel’s finance department has a single or a team of staff under the Accounts Receivable subdepartment. |
| How long a hotel can wait before companies can settle their credit bills? | Hotels have aging periods such as 30 days, 60 days, 90 days and more. Depending on the hotel’s policy and the creditworthiness of the client companies, it varies a hotel to hotel. |
2 Comments
[…] Bill: It is city ledger payment where the guest’s charges are transferred to his/her company account in the accounts […]
[…] is called City Ledger or Direct […]