Accounts Receivable Best Practices in Hotel Management

Why Accounts Receivable Outsourcing is Important for a Growing Firm?

Client Background

Hotel X, a prominent player in the hospitality sector, encountered typical accounts receivable hurdles. Dealing with late payments, billing errors, paperwork inefficiencies, and seasonal cash flow variations, they sought solutions to streamline operations and boost financial stability.

Client Challenges

  • Late Payments: Guests and companies take a long time to pay their bills, causing cash flow problems for Hotel X.
  • Billing Mistakes: With so many services offered, like rooms, meals, and events, it’s easy to make mistakes on bills, leading to arguments and delayed payments.
  • Paperwork Problems: Keeping track of who owes what can be a headache, especially with manual systems prone to errors and delays.
  • Seasonal Shifts: Changes in the number of guests throughout the year make it hard to predict how much money will be coming in, affecting planning and budgeting.

Our Solutions

  1. Steadier Cash Flow: Our team focused on clearer rules and better systems, Hotel X saw a big improvement in getting paid on time, making their finances more predictable.
  2. Less Paperwork, More Time: With digital systems in place our team is dedicated to satisfying the clients with increased efficiency.
  3. Happier Guests, Better Relationships: Clearer rules and faster responses to payment questions led to happier customers and stronger bonds with corporate clients.
  4. Financial Confidence: By diversifying income and managing receivables better, Hotel X became more resilient to seasonal changes, giving them peace of mind and room to grow.

Our Results

Our client was able to access the following benefits by outsourcing their billing requirements to Outsource AR 

  1. We reduced the average AR days from 34 to 23 within 6 months. 
  2. We increased the collection percentage from 53% to 61% within 6 months. 
  3. By increasing the collection ratio, our client was able to improve their cash flow. 
  4. Since our client now had more time and a clutter-free office, they were able to concentrate more on providing better service. 
  5. From the client’s end, there was a decrease in the reliance on their employees and the client did not have to face problems of employee turnover and backlogged claims. 
  6. There was a sharp reduction in administrative costs and an increase in operating efficiency.
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