Night audit at a hotel: bringing it all together

Night audit at a hotel: Bringing it all together

Hotel operations may differ depending on the size, function, complexity, and are not limited to providing excellent service. There are a number of other important activities hoteliers must adhere to. In this respect, robust accounting and auditing are not just necessary but required by law.

While talking about financial operations, night audit is in the “must-have” category and considered mandatory. However, what is it and how to effectively organize it in the hotel? Let’s find out below.

What is a night audit at a hotel?

The term night audit is prevailing in the hotel industry. It refers to the control procedure under which various revenues are checked after the end of normal business hours.

Also, it is the process of evaluating the hotel’s financial activities and a tool for preventing revenue leakage.

Such a control process where the night auditor reviews all financial activities helps hotel managers review daily cash flow into and out of the hotel’s account, as well as plan future goals and control the expenses.

The hotel night audit process may differ depending on the size and type of hotel and include customer service, front desk administrative roles, and maintenance duties.

The hotel night auditors play an important part in efficient hotel functioning. So let’s dig deeper into their responsibilities to understand what they do, their roles, and their skills.

Who is Night Auditor and what are his/her duties?

The Night Auditor fulfills the daily audit process, reconciles, and closes out financial activities based on the hotel’s operating standards, procedures, and policies. This process includes, but is not limited to, completing and transmitting daily reports that contain total revenue, receivables, cash, credit, room statistics, and more.

Traditionally, the work shift starts after most hotel employees leave for the day and finishes before the morning shift arrives. There may be one or several night auditors at the hotel.

Also, the Night Auditor may serve as the hotel’s Front Desk representative and be responsible for checking-in/out guests after 11 pm or in the early morning hours, setting up new guests in their rooms, handling their requests or complaints, grant discounts, or upgrades. In an emergency-only situation, he/she can handle housekeeping and maintenance issues.

The customer service or maintenance responsibilities are usually tasked where requests and customer interactions are minimal and don’t distract from completing the financial audit from the previous day. Below, we’ll compile a list of the night auditor’s key roles:

● Reconciles all day’s cash transactions, house reports, and reservations from the previous day, closes financial activities for a day, receives and records bank deposits, prepares cashier reports from the restaurant and retail outlets, and transmits credit card transactions, noting discrepancies and out-of-balance accounts;
● Reconciles all charges to the general ledger;
● Prepares backup files and closes out shift and day on the reservation system, including preparing the system for the next day of business;
● Prepares cash receipts for deposit;
● Reconciles room status discrepancies;
● Verifies room rates;
● Verifies no-show reservations;
● Controls hotel staff to correctly report revenue and financial transactions and reveals discrepancies that are reported and settled by management the following day;

● Posts accommodation and tax charges; Accumulates guest service charges and payments;
● Balances all departmental accounts;
● Verifies compliance of all paperwork with the accounts in the PMS;
● Clears and takes backup of the PMS-generated reports;
● Prepares lists of expected guest arrivals;
● Prepares and distributes reports;
● Starts financial activities for the next day;
● Provides superior customer service to all guests, gives information on area attractions and resort amenities;
● Performs all activities of a Front Desk clerk and completes night audit checklist;
● Generates housekeeping reports and prints folios departures;
● Maintains clean work area;
● Does other reasonable duties as requested.

As you can see, the night auditor fulfills a variety of duties and is responsible for delivering a number of reports, some of them are as follows

Night audit at a hotel

Other reports include

● Manager’s Report
A statistical list of the previous day’s occupancy, including details about available accommodations, occupied accommodations, sold and vacated accommodations, rack-rate, number of guests in the hotel, number of no-shows, etc.

● General Manager’s Report
Generated for the general manager’s assessment. Based on the daily sales report received from each department, the General Manager determines the profit-generating departments and evaluates the success of sales and marketing.

● Ledger Balance Summary Report
The opening and closing balances for the Advance Deposit Ledger, Guest Ledger, and City Ledger.

● Room Rate Audit Report
All rates that are applied to each guest and the difference from the rack rate with the predetermined rack code.

The development of realistic financial reports for a hotel business is an important process. To accurately estimate expenses, sales, and revenues, night auditors use formulas. Let’s take a look at some of them:

● The formula for Balancing Bank Deposit

Total Bank Deposits
- Total Cash Sales
- Credit card received A/R
– Cash received A/R
= 0

● The formula for Balancing Guest Ledger

Total Revenue
- Paid-outs and non-collect sales
= Daily revenue
- Total cash income
- Today’s outstanding A/R income
= 0

● The formula for Balancing City Ledger

Yesterday's outstanding A/R
+ Today's outstanding A/R income
= Total outstanding A/R
- Credit card received and applied to A/R
– Cash received and applied to A/R
= balance of A/R

Before entering tech space, hotels used to assign many night auditors to perform night audits. However, after adopting hotel management systems, the need for such activities has been reduced. Let's have a look at more tech solutions that can simplify the night audit process.

How to make the night audit process easier and more accurate?

Thanks to the latest advancements in technologies, night auditors can perform all the tasks and generate accurate reports in less time. As most of the hotels now use the hotel management system (PMS), the need for night audits has been shifted to more income audits done during day time.

The system, meanwhile, performs automatic balancing of revenue posting, next-day postings, and cashier closing, improves the tracking and posting of guest account charges, and automates Guest Folios.

What’s more, hoteliers can add extra modules to PMS that helps organize the night audit process even more efficient


Revenue Manage

Managing the financial statuses of various departments, tracking invoices, and creating reports all at once can be a tedious and lengthy task. Here’s where Billing, Invoicing Software can help to make it quicker and easier. It tracks all the financial transactions of the day and corrects any errors that occurred due to manual entries. It also helps to get rid of duplicate entries that provide the most accurate data reports. It also depicts various taxes and special charges automatically.

Room Management

For night auditors, it may be difficult to keep up with the constant changes of the room statuses. The Room Management module updates all the check-ins and checkouts of the hotel which eliminates all the chances of overbooking or double bookings. The night auditor can easily assign rooms to unexpected guests, manage all the canceled reservations or no-shows, and levy proper charges for them.

Cash Books

HotelFriend Cash Books have been specially designed for hoteliers. If the night auditor needs to monitor fee income, record cash receipts, find any transaction in seconds without checking dozens of Excel spreadsheets, Cash Books will help a lot.

Employee Management

No hotel can function without competent staff management. The night auditor can control the fulfillment of all the tasks carried out by various departments during the working day, and then generate reports accordingly. It becomes much easier to track any changes in shifts, occasional staff, pending and completed tasks. All of the above eliminates any confusion that occurred due to manual entries.

Reporting Module

The reporting module provides the most accurate analysis and generates reports within a few clicks. A significant part of this module is devoted to the End of Day Report that is designed to help night auditors get a bird's eye view of all hotel's revenue and operations. The report combines all the needed data and presents conclusions in an accessible digital format. This allows every responsible person in a hotel to get access to the relevant information and make informed data-driven decisions.

Housekeeping module

Night auditors can view and control the department operations in real-time and streamline the performance of the cleaning staff. They can track the status of room updates in real-time, ensuring no room is missed, making the room reconciliation process as efficient as possible.

Payments Management

Manual payment mistakes negatively affect a hotel’s reputation, and consequently, its revenue. Payment discrepancies can also cost a hotel the time it takes for a night auditor to review and resolve them. An automated and integrated payments solution can help by dramatically reducing human error and payment discrepancies, and by saving time on nightly payment batch reconciliations.

The hotel industry is being overwhelmed with a flurry of activities all the time. In this respect, the night audit process which is done at the end of the day ensures that a tangible record of all the day-to-day operations is maintained.

To simplify these numerous and tedious activities, most hoteliers are already using HotelFriend digital tools. They help optimize and automate all the functions making accounting and auditing human-less and paperless, as well as more time-saving, accurate, and fast.

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