A Comprehensive Guide to Hotel Night Audit

Nighttime routines help us to carefully summarize our day, better preparing us for the next one. Similarly, a hotel night audit helps a hotel to close its hotel day with accuracy and financial awareness and have the next one dawned with a perfectly matched balance sheet.  

The importance of this process or a night auditor cannot be undermined.  

Thus, let’s learn more about night audits at hotels. Starting with the basics of the concept, we would look at its importance and the steps involved.  

What is the Hotel Night Audit Process?

A hotel night audit is an accounting process. It involves reviewing the guest account transactions recorded at the front desk against revenue transactions, daily.  

This practice is undertaken to double-check and ensure the accuracy of the financial activities that have been recorded at the hotel property on a particular day. It further ensures transparency in financial operations and that the multiple departments are working in sync.  

Night auditing primarily is done to arrive at the Net Outstanding Balance (NOB). This balance equates to: 

NOB = Previous Balance (PR) + Debits (Dr) – Credits (Cr) 

While large hotels generally have full-time night auditors along with other front office staff, small hotels might not have this specific profile and the hotel managers or front desk staff might be doing it due to limited resources.  

Now that we have understood the basic concept, let’s learn more about night auditors and what is done by him/her during this process.  

Who is the Night Auditor? 

The process of night auditing isn’t something that can be done casually. It requires an experienced hospitality professional who also has some knowledge about the nature of cash transactions with direct influence on the front office accounting affairs.  

Thus, night auditors are multi-taskers. Along with having aptitude and skills for finance, they also have an understanding of hospitality operations or functions. Night auditors are usually senior front desk employees such as managers and are accountable for any discrepancies or irregularities that may arise during the audit.  

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What does a night auditor do?  

Hotels generally have a concept of ‘accounting day or hotel day’, which means the daily charging period of a hotel. So, the night audit closes the books on one hotel day and opens the books on another, that is the next day. 

Along with checking the accuracy and reliability of the guest and non-guest records on a particular day, a night auditor also checks for the following:  

• Closing the balance sheet for all front office accounts 
• Settling room status discrepancies, if any 
• Look after guest credit limitations 
• Generating or producing operational and managerial reports for the hotel 

Usually, a hotel starts with its night audit after the guest check-in window gets closed for the day. This window is generally between 2-6 pm for most hotels. So, the process starts after 6 pm. The process can also be carried out early in the morning, before the beginning of a new business day. 

Importance of Hotel Night Auditing

To prepare for the financial events and operations of the succeeding day, such as check-ins, and check-outs, as well as any payment collections or outstanding balances, auditing at night becomes important. 

Let's look at some other benefits of hotel night audit: 

• Maintenance of hotel’s financial health; alignment between revenue, transaction and payments, reservations and invoices. 
• Strengthening of revenue and price strategy through reports that highlight daily occupancy and guest spending. 
• Enhanced financial supervision 
• A good and sorted start to the succeeding business day 

Night audit is a process that is somewhat similar to the Indian household financial habits; we balance the cash in hand at the end of every day with the spending for that particular day. I travel with a small ‘accounts’ dairy every day, which records my day-to-day expenses. 

Is it me or do you practice this too? 

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Steps involved in the hotel night audit process

The night auditing process mainly focuses on two key tasks:  

• look through front office financial records for any errors and, 
• produce accounting and, management reports for better insights 

Through cross-referencing, it is ensured during this process that the front-office accounts are all equated to the back-office numbers or data. Discrepancies, if found, need to be corrected right away to rebalance the data of the above-mentioned departments.  

These are some standard steps that are followed during a night audit process:  

1. All outstanding postings are completed 
2. Room status discrepancies get reconciled 
3. All departmental accounts are balanced 
4. Room rates are verified 
5. Verification of no-show reservations 
6. Post-room rates and taxes are checked 
7. Required reports are produced such as reservation reports, credit reports, late charge report, etc. 
8. Cash receipts for deposit are prepared 
9. The system is either cleared or backed up 
10. Reports are shared with the concerned departments  

The process of night auditing can be done manually or through automation. The steps in the case of the latter might be less and combined.  

Conclusion

Night audit in the hotel front office is a crucial everyday process that ensures the health of the hotel’s financial system and streamlines business day operations. It brings in a lot of guest account clarity and eliminates the room for errors and ambiguity.  

Night audit helps a hotel practice financial discipline. It proves the legitimacy of the day-to-day guest activities and helps a hotel to rollover better into the next business day, whilst keeping a clean balance sheet.  

It’s a must for every hotel and should be carried out meticulously.