Setting up a Finance Department in your hotel resort is a very sensitive issue. The first thing that comes to your mind is the question ‘How can I do without it?’ Many hotel companies, both large and small are now resorting to hiring external consultants who specialise in small and medium scale hospitality management issues. This is one of the ways you can reduce the pressure within your own organization to deal with day-to-day issues of finance and accounting. However, the first step before you go down this path, is to understand your company’s current financial situation and establish an awareness of your hotel’s cash flow and liquidity.
Most of the international hotel and hospitality companies are reporting that they are successfully handling the business and issues related to finance, accounting and financial statements. There are companies that are now reporting record profits from last year’s Dubai summer vacation rentals. While there are challenges everywhere in the world today, most of the companies have been able to overcome the initial difficulties and are now successfully running their businesses as planned. This can be observed in their credit profiles in most of the businesses irrespective of its size.
The main reason why these companies are able to run their businesses as planned despite the current financial crisis is the soundness of their financial reporting and budgeting principles. In order to set up a sound finance department, there are certain things that you need to ensure. Firstly, a good and comprehensive job summary form that includes your hotel’s income statement, balance sheet, cash flow analysis, profit and loss account, and other relevant financial reporting that meet your company’s requirement. You also need to update your corporate credit profile yearly. In addition, ensure that your budgeting and forecasting tool are updated at least once every six months. Something like this OneStream Software could prove to be a useful aid if you want to update your resources to a type of software that has been known to help with efficiency.
The job of your finance manager should focus primarily on three things: budgeting, cash flow, and financial analysis. Your manager should have excellent accounting and finance skills to handle the reports generated by these three disciplines. A good manager should have strong communication skills to coordinate with other team members, analysts, managers, and the general manager. In addition, your manager should have excellent computer skills to efficiently manage the cash flow report, balance sheet, and other financial analysis. Without a doubt, a good finance manager should be an excellent communicator and good at budgeting.
Finance managers are primarily concerned with budgeting. Budgeting is essential for setting up a sound finance department since this will provide direction to the organization. It also provides information regarding the organization’s strengths and weaknesses. The chief objective of budgeting is to provide decision makers with the information they require for making decisions. For example, if the general manager has a plan to make an acquisition, the general manager will focus on the cash flow, short and long term costs of the acquisition, and potential tax implications of the acquisition. Since the general manager has strong financial reporting expertise, he/she will be the best person to provide direction for the cash flow analysis and budget preparation.
Another function of the finance department is to produce the journal and the statement of cash flows. These documents will provide accountability for the organization’s activities. The general manager will develop policies and procedures that will support the management of the accounting and finance department. Finally, your organization will be well positioned to meet its objectives through effective financial management.