With the busy Christmas period approaching, businesses operating in the hospitality and tourism sector will be dealing with increased demand.
Now more than ever, it is important to ensure your cash flow is as strong as it can be.
What are the basics?
When it comes to running a business, having a solid cash flow is vital. However, poor cash flow is one of the top reasons that tourism businesses shut down.
It’s a straightforward concept, balancing cash coming into the business against cash going out – inflow and outflow.
Inflow into the business can be defined as the payments received from customers for food and drink, but can also cover finance and borrowings.
Outflows are more complicated and cover costs like rent, rising utility bills, payroll and produce suppliers, not forgetting general maintenance and repair costs for the premises.
That is where the latest technology can make life easier by keeping track of day-to-day costs as well as often being compatible with the software used by their accountants.
Forecasting is key
With analysis from a point-of-sale system, businesses should be able to project cash flow for the year ahead.
Comparing data from the previous year will show the highs and lows of performance and allow planning for seasonal fluctuations.
Cut back when needed
If you are behind your forecast, action needs to be taken to reduce costs.
This could include cutting back where necessary and trimming menus, including the least popular dishes, and closing early when trade is slow to make energy and payroll savings.
Let your cash to the talking
Rather than taking stock on credit, for example, talk to your vendors about a discount on your orders if you pay in full, upfront.
A bulk cash order could persuade them to cut prices as they also have to think of cash flow.
Get the paperwork in order
The numbers and paperwork you face may seem daunting and complex, but that is where your accountant can help.
We can advise on cash flow, ensuring that your books are up to date so that you do not fall foul of any tax issues.
Need help with cash flow in the tourism sector? Contact us today.
