What is the Difference Between Folio and Invoice in Hotel Management?

What is the Difference Between Folio and Invoice in Hotel Management?

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Staying in and Checking out of a Hotel seems like an effortless procedure for most of us but, when it comes to the Hotel Management terminology, even the most experienced of us travelers find ourselves befuddled. The confusion grows, especially when it comes to the difference between Folio and Invoice. It is natural because these terms are related to the accounting procedures of a Hotel. 

Many times, terms like Folio and Invoice are used analogously, if not interchangeably. Both the documents contain details of your expenses in the hotel, but they are not entirely alike. They are two separate documents used for different purposes. 

While a Folio is a record maintained by the hotel to document the finances of your stay, an invoice is your bill for that stay. You might still not be very sure about the difference but put your mind at ease as this article covers both these terms in detail.

Folio vs Invoice In Hotel Management

Folio is an accounting record of all the in-house charges made by the guest since arrival in the hotel. It is a statement of all transactions that have taken place in a guest’s account.

As soon as you check into a hotel, a ledger is opened (manually or electronically) for your room. All the transactions accrued to you while staying in the room, like consumption of food and beverages or the use of any facility or service like spa, dry cleaning, valet, etc. This ledger is known as Folio or Guest Folio. 

The front office staff records all the transactions between the hotel and the guest on the Folio. It is opened with zero initial balance, which then increases or decreases depending on the transactions. At check-out, the Folio balance must return to zero when the guest settles payment.

Apart from Guest Folios (the main focus of this article), hotels maintain other folios like Staff Folio, Master Folio, Non-Guest Folio, and Incidentals Folio.

A hotel Invoice is a receipt that provides a guest with a statement of charges incurred for room rental and other services availed. It is simply proof of the amount paid by the guest. An Invoice includes the room rental and the services rendered by the hotel, which are billable to you. It is generated based on each Folio and specifies the amount you end up paying to the hotel.

Both Folio and Invoice may be in a paper form, electronic form, or both.

What are Billable and Non-Billable Services in a Hotel?

Let’s say you booked a Premium category room in a hotel via a Travel Agency Website. This Premium room includes a range of services like complimentary breakfast, in-room wi-fi, and a free airport shuttle. During your stay at the hotel, if you avail of any of these services, of course, you wouldn’t be charged extra because these are non-billable services for your room type. 

However, the hotel will charge you for availing of the services which are not enlisted in your Premium package, like the spa and dry cleaning service, among others. Hence, these services are billable to you. 

A record of all services rendered to you is kept in the Folio, whether they are a part of your room package or not. But when you check out, only the billable services are enlisted in your Invoice.

Purpose for Maintaining Folio and Issuing Invoice

Going by their names, Folio and Invoice may seem like just other ordinary documents but they have a special significance in the Hospitality Industry. This section of the article seeks to demystify the same.

Why is it Important to Have a Guest Folio in Hotel Management?

Folio in Hotel Management is a significant statement for several reasons. A folio system helps manage the additional sales made to the guests and ensures proper invoicing at check-out. But most importantly, it feeds into the hotel accounting system and helps track revenue according to the category and separate charges to determine tax obligations and the like. 

Modern hotels have several points of sale like a cafeteria, multi-cuisine restaurants, and recreation centers, etc. Nowadays, most hotels offer an in-house line of credit facility for such services, i.e., the guests are not required to settle bills for such services at the points of sale and can make charge purchases. These are posted to their folios and are settled during check-out. It is the reason why the hotel audits a Folio at the end of the day. If a Folio shows higher than expected expenditure, the hotel might ask the guest to provide a credit authorization. They do it to cushion themselves against the possible inability of the guest to settle such expenses at check out.

What is the Purpose of an Invoice in Hotel Management?

Hotels create invoices to request payments from their guests. They also help hotels keep a record of their finances. But an Invoice holds far more value to you (the guest) as it includes the details of the payment and serves as a record of your stay, especially in the case of a business or an official trip-

  • If you need to file for reimbursement.
  • For Tax Purposes.

 

How To Request The Hotel For Folio Or Invoice?

A hotel provides an Invoice to the guest at check-out (and also sends it via mail), and, usually, there is no need for placing a request. If it is not automatically issued to you, you can request it at check-out at the hotel reception. At a later date, you may request access to your Invoice via email. 

A Folio is usually not shared with the guests as it is meant for easing the hotel’s tax processes. But if you still wish to obtain the guest folio for your stay, you can do so by-:

  • During Check-Out: Requesting the hotel’s front-desk executive.
  • At a Later Date: By filling a Folio Request form on the hotel’s website, after which your Folio is shared with you via mail.

If the hotel does not have a website, you always have the option of  requesting your guest folio via mailing or calling them up.

 

Frequently Asked Questions

In this section, I have tried to answer the questions you might have related to Folio, Invoice, and Hotel Management in general.

Q1. What are the elements of a Hotel Invoice?

Ans. Elements for an effective Hotel Invoice are-:

  • Name, address, and contact details of the hotel.
  • Details of the guest(s).
  • Dates of the stay.
  • A list of billable charges incurred during the stay.
  • The Total Amount and the method of payment. 
  • Hotel Invoice Identifier.

Q2. My Folio shows a negative balance. What does it mean?

Ans. The negative balance on your Folio indicates a credit, i.e., the amount you already paid. The positive balance reflects the services you availed of in the hotel. 

Q3. Why are different types of Folios maintained?

Ans. Apart from guest folios, hotels maintain-:

  1. Non-Guest Folios: for records of walk-in or non-registered guests.
  2. Master Folios: assigned to multiple guests or a tour group.
  3. Employee Folios: all transactions between the hotel and its employees are recorded here.

Q3. What is meant by Charged Privileges?

Ans. Charge privileges relate to the in-house credit facility provided by the hotel to the guests, i.e., they don’t pay at different points of sale in the hotel but settle such payments at check-out. Before extending such a facility, a guest may be required to present a valid credit card at check-in.

 

Read More

  1. How Late Can You Check Into a Hotel?
  2. What Is a Bed Runner? Why Do Hotels Use It?
  3. Can You Have Visitors in Hotels?
  4. Do You Have to Check Out of a Hotel?

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