Knowledge is Power

Overview:

Let’s take a look at some of the top common practices to help ensure your hospitality business is best positioned to not only survive unexpected events, but is in a position to emerge stronger on the other side. As published in the August 2020 edition of Hotel SA Magazine.

Off the back of our article Preparing for a Post-JobKeeper Reality last month, we’ve had a number of Publicans contact us regarding a review of their current bookkeeping practices and how they can leverage their increased turnover to further grow their business. In several cases, this means taking advantage of the Federal Government’s extension of the $150K instant asset write-off scheme until the end of December 2020.

Whilst every venue has its own unique circumstances, a common thread that we have seen in resilient operations is that they have maintained efficient bookkeeping processes throughout the crisis, to ensure that their business is best positioned to not only survive unexpected events, but is now in a position to emerge stronger on the other side. Let’s take a look at some of the top common practices…

Keep Your Finger on the Pulse

As every business owner would know, success depends on many things – a sound business strategy, strong cashflow, good supplier relationships and a loyal customer base.

Bookkeeping should be seen as the way you bring all these areas together behind the scenes to give a live view of your operation, providing your business a solid foundation to work off of.

The key to building and most importantly, maintaining, this solid bookkeeping foundation relies on efficient processes and personnel for accuracy of information and timeliness of data.

“Immediate access to insights, like having a clear picture of your business’ inflows and outflows, is critical to knowing where your operation is at and what economic levers are available to you to maximise your gross profit. Access to real-time data ensures that you have all the right information at hand that enables you to optimise opportunity and minimise risks,” explains Elizabeth Elliot, our Director of Bookkeeping at Perks.

Keep Your Eyes on the Road Ahead

When you have real-time vision of your finances, you can pinpoint key areas to cut or scale in accordance with your strategic business plan.
Real-time data allows you to adapt quickly to variations in inflows and outflows, such as:

• Increased operating costs
• Sudden increases/ decreases in your customer base
• The impacts of varying relief measures
• JobKeeper impact on Gross Profit
• Forecasting wage costs based on your roster
• Annual wage increases/ changes to Award Rates

Accurate, timely data is the key to feeling confident in making timely decisions as challenges arise. Agility in the face of change ultimately allows you to protect your bottom line and ultimately positioning your business for stability over time.

“Accurate and up-to-date bookkeeping data enables the business owner to measure the effectiveness of their strategy over a defined time frame. It can quantify how well the business has capitalised on opportunities and withstood any downturns,” states Elizabeth.

So, for those that now find themselves in the fortunate position of benefiting from the sudden influx of patrons, their robust bookkeeping practices should allow them to see beyond the increase of turnover and project into a post-JobKeeper scenario.

Lockdown Your Costs

Whilst many Hospitality suppliers have really come to the party in regards to stock returns, credits and the like, juggling variable costs can be difficult when faced with unforeseen circumstances.

Just like locking down your monthly rent with your landlord also establishes an expectation of what they will be responsible for in terms of your premises, you can also consider locking down other suppliers so that you establish an expected scope of work that they will deliver whilst minimising any variable “surprises.” Even services like Bookkeeping, Training and Development and Human Resources can be outsourced and
locked to fixed fees.

“We’ve found that amongst our client base, the fact that our Bookkeeping team works year-round and on a fixed fee, is highly appreciated. For many business owners, the ability to know exactly what work will be done by our team and how much it will cost ensures that there are no unwelcome surprises that affect their bottom line,” shares Elizabeth.

Time to Get Technical

Getting the most out of your bookkeeping processes necessitates the integration of technology for both efficiency and clarity. By using systems that help to streamline your day-today bookkeeping, processing time and errors can be cut down significantly, enabling you to easily keep your books up to date and accurate.

Efficient bookkeeping practices are also critical to the ongoing smooth operation, organisation and transparency of your business.

They ensure you:

• Have the ability to cost your roster in advance, so that you can apply it against new sales forecasts and take appropriate actions to reduce wage costs, if necessary;
• Have safeguards ready, in case of an audit;
• Can readily catch any potentially suspicious activity;
• Cut-down on the time your Accountant needs to translate your books for compliance purposes;
• Have the documentation on-hand that you need to apply for finance or assistance packages, such as those we’ve seen rolled out due to COVID-19 and bushfires.

In summary, building and maintaining strong operational practices, and gleaning insights from those practices in realtime are key to resilience in the face of turbluent times, and also staying on the path when the pendulum swings the other way.