Most franchise restaurant owners take pride in their business—and they should. Franchise restaurants can be difficult to run due to thin margins and issues like rising labor costs. Successfully managing these units takes skill and dedication. What most proprietors don’t realize is that they could be sabotaging their own business if they chose to hire a low-budget and poor-quality franchise accounting system for franchise restaurants.
If your accountant is making mistakes, you could be destroying your restaurant from the inside out. Accounting is the lifeblood of your company. It quite literally keeps the lights on in your dining room and food on the stove. Inaccurate accounting for franchise restaurants can prevent your business from achieving your goals and send your units into a downward spiral. An expert outsourced accountant that specializes in franchise restaurants can help you avoid these errors and reach your goals.
If you’ve noticed poor inventory calculations, a lack of reconciliations on bank accounts and credit cards, or you’ve hired an internal bookkeeper, then keep reading— your franchise could be at the top of a downward spiral.
Mistake #1: Poor Calculations of Inventory Costs
Calculating inventory costs is a huge part of accounting for franchise restaurants. Your accounting team needs to be able to reliably calculate how much inventory your restaurant is going through. If they cannot do this accurately, then you risk ruining your margins and falsely inflating your cash flow.
Franchise restaurants already operate at thin margins. Between rising labor and food costs, there’s not much room for mistakes. Having to throw out food can be the difference between making a profit or losing money.
If you’re spending more on food than the records show, then cash flow will quickly become a real issue. When your expenses are higher than you think, you will outspend your income relatively quickly. In this situation, you may have to open a line of credit in order to make up the difference until the issue is resolved.
Outsourced accounting for franchise restaurants ideally means a team solution with a built-in review process. This includes peer-reviewed work in order to avoid mistakes. An accounting solution that specializes in franchise restaurants is familiar with inventory costs and experienced in calculating them.
Mistake #2: Not Reconciling Bank Accounts
Bank account and credit card reconciliation is crucial to the profitable running of a franchise restaurant. Failure to reconcile can lead to several issues including inflated costs, inaccurate representation of cash flow, and undetected losses.
Mistakes happen. Everyone is human. A mistake on a credit card statement can be easily resolved with a phone call and a disputed charge—that is, if it’s caught. Credit card reconciliation is the process of catching these mistakes. If a duplicate charge goes unnoticed too many times, your business expenses can be needlessly inflated, costing you thousands of dollars in profit.
Bank account reconciliation helps your accounting team to track expenses and accurately calculate cash flow. If bank accounts go unreconciled, expenses go untracked, and your cash flow could be falsely inflated. Inflated cash flow can lead to increased debt and overdrawn bank accounts. Cash flow errors are a big problem that can have a significant impact on your business.
Bank account reconciliation is the perfect opportunity to catch unexplained profit losses that could be due to team members taking cash from drawers. It can be easy for a team member to steal from your company. Staff members who work the registers are trusted with handling cash and balancing drawers. If account reconciliation is not completed, it becomes much easier for losses to go undetected and untrustworthy team members to walk away with hundreds of dollars.
When was the last time you saw an accurately reconciled credit card statement? If it’s been a while, then it’s time for a new solution. Outsourced accounting for franchise restaurants provides accurate reconciliation that catches fires before they happen and saves your company money.
Mistake #3: Working with an Internal Bookkeeper
Internal bookkeepers are a common mistake made by franchise restaurant owners. These employees are often performing business accounting on the side while they do other administrative tasks. It’s easy for an unfocused bookkeeper to make mistakes.
An internal bookkeeper can seem great at first. You can speak to your accounting team face-to-face whenever you want, and paying their salary seems like a much lower cost than the monthly rate for an outsourced team. Looks can be deceiving. Working with an internal bookkeeper can actually cost you a lot of money and time in the long run.
Issues come up because your company accounting is not their sole focus. They’re balancing administrative office work and typically aren’t passionate about finance. Because their hopes and dreams don’t have much to do with accounting, these team members are often inexperienced. This lack of expertise leads to mistakes such as poorly completed reconciliations, not forecasting for future financial trajectories, and miscalculated inventory costs.
On top of these errors, you also receive a lower ROI when you hire an internal bookkeeper. Your new employee’s hourly salary may be less expensive than that of an outsourced accounting team, but they require more management hours, onboarding, training, vacation time and sick days. Not to mention the time and effort it takes to find and hire a bookkeeper.
When compared to an internal bookkeeper, outsourced accounting is clearly the winning solution. It offers your business a reliable and experienced team with expertise built on years working in the franchise restaurant industry. In return for the monthly rate, you receive more accurate reporting which can save you money in the long run. You also won’t be left without an accounting department if someone wants to take a vacation.
Outsourced accounting helps your franchise restaurant avoid mistakes and reach your future goals. At Global Shared Services, we stand by our belief that every business owner should have access to expert-level finance and accounting services. We offer high-quality accounting solutions that scale with your franchise restaurant.
High-quality accounting is crucial to the success of your hard-won business. Don’t allow financial mistakes to close your restaurant’s doors. Learn more about what Global Shared Services can offer you today.
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With GSS, we meet our franchisor requirements on time and with accuracy. The local CPA could not handle our volume. We are so happy to have made the change. GSS knows our business and our franchisor requirements.Multi-unit fast sandwich Owner