Set Yourself Up For Financial Success
As the chaotic year of 2020 comes to a close, this is the perfect time to take a deeper look at the state of your financials. A better understanding of where your books are now will help you set next year’s business goals and set yourself up for financial success in 2021.
We teamed up with our friends at One Point Accounting, an accounting company that exclusively serves restaurant franchises, to share the five cash management and accounting areas that can have a big impact on your profits and as you close out 2020.
1. Inventory Management
Inventory management is an important component of any cash flow strategy. Inventory is cash already spent. Having too little on hand impacts how much you can sell, and having too much on hand impacts what else you can buy. Consistent accounting practices help identify patterns in your business’s cash management and lead to more accurate forecasting.
That being said, restaurant inventory management can be time consuming and challenging to do well. But it’s also critical for both the day-to-day financial health of your business and for informing your long-term business strategy.
The easiest way to keep your inventory accurate and up to date is to make it as easy as possible for yourself and your team. Since inventory can be tedious to do by hand on an inventory sheet, investigate using your POS, reusable templates, or a platform with a mobile app that can streamline weekly inventory management. The most important thing is to create a standard process that is replicable and sustainable whether weekly or monthly. Instilling this discipline and ensuring your staff is well trained and following through will pay dividends in the future. Proper inventory management can have a big impact on the financial bottom line of your business.
2. Cash Over Short
Do you know all the stories your accounting data can tell?
Discrepancies in your cash over short account can help identify training deficiencies, QA issues, vendor errors, or even theft. Noticing and investigating when funds don't add up can help your units save thousands of dollars.
Examining point of sale records and deposit records side by side with the bank statement is the first step in affirming your accounting processes are working as they should. This singular step uncovers over a third of the discrepancies.
3. Staffing
Much like inventory management, staffing is a critical part of optimizing your monthly cash flow. Having the ability to quickly analyze labor costs and identify opportunities to increase or decrease staffing based on peak and non-peak hours is essential. In addition, access to data to benchmark those labor costs in comparison to your peers can be incredibly valuable.
4. Forecasting & Maintaining Current Financials
Maintaining real-time financial reporting lets you make decisions faster, reducing failure rates and improving business operations. Accurate forecasting can help you reduce waste and maximize profits. It's time to look at how appropriately you've been predicting sales and stocking your inventory. Review your accounting data to help you predict trends and plan ahead.
The good news is, making your accounting data actionable isn’t actually that complicated. You already have all the numbers you need and you don’t need data analysts or expensive software to make it actionable. Regularly taking a look at your financial analytics and tracking the same numbers over time will give you historical insight to allow you to set a baseline, identify trends, and give you actionable insight to make better business decisions.
5. Get an Accounting Partner
Bottom line? You are responsible for creating strong financial systems and processes for verifying your deposits, invoices and transactions. And it can be overwhelming to find the time to review all of these important documents and successfully run the other aspects of your business at the same time.
A good accounting partner will be experts in the business and accounting challenges you face and know how critical reliable accounting data is to your business. A good accounting vendor will provide that second set of eyes on your data to help you avoid costly errors, identify cash management opportunities, and give you more comprehensive insight into your business’s performance.
If you’re a franchisee or franchisor in need of an accounting solution, contact OnePoint for a free consultation.
