You need solid financial foundations to grow your hospitality business. With robust financial management in place, you have the stability and confidence to expand, make bold business decisions and lay out the growth strategy of your business – whether you’re running a busy hotel, a leisure park or a seasonal tourist destination.
Many hospitality businesses are embracing cloud software and digital technology, with a view to updating their financial processes. And having a cloud accounting platform at the centre of your business does more than just lighten the accounting load – it also helps you grow.
The key financial challenges for hospitality
Hospitality is the third largest employer in the UK, employing 3.2bn people in 2017 and generating £72bn of of gross value added (GVA) to the British economy. But hospitality finance is also an unpredictable beast where fluctuating sales, poor cashflow and high overheads can often cause major headaches for owners and management teams.
So, to begin with, let’s look at some of the key financial challenges you’re liable to be facing:
- Increasing your sales and income – whether you’re a seaside hotel, or a local trampoline park, it’s vital that you can nurture, maintain and expand your sales revenues. Regular income is the fuel that fires your business, so keeping customers coming back, and regular money coming in, is essential.
- Managing your cashflow – cash is king in any business, but with hospitality so prone to seasonal dips and cashflow droughts, it’s important that you can understand your current cashflow situation and, more importantly, predict your future cashflow position.
- Having tight control over costs – hospitality is a sector with high running costs, including staff payroll, building and utilities overheads and the costs of any food, drink and additional services you supply to guests and customers.
How cloud puts you in financial control
How can switching to cloud accounting help your hospitality business cope with these pressing financial challenges and get in control of the numbers?
Online accounting packages, such as Xero, Quickbooks and Sage have one key advantage over traditional desktop applications. And that’s the ability to offer up-to-date, real-time financial information, all collated in one central, cloud-based dashboard.
- A better view of the income pipeline – using a tailored hospitality Chart of Accounts to to drill down into which branches, services or cost centres are providing your main revenue streams – and where you can improve your profitability.
- A future view of cashflow – utilising cashflow tools like Fluidly to project historic actuals forward in time and provide forecasts of your cashflow position on a daily, weekly, monthly or period-end basis. And, by doing so, allow you to plan ahead accordingly and avoid any painful cash dips.
- A detailed breakdown of costs – with accounting codes for each cost, you can enhance your spend management, see where cash outflows are highest and rein in your expenses and overheads – improving cashflow and increasing your profit margins.
Making better growth decisions
The better your management information is, the more informed your business planning and decision making can be. And the level of drilled-down financial detail available from a cloud business system puts you firmly in the driving seat of your hospitality business.
There’s a huge range of point-of-sale, inventory management, financial reporting and project management apps that can be integrated into your cloud set-up (take a look at the hospitality apps for Xero here). These tools make managing the business easier, so you can focus on what you’re good at – running the business and bringing in those all-important customers.
With an integrated cloud business system, you can:
- Forecast your future path – with projections of sales, cashflow, costs and end profits
- Answer those ‘What if…?’ questions – and scenario-plan different business strategies
- Drive a bold growth strategy – by making robust and informed business decisions.
A digital future for your business
With the Government’s Making Tax Digital initiative making it compulsory for VAT-registered business to supply digital records, and cloud accounting platforms making it easier than every to work online, now’s the ideal time to switch to digital and the cloud.
Running your hospitality company from the cloud sets the foundations for becoming a fully digital business – one that’s ready to evolve, innovate and grow as new challenges from the hospitality market appear.