Hotels and restaurants that have been managing their finances on paper or on different spreadsheets could become more efficient by introducing a proper accounting system.
Why do I need an accounting system, and why can't I just stick with paper ledgers?
Just because what you've done in the past works for you, doesn't mean you shouldn't consider a change.
Just ask Annie Schwab, proprietor of Lincolnshire restaurant Winteringham Fields, who used to manage all of her records on paper. "We have been using Sage accounting software for 12 years. Before that we used big handwritten accountancy books, where everything had to be written in by hand," she says.
"It took hours and hours. On Sunday morning it now takes me half an hour."
With 450 different suppliers coded into the system, Schwab now has all the information she needs to hand, and can get an instant snapshot of how much the business owes to any one company.
Getting that sort of information about your business is much more difficult when dealing with traditional paper-based systems.
What special characteristics of the hospitality industry should an accounting system cater for?
Restaurants need an accounting system that addresses issues like excess wastage on different product lines, and consumption of different products, rather than mere stock control.
In hotels, accounting systems need to cope with everything from varying room rates, different ways of charging for phone calls, customer discounts, loyalty programmes and everything in between.
Are there many specialist accounting systems for hotels and restaurants?
Tom Tobiassen, co-founder of Priddy Accountancy, a specialist accounting firm for the licensed trade, argues that there is a shortage of specialist accounting software in the UK.
When he was finance director at catering firm Milburns Restaurants, he tried to get the in-house accounts and IT teams to write specialist accounting software themselves, but found that there was a lot of duplication in the functions of that software and other systems.
The best course of action for smaller hotels and restaurants at present is to use generic accounting software for small businesses, populated with data from other specialist software packages designed for their specific sector.
Hotels may find themselves using reservation data from property management systems, for example, while restaurants will want to use data from food and beverage control software packages to feed their accounting software.
Who sells accounting systems in the UK?
One of the most popular accounting systems for small businesses is Sage, which sells a variety of accounting packages including Sage Line 50, an accounting system aimed at small businesses.
Pegasus sells the Opera II Small Business line of accounting software.
Other vendors targeting small- to medium-sized businesses include Intuit with Quickbooks, and Microsoft with its Small Business Financials accounting platform.
Systems Union sells accounting software targeting three-star hotels with between 70 and 100 bedrooms.
What features should I be looking for in an accounting system?
Look for a system that enables you to back up data quickly and easily
Comprehensive reporting capabilities are also important, because they will enable you to monitor ongoing trends within your business
Think about ease of use, because smaller hotels and restaurants are unlikely to have dedicated financial staff. Business owners will probably be burdened with the task of financial management
Look at automation. You should be able to automate common tasks such as producing invoices and running regular custom reports.
How much will it all cost?
For smaller hotels, a couple of hundred pounds for the software, along with £500 for a basic PC, should get you up and running.
How can I connect my accounting system with my property management/food and beverage system?
In many establishments, this integration is done manually.
For example, Winteringham Fields' Schwab has an administrator manually enter information from her Guestmaster booking system into Sage Line 50 at the end of each day. This takes roughly half an hour a day, and she then spends half an hour each week balancing the books.
Some companies will integrate systems for you. For example, computer accounting software company Computer Accounts Technology integrates Sage with hotel information systems, automatically feeding data from one product to another.
Accounting Answers has integrated its EnterpriseMRM membership management system with both Sage and Pegasus software, removing the need to manually re-key data from one system into another.
How can you make your accounting system work harder for you?
Integrate disparate data. "Hotels and restaurants are data-rich, information poor," says Andrew Turton, Global Solutions Director for Hospitality at Systems Union.
The problem lies in the fact that data isn't collated in a sensible way. Instead, it's buried within paper-based accounting ledgers, or scattered across different spreadsheets and proprietary systems. An accounting system gives you the chance to put all that data in one place, even if you have to re-key the information manually into the system.
Watch for trends. When data is scattered, it becomes hard to spot trends within the business. These trends can provide you with useful information.
For example, which suppliers are you spending less money with? Can you use this information to swing a better deal with them? Is there a certain time of the year when sales of a particular product are low, perhaps creating the opportunity for promotional campaigns and special packages?
Use information to market more effectively. Spotting trends that apply directly to your revenue base can lead to interesting marketing opportunities.
For example, how easy is it for you to identify those customers that spend the most money with you? Could you offer them discount packages?
What about businesses that have used your hotel or restaurant once or twice but do not appear to be using you regularly? These could be useful targets for a sales campaign designed to make you a key supplier.