By Rene Artz
Accounting for Hospitality through Xero
Stress is a choice, so is peace.
Failure to systemise accounting procedures creates time, money and mind stress – for what is guarding the hen house?
Accounting procedures are important management controls and in this blog, we describe how to get freedom through key hospitality accounting procedures you can integrate through Xero.
Daily EFTPOS and cash sales
Xero is a leading accounting platform that links to a variety of business tools from point of sale (POS) to timesheets.
A modern POS like PosBOSS will record a range of information, however, it is usually from Xero that we prepare benchmark and management reports.
That is why data captured from business tools need to be properly reconciled in Xero to produce meaningful reports.
For example, all EFTPOS and cash transactions are typically posted as a lump sum from POS into the bank, which flows into Xero.
If lump sum EFTPOS and cash deposits are simply reconciled to sales, we lose specific benchmark measures that drive hospitality performance.
However, using POS data we can break-down both EFTPOS and cash deposits in Xero to proportion sales by food and beverage, which is key to measuring prime costs.
Proper reconciliation of EFTPOS and cash is the start to accounting for hospitality through Xero.
Weekly prime cost benchmarking
Prime costs are fully explained in our blog here.
Creating a weekly prime cost report will show the gross profit margin after the three areas you can control are deducted from sales; namely food, beverage, and payroll costs.
Prime costs will vary by café or restaurant concept, however, these costs of goods sold should be kept below 60 – 65%.
Regular measurement of prime cost creates awareness and in-turn small actions will often create a 2 – 5 % reduction of these costs against sales.
That minor difference through regular measurement means a world of change to shareholder return, potentially doubling what the business can return to shareholders.
Controlling prime costs is the most effective measure of hospitality management, with weekly benchmarking allowing for timely reaction to adverse cost ratios.
Purchase orders are used to control the purchasing of products and services from external suppliers.
In plain terms, a purchase order informs a supplier the types, quantities and agreed prices for the product or service to be delivered.
Creating purchase orders in Xero and emailing it to a supplier makes a world of difference as it allows for daily controls for order processing and recording receipt of supplies, invoices and credits.
Purchase orders also ensure goods dispatched by suppliers and received by the company match a clear description, quantity and price.
Finally, purchase orders enable a company to track expenses on accrual, accounting for daily costs.
Using purchase orders alongside a simple inventory control is a key area for accurate accounting and regular performance benchmarking through Xero.
Many hospitality owners would describe rostering and payroll as one of their most painful administrative accounting procedures.
Here again, stress is a choice.
Rosters for employee scheduling, GPS enabled time and attendance tracking, check-in and check-out along with roster communication can all be captured electronically via a timesheet system like Deputy or TSheets.
No more hassles with shifting rostered times, attendance tracking and re-communicating to the team.
Accounting for hospitality
Take ownership of your business and be responsible for its success.
Accounting for your hospitality business through Xero has never been easier, more insightful or affordable.
Stress is a choice, but so is peace.
Get in touch with Mathieson Chartered Accountants – we’ll guide you through the Xero business tools to give you money, time and mind freedom.
Mathieson Chartered Accountants Ltd
“tax and Xero connected business advisers”
ph: 03 307 6455