Making financial management simpler: a guide for small business owners in the hospitality industry
Financial management can seem overwhelming when you run a hospitality business, but it’s important! With a few tools helping you out, including Libeo, the whole affair can be a lot easier.
Financial management: a headache for restaurants and hotels owners
You’re all set. Your business is open, and guests have arrived. Fine food, a relaxed ambience and, because you make sure of it, great service. Sure, there are all sorts of financial considerations, but on the surface they seem secondary to ensuring that visitors enjoy their stay with you.
At Libeo, we love the hospitality business. It is full of creative, hard-working, talented people who dedicate their professional life to giving customers a great time, and who doesn’t love a great time?
But the sad fact is that businesses in the hospitality and catering sector are three times more likely to go under than businesses in other sectors. Taken as a whole, 5.25 per cent of UK businesses fail each year, but in the hospitality sector, it is 15.5 percent.
Because the hospitality sector is so hands-on for entrepreneurs, financial management can fall by the wayside – a massive factor in the number of businesses that fail. Sound financial practices can slip when you’re chasing your tail, getting on top of unexpected problems, calling a wine merchant, and working out a staff rota.
Financial management for hospitality businesses is crucial, but an accounting strategy that allows you time to actually run your business is needed too – after all, your guests aren’t going to create next month’s menu themselves!
Invoice payment management: what every restaurant owner needs to know
What is the role of financial management?
Imagine you were travelling from Lands End to John o’Groats. How would you go about it? Would you jump in your car and start driving without checking you had enough money for fuel or putting directions into your satnav? Would you head to a station or airport without looking at a timetable and then board the first train or plane that happened to depart?
Of course not.
Just as planning a long journey requires you to know your destination, get relevant information and make plans, so does navigating a business to success.
A financial management review is the way you achieve this. It involves strategically planning how your business will spend and make money. Every financial decision should be part of this carefully considered roadmap, from setting budgets to taking out loans.
Whether you run a small family hotel or head up a whole chain of restaurants, you’ll want to keep your team on board with your strategy – they’re the ones who need to implement it. You’ll need to analyse your business’s data, set financial goals, and keep your whole crew on track. What’s more, you need to keep an eye on financial regulations to ensure your business is legally compliant too.
If this sounds overwhelming, relax. We know a secret to make things easy.
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A strategic financial management system – is it all about admin?
The short answer is yes! Every business needs a method to track expenses and income. Without administration, assets get wasted, profitable opportunities are missed, and unnecessary costs are incurred.
The right system will help to keep your business sustainable by improving performance in all aspects of accounting - both financial and management.
Financial accounting focuses on creating financial statements based on past performance. It needs to be exact and must adhere to established protocols. These statements are shared externally – with banks, commercial organisations, creditors, potential investors and other interested parties.
On the other hand, management accounting is for internal use. It is based on current trends rather than past performance and involves estimates rather than exact figures. You can use it to make informed decisions about price-setting and other day-to-day operations.
Overcoming spreadsheet addiction
Financial transaction management can take up seemingly endless hours – many restaurant owners spend ten hours a week on invoicing alone. With an automated system, you can save time, and minimise errors too.
Accidently failing to pay a supplier on time has damaging ramifications for your reputation. Restaurants adopting the farm to table model, for example, have numerous suppliers, and keeping track of payment dates by hand is challenging.
An electronic method helps you track cash flow better too. We can’t overemphasise how important this aspect of financial management is. In fact, we wrote a blog about it.
If your financial management system is made up of paper and spreadsheet cells, it is time to look at what the tech world has to offer.
Financial management software for small businesses
Larger companies routinely use financial management ERP software (Enterprise Resource Planning) to streamline their finances, but many small and medium-sized businesses have yet to recognise the remarkable benefits of it.
EPOS (electronic point of sale) systems are so widespread that many consumers no longer carry cash. But in addition to making every sale digital, EPOS systems cut down on human error and so can make bookkeeping easy.
But there is so much more available. Here’s a hot list of our favourite financial management software.
Capucine Frerejean, Co-founder of Cali Sisters Restaurants, about libeo:
"Compared to before Libeo, we have divided by 3 the time spent on supplier invoices for collection, payment and analysis. It allows me to focus on the business - future implementations, team management, cash flow."Learn more
Used by many of the world’s leading hospitality and entertainment venues, this mobile menu, ordering and payment platform features table ordering, counter pickup and room service options. Customers and staff alike can enjoy a frictionless service.
Integrate all your online orders to an existing POS or Deliverect’s own Delivery Manager app. From small cafés to boutique restaurants, Deliverect simplifies online order management, allowing owners to focus on their customers.
Offering intuitive tools that make taking card payments easy, Dojo can take the hassle out of running your business. There are no long-term contracts or hidden fees to surprise you or tie you down.
But what about that secret? – Make life easy with Libeo
We promised to tell you how to take the strain out of your financial management system. With Libeo, financial management is easy. Rather than wasting ten or more hours every week chasing up payments or facing the shock of a forgotten invoice, Libeo centralises the validation and payment of all your invoices in one click.
We believe in making life simple. You don’t need to worry about dealing with a stack of competing tech software. Libeo doesn’t replace your accounting app: it works with it, seamlessly connecting with your preferred system.
With the Libeo payments platform, you’ll have no more worries about invoice payments. What’s more, all the data you require for proper financial transction management is at your fingertips. Libeo gives you the insights needed to chart a course to financial success.
Automate accounting entries, get a real-time overview of your business’s key financial indicators and track the prices and flow of goods from every supplier swiftly and efficiently. Libeo helps you build stronger business relationships by enabling better communication and complete clarity.
To learn more about making financial management simple, check out how to create a financial approval workflow.
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