As an accounting service provider for the food and beverage industry, and wife of a restaurant owner, I have learned that it is a fast paced, ever-changing business. If you aren’t nimble enough to pivot when necessary, you can quickly find yourself on the losing end of the curve. In this dynamic world, profitability and sustainability hinges not only on delectable cuisine and impeccable service but also on astute financial management. Whether you're a restaurant, a café, or a catering service, implementing sound accounting strategies can significantly impact your bottom line. Here are some ingredients for the perfect recipe!
Ingredient 1: Technology for Streamlined Processes
Modern software solutions have revolutionized the way businesses manage their finances.
The most important systems for a restaurant or bar to streamline is the point-of-sale, bill pay, expense tracking, payroll, and inventory management. Don't implement these systems in a vacuum. Think of your technology as one big tech stack that needs to work in harmony to give you real-time insights, allowing for informed decision-making and timely adjustments. If one system is incompatible you open yourself up to a lot of manual, duplicate work which can lead to error.
Of course, you can’t report what you don’t track. I’ve seen many businesses implement a system and only utilize 10% of it, rendering the solution impotent. Putting in some extra effort up front is key. Even if you don’t utilize every tool at the beginning, having the data in the system when you are ready will make the process so much easier.
Finally, implement a cloud-based accounting system. Here at Serenity CFO Solutions, we are experts in QuickBooks Online and can provide you discounts and bookkeeping services. Send us a message if you are interested in getting set up with an accounting system!
Ingredient 2: Inventory & Cost Management
One of the most important pieces of information necessary for success in the food and beverage business is your inventory cost and turnover. Maintain meticulous records of ingredient costs, portion sizes, and waste. Regularly reconcile inventory to identify discrepancies and prevent theft or spoilage (we suggest at least weekly). Again, this is where technology can help. Implementing a robust inventory management system helps control costs and minimizes waste, contributing directly to increased profitability.
Ingredient 3: Regular Cash Flow Monitoring
Cash flow management is the lifeblood of any business, and it's especially crucial in the food and beverage sector with its fluctuating demands and seasonal trends. Monitor cash flow diligently by creating cash flow forecasts that consider both short-term and long-term financial obligations. I’ve seen many businesses fail because of poor cash flow management, so having a handle on how much you need and when will save you a lot of headaches. Here are 3 easy steps to consider when monitoring cash flow.
Know how much cash is needed on a weekly basis to operate your business.
Determine how often you need to purchase supplies and inventory to keep afloat.
Set aside a portion of your operating expenses to cover maintenance, capital purchases and unforeseen costs. Also, don’t forget about taxes!
We suggest opening at least 3 separate bank accounts for operations, sales and income taxes, and capital maintenance. Doing this will ensure there's enough liquidity to cover operational expenses, purchase inventory, pay your taxes, and manage unforeseen costs.
Ingredient 4: Robust Internal Controls
Internal controls are essential to safeguarding assets and preventing fraud. There is nothing more detrimental than finding out someone has been stealing from you. Here are some accounting procedures you can implement right away.
Establish procedures for handling cash, with clear checks and balances.
Segregate cash handling and reporting responsibilities to different team members to create accountability and minimize the risk of errors or fraudulent activities.
Require all employees to provide support for reimbursed expenses. Any payments made to employees or contractors need proper approval and documentation.
Safeguard all your physical assets and ensure everything is marked, locked down and accounted for.
Ensure your systems are password protected and activate multi-factor authentication where available.
Ingredient 5: Financial Health Monitoring
At minimum, you should review your financial statements like profit and loss, balance sheets, and statement of cash flow at least quarterly to ensure profitability. However, analyzing these statements alone is generally not enough to give you valuable information for decision making. In addition, you should implement key performance indicators (KPIs), like your gross margin, break-even sales, prime cost, and turnover rates to determine your financial health.
Include these items, along with quality benchmarks, in dashboards that allow you to see at a glance the health of your business. I’ll be providing future articles with specifics on these KPIs for food and beverage businesses, so stay tuned!
Ingredient 6: Professional Expertise
While managing accounting internally might seem cost-effective, investing in professional expertise can yield substantial long-term benefits. Hiring an experienced accountant or engaging with a reputable accounting firm specializing in the food and beverage industry can provide valuable insights, optimize financial strategies, and ensure compliance with industry-specific regulations.
If you are looking for an expert, or to learn more about accounting for the food and beverage industry, please reach out to us for a free consultation! We offer an array of service tiers at fractional pricing so that you can have peace of mind without a high cost.
Comentários