Efficiency and profitability are key indicators for the success of a company in today’s competitive hospitality industry. Hotel owners are looking to integrate financial systems to boost productivity, make better decisions, and improve guest experience which leads to improved sales and building a strong corporate reputation.
We will understate the importance and benefits of financial system integration while highlighting the role of technology in streamlining their financial management operatives.
Understanding Financial System Management
Before we get to the nitty-gritty of the topic, let’s start by discussing the financial management system. It refers to the back-office solution processes used to manage the financial aspects of a hotel. Apart from dealing with financial operations, it also maximizes profits and ensures long-term business which helps to manage administration and operations related to back-of-the-house departments,
What are the benefits of efficient system integration in the hotel finance and accounting department?
The integration of efficient system integration in the hotel finance and accounting department comes with numerous advantages.
Automating Routine Tasks
First and foremost, a state-of-the-art financial management system is highly effective in streamlining tasks. Currently, tech companies are working on AI-powered software with automation features. This cutting-edge technology automates repetitive tasks that would require human interaction in the past, such as invoicing, payroll, and financial reporting. This emerging trend has improved performance, enhanced productivity, and reduced the risk of error.
Its integration into online hotel management software has also eliminated redundant processes and optimized resource allocation with integrated systems assisting hotels to reduce administrative costs and enhance overall profitability.
Data Accuracy and Consistency
Modern-day financial systems provide reliable and accurate quantifiable metrics that give up-to-date financial data that help hotel management make informed decisions to improve their financial positions quickly.
Effective financial management systems have proven to be effective in improving accuracy and compliance with the guidelines set by the authorities. This ensures that consistent and accurate data is disseminated to the departments. An integrated back office will allow the hotel to track its finances, expenses, and revenues daily. It is imperative to have a BO solution as without that a hotelier cannot get a picture of the hotel’s operations or financial position.
What factors should be considered to understand the importance of financial system integration?
Financial integration is an important crucial aspect of modern business operations especially in the hospitality industry. It is integrated into various financial systems and functions within an organization to ensure a seamless flow of information and resources.
If we look at it from a different perspective, we can clearly see it as a way to boost operational efficiency, improve decision-making processes, and foster collaboration among different departments.
Invoice Automation
A hotel can improve its operational efficiency by integrating AI-powered tools for business purposes. It paves the way for the consolidation of financial data from different sources, simplifies tedious processes, and eliminates the need for manual data entry such as automating invoice processing, reducing errors, and expediting payment cycles.
Bank Reconciliation
The automation process offers a built-in audit trail, which reduces the risk of fraud. It provides insurance transparency, which can help hotels and resorts protect themselves from large losses caused by fraud. For example, if employees are made to attach scanned receipts to their expenses, then several people would get involved in the process, thus increasing the chances of unethical business practices.
Purchasing and Inventory Control
Purchasing systems are vital in managing a company’s cash outflows because they reflect the purchases made by the hotel at different prices. It uses outputs from the production planning system, which include input amounts needed for production.
The integration of a financial management system with an online hotel management system makes purchasing and inventory management more efficient by helping companies reduce their supply costs. It can reduce their administrative costs, cut the length of the purchase cycle, and reduce human error which leads to minimizing shortages.
It can also simplify order tracking and make the management of purchasing budgets easier by creating expenditure reports.
The integration of a financial system in hotels paves the way for better visibility and transparency. The property management and finance teams have real-time access to key financial metrics and performance indicators. This helps them track revenue streams, expenses, and profitability in real time, which leads to management making faster and more accurate decisions while proactively managing their financial resources.
The software systems serve as a repository for financial data, which facilitates tracking and auditing their activities while complying with regulatory requirements and preparing financial statements. They help in keeping track of hotel receivables from various sources like OTA, companies, agents, etc, get a correct picture of aging and at the same time also know what are the liabilities and to whom payments need to be made based on products purchased to service customers.
These systems are encouraging businesses to operate more efficiently while making more informed decisions, and driving a higher level of business success. Hotels that embrace financial system integration will have a competitive edge in the market.
Why does a single platform offer a comprehensive system that handles everything from bookings to providing costing?
It is advised to use a single platform for hotel operations, from bookings to costing and financial management, as it offers numerous advantages to the hotel owners and customers.
A comprehensive system is effective in operational efficiency by making multiple disparate software solutions non-existent. The centralization of data and workflows helps hotel staff streamline processes, reduce manual errors, and optimize resource allocation. It boosts productivity guest experience by assisting staff to concentrate on delivering results rather than focusing on administrative tasks.
It also provides a real-time overview of hotel operations, which includes reservations, room availability, guest preferences, housekeeping schedules, and financial performance. It helps keep track of various costs associated with servicing customers may those be staying in rooms or visiting other hospitality services like restaurants or banquets.
Moreover, a comprehensive system ensures data consistency and integrity across various departments while providing reliable metrics for forecasting analyzing budgeting, and assessing performance. This is important particularly when organizations have to comply with regulatory requirements and financial reporting guidelines.
It simplifies the hiring and training process thanks to a unified interface and standardized processes. It helps new employees familiarize themselves with the system, enhancing operational readiness and minimizing learning curves.
Understanding the importance of P&L Statement:
An effective financial integration system in a top hotel software also provides a Profit and Loss (P&L) statement, also known as an income statement or a statement of operations. The financial document helps hoteliers track performance over a specific period of time over time. For example, they can determine when they saw an influx of customers or when their catering business was at an all-time high.
Hotel management can identify their spending patterns and the areas in which they need to improve or adjust their spending. Hotels can set budgets and keep track of achieving targets or how each revenue center and cost center is performing and also how is the financial health of the company.
How mycloud PMS is the Right Choice for Luxury Independent Hotels & Mid-size Hotel Chains
mycloud PMS offers a comprehensive cloud-based solution for hotels of all types, from independents to small luxury chains.
It offers features like back office, booking, guest experience, distribution, and various operational tools, and boosts efficiency and guest satisfaction.
Through integration with over 200 interfaces, it simplifies third-party software management on a single platform. Hoteliers can book rooms and offer numerous services (email campaigning, dedicated phone call support, internet service interface, e-invoicing generations, PMS setup, kitchen display system, payment gateway central reservation system, etc) at the lowest prices.
We are proud to mention that mycloud PMS was awarded the Certificate of Excellence award for three consecutive years (2021, 2022, 2023) with 34% of the positive reviews coming from luxury hotels.
Conclusion
Making an advanced financial management system enables hotels to work in a more efficient manner which would enhance profitability, and make the guest experience more memorable. Hotels can use it as a strategic tool to achieve sustainable growth and leadership in the industry.
About The Author
Deepak Chauhan
Deepak Chauhan is responsible for marketing and positioning of “mycloud” platform and is a veteran in the hotel software industry with over 25 years’ experience giving him a strong understanding of the product requirements in the industry. He has very rare mix of working in operations of various hotels and chains for over 10 years and then co-founding a software product and service company, servicing 5 star hotels and chains for 14 years.
Deepak has led the development and marketing of cloud based hospitality systems to meet the specific, business objectives of small and mid-size properties across the globe and has worked closely with a diverse group of hoteliers and hotel technology vendors.
