Running a full-service restaurant business is a demanding task, to say the least. Fast-paced, full of endless tasks, planning, and tracking. And no aspect is easy nor stand-alone. Consider, both the location and the menu need to be appealing in order to strike the right chord with the target audience. That means having the right balance between standard and new or featured fare, often changing with the seasons and latest gastronomic trends. Then there is always the question of employees, with staff for both the front and back of the house in need of constant training. Don't forget that reliable suppliers are also needed to keep the storeroom stocked and the kitchen going.
The list can go on and on but one thing is for sure: with all of the factors constantly in motion, completing some vital tasks like accounting can rapidly become quite challenging. This is where accounting and technology come together, with restaurant invoice management accounting software that addresses industry-specific needs and help ensure nothing is falling through the cracks.
Why Use Accounting Software?
The overall financial picture for restaurants isn’t pretty, even before the pandemic hit. Estimates of failure rates vary wildly, ranging from an often repeated but unsubstantiated claim of 90% of establishments going out of business within the first year to just a quarter not making it. H.G. Parsa, formerly associate professor of hospitality management at Ohio State University, pegged failure rates at roughly 60% within the first three years, regardless whether it’s a stand-alone restaurant or a franchise.
Making money from selling food and beverages, whether it’s take-out, casual or more formal dining, also isn’t a guarantee a restaurant will make it, as costs for major inputs such as ingredients and wages keep rising. No wonder, then, that industry experts put the margins for running a full-service restaurant at somewhere between 3% and 6%.
With this overall financial picture for restaurants being somewhat ugly, management needs to excel at keeping tabs on revenues and expenses or the usually thin margins will erode and eventually lead to failure. An accounting software system can play a large part and even make the difference between success and failure. The right software handles everything from bookkeeping, ordering food supplies, and staff scheduling to integrating with point-of-service payment systems to help managed the high volume of daily cash and credit payments. It can make the difference between dying, just surviving, or thriving.
Keeping Track of the Details
When it comes to running a food business, it's certainly true that you can only manage what you can measure. The more fine-grained the data around inputs and outputs - and the more frequent these key metrics can be gathered - the greater the chances that revenues aren't consumed by expenses. Some of the specific areas where a good restaurant accounting software system makes a difference includes:
- Improved data accuracy
Accounting, and the accounts payable workflow for restaurants in particular, leaves little time to maintain books and less room for error. However, entering financial data in a timely and organized fashion is much harder than one might think when it comes to a hectic environment. Tracking invoices, checking amounts, ensuring the correct information, and just entering the data manually are all areas ripe for error especially when needed on a daily basis. The best accounting software for restaurants takes this into account, especially when automated.
An automated accounting software system eliminates the possibility of missing or redundant data, able to quickly ensure that the data entered is correct and accurate. It then stores all the information in a single database. No more depending on either an accountant to prepare (sometimes costly) financial reports or relying on an accounting department to determine how the business is doing. Instead, you can quickly access and analyze the information at any time. In addition, the automated system creates a digital trail that, if necessary, can be used for either audit and tax purposes or even just finding hiccups in the operating process.
Knowing that the information is up-to-date and accurate in turn gives you more confidence in the data and a greater ability to accurately make strategic business decisions.
- Simplified reporting
Having real-time information readily available in a single online location allows for on-demand reporting for everything from daily planning and decisions to auditing and tax reporting. With just a few clicks you can rapidly compare inventory, pricing, and payroll. You can track expenses and cost of goods sold - important in a volatile economic environment - and use it to negotiate better inventory rates or help set pricing. These are just a few of the key insights that can the difference between just scraping by or turning a profit.
Some of the insights that single platform or a well-integrated group of software can provide include:
- An up-to-date overview of business expenses through an accounts payable dashboard which can quickly be sorted by vendor, service, due date, and other criteria,
- An equally current view of sales and revenues,
- Cash flow projections that help to plan and conserve funds to pay staff and vendors on time,
- Customer data that can be queried to identify problems with food quality or service, and
- A master list of vendors that can be used to solve short-term supply problems and negotiate more favorable conditions.
- Greater efficiency
An accounting software system helps to streamline daily activity, saving on administrative time and effort. An automated accounting system eliminates the need for manual data entry and cross-checking as well as important daily factors such as inventory tracking, automatic POS integration, and invoice management. Reporting capability is enhanced, whether it be from rapid real-time creation to customizing reports for different areas and vendors.
Software also reduces the amount of paper, both on the front and back-end. Less to purchase, less to track, less to store, and definitely less to literally lose between the cracks.
- Improved communication
One often overlooked benefit to having the best accounting software for restaurants is improved communication in all areas. Having real-time information on hand in a single, centralized location plus being able to access it from a mobile app or device means being able to answer questions quickly. Not only does this improve staff relations but can play a large role in supplier relationship management.
Cutting Through Barriers: Additional Benefits of Restaurant Accounting Software
Besides providing real-time analytics and planning support, state-of-the-art accounting software for restaurants has other important benefits. Significantly cutting cycle times and processing costs for invoices means an end to missed or late payments, more options to lock in early-pay discounts, and as mentioned above no longer having to deal with time-consuming supplier inquiries. A vendor who knows that the restaurant will pay their bills on time, every time is more likely to bump them to the front of the line when there’s a delivery crunch.
Plus, always having financial insights at their fingertips enables owners and chefs to automate certain parts of their routine operations, such as quickly reordering and paying for regularly occurring orders electronically, without ever writing a check.
Questions to Ask Before Choosing Accounting Software for Your Restaurant
Knowing that you should have it and having it are two different things. When choosing the best accounting software for restaurants for your business, it’s important to ask a few key questions:
- Does the accounting system live in the cloud to allow secure capture and storage of all important documents?
- How long does it take to implement the software system? Can it be up and running in a matter of hours?
- Can the system accommodate the team’s usual workflow and can it easily be finetuned for a restaurant’s particular requirements?
- Is the system customizable, such as tracking what has been ordered from which vendor?
- Does it have an intuitive interface that the staff can quickly learn how to use, without skipping a beat running the actual restaurant?
- Does the accounting software integrate well with existing financial or scheduling software in the front and in the back of the house?
- How easy is it to automate repetitive steps to enable a more hands-free workflow, from placing orders to setting up payments for trusted suppliers?
Ideally, you will also know approximate numbers per week and month for everything from inventory - food and supplies - to reservations, staff, and even for crucial areas such as maintenance, repairs, and utilities. This information will be invaluable when comparing software capabilities.
Bank on a Recipe for Success
At the end of the day, running a dining establishment, no matter whether it’s a food truck, a small franchise operation with multiple locations or a single fine dining restaurant, should be about unleashing the chef’s creative energy and serving meals that delight customers to come back for more. Shuffling purchase orders, invoices and other paperwork shouldn’t take center stage and become a distraction from the actual core business. Instead management should be able to quickly and easily close the books each night after the last dish has been plated and the stoves scrubbed.
The best accounting software for restaurants is the one that lets the business operate smoothly, with accurate data and real-time reporting. It is one that saves both time and money, helping to tilt the scales firmly in favor of making memorable food and creating customer loyalty. Digital tools exist, and they are affordable, even for a small business.
It’s time to finally stir the pot and let innovative accounting technology be the ultimate kitchen aid.