HITENDRA PATIL has WORKED FOR OVER 25 years in the financial services industry. HIS PREVIOUS TEAM PROVIDED DIRECT ACCOUNTING SERVICES TO MANY CLIENTS, INCLUDING SEVERAL FINE-DINING RESTAURANTS. He currently helps other accountants with ACCOUNTANTSWORLD.
Have you ever seen a vital signs monitor in a hospital room?
Clinicians use its alerts to proactively manage patient health in the moment. While beverage management is not as complex as the human body, it can be just as lethal to the health of a business if not managed professionally. Real-time bar accounting is the best way to avoid failure, and technology is your ‘vital signs monitor’ for identifying the critical warning signs in the moment.
Restaurant accounting often comes too late
The team in my previous company provided a lot of restaurant accounting work for several fine-dining restaurants across the country, including inventory accounting and larger business valuations. In either case, we found that these tasks would be completed too late for the businesses to prevent serious problems. The reason? It was a manual process.
Restaurant staff start by handwriting their current inventory in pre-printed Excel tables, which are prone to individual error. We then enter the data into our own Excel spreadsheet, and apply the last purchase rates to compute the value of inventory on hand. We then enter those values into our accounting software and use it to compare the establishment’s sales numbers to compute the actual profitability of all liquor, beer, and wine sales. As the accounting back-office for a restaurant or bar, our job would be to provide the owner with the best course of action when presented the data from inventories and sales reports.
However, to be totally honest, after-the-fact accounting like this can’t prevent losses—it can only identify possible issues and give owners recommendations for preventive or recuperative actions. To get a deeper real-time analysis, a different approach is necessary.
The benefits of technology for bars
The internet and cloud technology has transformed accounting to operate in real-time. With this technology, you can:
- Get real-time trends in your inventory usage. With this data, you can order the right product in the moment, reducing cash stuck in inventory and leading to better cash flow management. This ultimately leads to increases in profitability as your financing cost for operating expenses go down.
- Get real-time data comparisons of your beverage costs and sales figures, such as pour cost trends across days of the week and time of the day, bartender performance, etc. This data informs owners and managers when costs increase, and helps them analyze why.
- Compare market prices.
- Join buying consortiums to reduce purchase costs.
- Quickly identify slow moving items to create promotions that free up cash stuck in inventory.
Use technology to help your accountant deliver more value to you
Accountants are trained to think about numbers and identify the intelligence from those numbers. If you weigh them down with extra work to create data, they will have less time to give you in-depth business insights.
I have seen accountants help establishments become more profitable and save them from failure. The best ones use data to give owners the most effective advice. Owners, utilize technology to help your accountant deliver real, actionable value to you, not just financial statements.