Importance of Financial Management in Hospitality Business

This assignment discusses the importance of financial management in the hospitality industry. It covers topics such as financial transactions, managing and monitoring financial performance, double entry bookkeeping system, cost management, and accurate recording of transactions. The assignment also explores the stages of the HR life cycle and their significance in talent acquisition and retention in the food sector. It provides insights into the role of HR in supporting, growing, and retaining talent in specific job roles. Overall, the assignment highlights the crucial role of financial management and HR in the success of hospitality businesses.

Hospitality
Business Toolkit

INTRODUCTION...........................................................................................................................1
ACTIVITY 1....................................................................................................................................1
1. Introduction of financial transactions.................................................................................1
2. Principles of managing and monitoring financial performance of business......................2
3. Principles of double entry bookkeeping system.................................................................3
4. Sample of trial balance stating steps used and purpose......................................................3
5. Types of cost and their management for influencing financial performance of business. .4
6. Importance of accurate recording of transaction................................................................5
7. Conclusion for evaluating role of financial management including recommendation.......5
ACTIVITY 2....................................................................................................................................5
1. Stages of HR life cycle applied to issues in talent acquisition and retention with food sector
................................................................................................................................................5
2. Evaluation of HR life cycle stage and significance of HR plays in supporting, growing and
retaining talent applied to specific job role............................................................................6
3. Develop a performance management plan for supporting particular job role....................7
4. Valid judgments and recommendations on processes and documents at HR life cycle stage
for improvement with examples.............................................................................................8
ACTIVITY 3....................................................................................................................................8
1. Identification of specific legislation which are comply by hospitality organizations in daily
transaction of business............................................................................................................8
2. Impact of company’s employment and contract law on business decision making...........8
3. Potential implications of any two regulations on standards with the use of examples......9
4. Critical reflection on how legislations improved the company employment contract.......9
ACTIVITY 4....................................................................................................................................9
Covered in PPT.......................................................................................................................9
CONCLUSION..............................................................................................................................10

REFERENCES..............................................................................................................................11

INTRODUCTION
Hospitality is all about welcoming individual by an individual into houses or any other
place wherever he/she work or spend time. However, hospitality is a term which originated from
Latin word “Hospes” and it means “to have power”. Simply, it’s an art of an individual,
corporate firm or an enterprise to entertain others in a guest form (Jayawardena and et. Al.,
2013). Therefore, this assignment is going to cover indispensable toolkits of hospitality business
for understanding the things which are considered by a service firms while performing their
business. Initially, most significant element will outline in the report that is financial department
because capital is a backbone for every business whether it is small, medium or large.
Furthermore, factors of human resources and legal norms will also have discussed in this
assignment for analysing their roles in business operation. Lastly, report will throw some lights
on effective communications and its significance in hospitality industry by showing suitable
situations or examples for better understanding.
ACTIVITY 1
1. Introduction of financial transactions
According to the given case study, existing business is specialised in making healthy
salads and offer delicious juices with smoothies by considering health of customers. Moreover,
opening of gymnasium next to the company is one of the major advantage for their growth as
sales of juices has increased through gym customers because it’s very healthy product. As a
result, idea of bringing alcoholic spirits into juices and smoothies is a best option nearby wine
bar but it is essential to consider financial aspects before opening it so that things can initially
forecasted. However, capital act as a backbone for business growth due to which thriving
enterprise need to get aware about various financial transactions for performing activities in
better way (Kysilka and Csaba, 2013). Basically, there are numerous kinds of transactions related
with finance are present which are discussed as follows-
 Sales- This function covers all the elements related with sales such as; selling of healthy
juices to end user and services offered to customers. Simply, it records the amount of
sales which is done by firm either in cash form and credit as a source of sale receipts.
 Purchase- Products which are purchase by company such as; raw materials for creating
finished goods like; use of milk for making juice in which milk is a raw material and
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juice is a final item. Therefore, this transaction records the product or material which is
purchase by company for their use.
 Receipts and payment- This business transaction is relying on summary of real cash
receipts and payment which are removed from cash book over a particular duration.
According to regulations, financial statements needs to conform by accounting standards and
legitimate requirements. Moreover, it is essential for UK firms to must design their domestic as
well as public financial statements under IFRS standards. There are mainly five probable
reporting approaches are present for SMEs in which FRS 102 is a most common one which is
applicable under financial reporting standard in UK. Some of the major regulations related with
financial statements are-
 It is essential to prepare annually.
 Small firms whose annual turnover is not exceeding GBP 10.1 million requisite to deposit
summarised balance sheet and notes as well as special report of auditors.
 Medium size firm need to deposit P&L account, statement of added widespread income,
balance sheet and statement associated with alteration in equity, report of director,
strategic, auditors and notes of accounts (Nelson, 2018).
2. Principles of managing and monitoring financial performance of business
Financial performance is a most significant aspect for small, medium and large
organizations because as per given case scenario, profit is earned by thriving enterprise by
investing some amount in new project only. Therefore, it is indispensable to come to know about
various useful principles of managing and monitoring financial performance of an enterprise.
Hence, there are some methods which are used by financial department for assessing
performance through management and monitoring is discussed as follows-
 KPI- According to this method, an organization come to know about the measurable
value from which it has been understood that how appropriately an enterprise is attaining
key targets. High level of KPIs always concentrate on entire performance of entity
whereas low level focussed on procedure used in several business departments like; sales,
promotional, HR and others. As per the given case study, firm can calculate, evaluate and
opt opportunities in their operations for gaining development (Bowie and et. Al., 2016).
 Cost-to-profit ratios- This element has been measured via selling cost which is charged
as based time 100. Simply, percentage of overall selling expense which are converted
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into profit is known as firm target. As a result, this element guide thriving firm to
generate maximum amount of benefit by trading healthy drinks to the end-users.
 ROI (Return on investment)- By this factor, an organization can easily measure the
performance of business because this thing can show the return of business on their initial
investments. It means that, this will calculate the amount of profit by comparing initial
spending and earned returns (Jarratt and et. Al., 2019).
3. Principles of double entry bookkeeping system
Double entry book-keeping is one of the most appropriate system which is used by accounting
department for recording financial transaction which requisite a corresponding entry to various
accounts. However, this system is having two equal sides named as; debit and credit. Mainly,
major concept of double-entry system is relying on key principle i.e. every debited amount is
having an opposite credit for maintaining an equality in amount of money or vice-versa.
Therefore, in a given case study, it is essential for management team to record transactions on
daily basis with the use of double-entry booking system (Benckendorff and et. Al., 2015). One of
the most important principle is
 Assets = Liabilities + Equity.
Some of the examples related with double entry system are-
Sale- It has been analysed that each transaction is having an equal and opposite impact in at least
two different accounts. Therefore, sales via credit is going to reported in two accounts one is
income statement and other is balance sheet.
Debtor A/c……. Dr
Receivable A/c……. Dr
To sales A/c…. Cr
4. Sample of trial balance stating steps used and purpose
Trail balance
Particular Debt Credit
Cash 22500
Inventory 25000
Rent 1500
Wage expense 750
supplier expense 500
Long term liabilities 20000
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Account payable 14500
Common stock 10000
Revenue 5750
50250 50250
Some of the essential steps that needs to follow in trial balance is discussed below-
 Need to design a workbook with at least three columns
 Requisite to put every account titles and record the balance in reliable debit and credit
side.
 Significant to add debited and credited amount.
 At the end, need to compare the both column for analysing the total amount.
One of the foremost purpose for creating trial balance is to ensure that every accounting entry
must recorded in general ledger in an accurate balanced way. This can help a business in
correcting the entries by passing a new journal entry and provide precise debit and credit to real
accounts (Wushe, Shenje and Ndlovu, 2014).
5. Types of cost and their management for influencing financial performance of business
Cost is considered as most indispensable element for every business because it’s a key
element for designing any project and support an association to produce large number of
products for meeting the needs of desired customers. Therefore, selected firm needs to consider
some essential cost before making a plan are-
 Income stream- It’s an easiest mode for achieving a constant income like; salary.
 Fixed cost- These expenses are fixed in every phase of an organization and doesn’t get
influenced by change in any factor. For example; utility bills, rent, insurance premium
and so on.
 Variable cost- These cost get fluctuated according to change in other factor like; cost per
unit production such as; amount of raw materials, packaging expense henceforth (Mariani
and et. Al., 2018).
 Calculation of Profit
margin
Particular Amount
Revenue 50000
Cost of goods sold 29000
Gross profit 21000
Gross profit margin
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21000/50000 0.42
Profit margin
0.42*100 42
6. Importance of accurate recording of transaction
It’s really important for entrepreneurs of an organization to make a practise of recording various
regular transactions because this can support overall firm in making effective decisions by
considering necessary elements. However, business owners can also use records as a reminder of
an individuals or employee’s deductible credits and expenses. According to GAAP, an
organization needs to follow uniform set of standards for maintaining financial reports for
making reliable judgments like; where there is need to invest business capital. Along with this,
also gives an appropriate consistency while recording accounting transactions which can guide
an organization in evaluating financial statements (Anderson and et. Al., 2017).
7. Conclusion for evaluating role of financial management including recommendation
Throughout the scenario, it has been understood that financial management really played
significant role in enhancing business position because it aids thriving enterprise in various
circumstances. For example; financial statements give an overview of incurred transactions
which helps enterprise in making decision regarding investments. Therefore, firm needs to
monitor things by using various performance assessment tools such as; KPI, Cost benefit and so
on for identifying the exact element of business growth and take measures accordingly.
Additionally, stocktaking is a most appropriate method that might use by an organization for
physical verification of product quantities which stored in inventory (Cawsey, Deszca and
Ingols, 2015).
ACTIVITY 2
1. Stages of HR life cycle applied to issues in talent acquisition and retention with food sector
HR life cycle is a most indispensable subject in HR department because it aids an
association in understanding various phases of employees from which they are gone through till
starting to end. However, every stage is having their own limitations, opportunities and
experiments for Marriott international. Some of the essential stages of HR life cycle is described
below-
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 Recruitment- It’s a first stage where an organization is searching for potential employee
which further place at specific position at workplace.
 Selection – Secondly, it’s time for choosing right candidate or member at right place
from the larger pool. It means that, it’s a scrutiny phase where selection is accomplished
on the basis of their skills and knowledge (Ervin, 2016).
 Orientation- Now it’s time for employees to get mingle with the culture of Marriott for
understanding the environment in better manner.
 Retention – One of the most eminent phase in employee’s lifecycle because in this stage
organization needs to come up with new plan for encouraging member towards long term
connectivity with company. For example; by increasing salary, involved in friendly
communication with employees and so on.
 Exist- At the end of the stage, now employees are leaving the organization on basis of
any reason such as; personal, retirement, offered by highest salary to other organization
and so on (Kennedy-Glans and Schulz, 2010).
2. Evaluation of HR life cycle stage and significance of HR plays in supporting, growing and
retaining talent applied to specific job role
HR life cycle is a term in personnel management which covers various phases of
employee’s period in a selected organization as well as describe roles of employees at workplace
in several stages. Simply, it’s really important for business to consider every stage of life cycle
for understanding the aspects of staff members in better manner and it also aids in maintaining
positive relations with employees by understanding them correctly. However, every phase is
having its own importance and requirement at workplace.
Initially, recruitment is a first step in which employer needs to hire right candidate for
right position by considering relevant factors such as; education, qualifications, experience, skills
and talent. This helps Marriott in filling the vacant position of firm which aids in maximizing the
productivity of firm. Secondly, selection take place by scrutinizing method for controlling the
probabilities of mistake while placing candidate at position. Thirdly, orientation phase is also
useful because in this stage newly hired employees get to know about the business culture and
try to adjust accordingly which automatically reduce the probabilities of future conflicts. After
that retention is also suitable stage where change is required for employee in a motivational form
otherwise he/she get bored and sometime feel demotivated too. Lastly, an employee exits the
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firm for distinct reason such as; sometime young employee wants to learn more by getting hired
in multinational firms, sometime age become a reason for retirement and so on. Hence, it has
been understood that every phases are essential and important for HR management team because
it reduce the possibilities of minutes’ errors (Silverstein, Samuel and DeCarlo, 2013).
Consequently, performance of staff members is measured by supervisor at every stage for
giving feedback on it for directing them towards corrective path.
Talent management- It’s a most indispensable element for selected members because it
makes them realise about their involvement and encourage towards right direction.
Performance management- According to this element, productivity is a factor through which
performance can measured and employees can act accordingly to enhance the performance more
or more.
Succession planning- Need to make plan for encouraging managers to make customise
products in order to fulfil the need of Marriott final users.
3. Develop a performance management plan for supporting particular job role
Table of clarity
Results in
percentage
Job satisfaction (Role clarity, conflict and
content)
Role clarity 70.00
Conflict 62.00
Content 60.00
Performance feedback
Complexity 42.00
reversibility 10.00
Time of
communication 66.00
Employee perception on the basis of their
performance
Role play 30.00
Animation 10.00
Throughout the assessment, it is analysed that annual review of employee performance is
beneficial in enhancing capabilities. It guides in enhancing interaction between members via
continuous check-ins from supervisors for sharing target freely (Ali, Ryu and Hussain, 2016)
(Brotherton, 2015).
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4. Valid judgments and recommendations on processes and documents at HR life cycle stage for
improvement with examples
It’s really significant for corporate firms to must have legitimate aspects which guide the
departments for resolving employee’s problems such as;
 Grievance issue- In Marriott hotel, staff members have to deal with numerous of
legitimate rights for maximizing grievances.
 Fair labour standard act 1938- This legal right prevent staff members from various
types of work associated problems like; minimum salary and security.
Throughout the information, it has been understood that appropriate policy need to adopt
by Marriott for preventing staff members from unethical issues.
ACTIVITY 3
1. Identification of specific legislation which are comply by hospitality organizations in daily
transaction of business
Legal bodies have enacted numerous of laws, norms and provisions related with
hospitality industry associated with hygiene, storing, consumer and so on. It helps association in
protecting firm from fraudulent activities and unusual fine. Some of the basic legislation related
to regular transaction are-
 Maintaining a cash book and financial accounting program that includes cash receipts or
payments.
 Maintain deposit books, cheque books and statements.
 Recording employee’s information such as; working hours, remuneration, leave,
termination of employment and so on.
 Records of sales like; invoice books, cash register, credit card henceforth.
 Evidences of purchase such as cheque butts, petty cash book.
 Health and safety records as per WHS standards.
2. Impact of company’s employment and contract law on business decision making
In hospitality sector, legal provision influences the connectivity of employees and employers as
well as shape the relationship too. In fact, staff members need to follow regulations of governing
bodies for reducing the chances of law exploitation (Fettermann and et. Al., 2017). There are
numerous of employment and contract laws which influencing business decisional process such
as-
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 Data protection Act 2018- As per this legislation, management team of an organization is
responsible to protect confidential information of employees from getting misused from
fraudulent activities. This law enforces higher authority to take privacy measures such as;
implement biometric technology at workplace for safeguarding the data of employees
from other employee.
 Equal opportunity Act 1972- As per this provision, an organization need to provide equal
success opportunity to every employee whether he/ she is potential or not. Therefore, this
Act shape the decision of managerial team and enforce them to make judgments as per
laws norms.
3. Potential implications of any two regulations on standards with the use of examples
IT protection provision enforce an association to make sure that broker of information
can maintain accuracy and protect staff members from probable harm. In hospitality industry,
high range of work is related to online network such as; ordering of food with the use of digital
platform (Fettermann and et. Al., 2017).
Cybersecurity provisions- As per IT Act 2000, data security need to offered by firm to
employees whose are accomplishing payment via credit cards or any other internet sources.
4. Critical reflection on how legislations improved the company employment contract
Business ethics is a kind of principles, norms and policies which is followed by an
enterprise as well as implemented at workplace such as; reaching office at a 9:00 clock in
morning, using cell phones is not allowed in office premises and so on. However, in hospitality
sector, there are plenty of problems has incurred such as; crime, fraud, misused are most
common one and these things needs to be managed by manager with the implications of ethical
norms. Additionally, political, security and shortage of skilled employees are three major ethical
issue which are identified at hospitality sector and these are the key to success of business. Thus,
it is essential for enterprises to provide best security measures for employees so that they can
work with a firm without any fear.
ACTIVITY 4
Covered in PPT
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CONCLUSION
From the above report, it has been understood that hospitality industry need to consider every
aspects of business for smooth functioning such as; financial, human resource, legal bodies,
communication and others too. This help an entity to reduce the chances of minute errors by
performing every activity in a corrective way. Therefore, this project has shown significance of
each and every factor with the help of suitable examples.
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REFERENCES
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 Silverstein, D., Samuel, P. and DeCarlo, N., 2013. The innovator's toolkit: 50+
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