Restaurant Accounting Software & Solutions
by The Plate IQ Editorial Team
Accounting tasks can be complex and daunting while taking up a ton of your precious time. Restaurant accounting software allows for automating some of those daily bookkeeping tasks to get them off your plate. It can be an excellent resource to your restaurant accountant.
In this article, you’ll learn about the benefits of using accounting software and how it can simplify and streamline your restaurant accounting tasks. We’ll cover:
- What does restaurant accounting software do?
- Key concepts to know for restaurant accounting & solutions
- Crucial reports for restaurant accounting software
- Restaurant accounting services
- The unique challenge with AP in restaurants
Plate IQ is the AP automation software that reduces time and money spent on accounts payable by integrating into your restaurant’s tech stack.
What Does Restaurant Accounting Software Do?
Accounting software can be highly beneficial to your restaurant as well as your peace of mind. It’s the key to automating many tasks while providing insight into how well your company is operating.
It offers a solution to help your restaurant manage and track all financial transactions by recording and processing accounting procedures like accounts payable, accounts receivable, payroll, and invoices.
Utilizing accounting software can help you keep track of inventory and make it easier to order food and other products needed to keep your restaurant rolling forward.
Adopting restaurant accounting software results in less human touch points which leads to higher accuracy and more savings.
For example, using accounts payable automation software like Plate IQ can save a business $16 or more per invoice.
Restaurant accounting software can be your solution to simplifying and organizing your daily financial tasks while staying on top of how your restaurant is doing overall.
Accounting software makes for more accurate bookkeeping, easier tracking, and running quick reports painlessly.
The Cost of a Manual Restaurant Accounting System
You certainly don’t have to use accounting software. You can manually handle your restaurant accounting using a paper ledger or spreadsheet.
But you don’t have to have a dishwashing machine in your kitchen, either.
Both of those decisions come with some pretty massive costs.
Be aware of, or rather, beware — manual accounting will cost you.
It’ll cost you:
- Time — Writing or entering data manually will take much more time than software. You’ll need to spend time unraveling accounting complexities that you wouldn’t necessarily need to have such a deep understanding of if you took the software route. That learning curve takes away time from customer service, training staff, and creating exciting food.
- Accuracy — Let’s not forget, to err is human. And while that’s fine for philosophers, errors cost money and can get you in hot water with your taxes in the restaurant business. Numbers can be transposed among other seemingly minor mistakes that can have a significant impact.
- Year-end financials — Gathering your year-end financial data might have you riding the struggle bus up Mt. Paperwork for way longer than you’d like. A manual accounting system means combing through all monthly ledgers or spreadsheets and manually creating year-end reports. Accounting software could generate those reports with the click of a button.
The Restaurant Accounting Software Tech Stack
“Tech stack” is a term that gets thrown around a lot, but it’s more than a buzzword. Your restaurant accounting software tech stack consists of all the combined software elements that make up your accounting system.
Accounts Payable & Spend Management
Using a restaurant accounts payable software like Plate IQ is vital because it gives a quick snapshot of which vendors have been paid + the expenses associated with each vendor.
When your monthly or yearly financial statements are generated, all restaurant expenses are listed, and you’re able to easily see when and where money is being spent. Tracking expenses is essential to identify any areas that have leaks in need of plugging or require a deeper dive to keep your restaurant operating in the black.
Plate IQ helps you find the story in your spend.
Payroll is another essential feature to assess when choosing accounting software. Sure, there are 3rd party vendors who can process payroll, but it can be a spendy endeavor — it’s more cost-efficient to use accounting software to assist with payroll.
As you well know, one of the most challenging parts of payroll is calculating taxes and filing the proper tax forms to the state.
Your accounting software should calculate and provide the data along with the state form needed to be filed in order for your restaurant to pay proper payroll taxes.
Your point of sale system should be tailored to your restaurant and meet your specific needs. Your individual POS system needs to be set up with your detailed menu items to ensure each receipt can be calculated and rung up with the push of a few buttons.
Your restaurant’s POS should also be able to run reports showing what and how much was sold of each item, and if any discounts or refunds were given on particular items. Your system should be able to lay out the restaurant’s entire day’s worth of sales and provide detail on everything sold in order to calculate the sales for that day, week, and even month.
Also, your system should be able to break down morning, lunch, and dinner sales so management can review and analyze what time(s) contribute to the highest sales. Your restaurant management can review this information and adjust staffing or hours of operation once they break down their sales.
Inventory & Recipe Management
Let’s talk inventory and recipes: two areas that can make or break a restaurant.
Your restaurant accounting software’s ability to track inventory down to the last leaf of lettuce is uber important. If you have too much food on hand (especially produce), you run the risk of it spoiling equaling money down the drain — not enough food means you could run out of supplies and have to “86” menu items for the night, resulting in disappointed customers Yelping their frustrations.
It’s up to you to set the budget for your restaurant’s food costs, however, 28% to 32% is a good range to shoot for to be profitable.
Food cost ÷ Food sales = Total Food Cost
You’ve worked your tail feathers off creating specialty recipes and signature dishes that delight your customers and keep them coming back again and again.
An accounting software system that can keep track of recipes in password-protected files helps keep them accessible, organized, and safe. It’s that, or carry them around with you in a briefcase handcuffed to your wrist.
It’s a good idea to require employees with recipe access to sign a disclosure form stating that they will not share or release the recipes.
Recipe management is the master key to consistency in your food. And consistency is the golden goose of keeping those tables full and your customers spreading the word about your restaurant.
Accounting & Bookkeeping
Your restaurant accountant is your own personal numbers guru, able to present all end-of-month financials and interpret how well or not-so-well your restaurant did.
Your accountant is the gatekeeper, monitoring your expenses and calling attention to any unusual activity or large expenses as well as comparing the actual to the budget.
Your accountant analyzes your financials on a monthly basis and offers advice based on that data.
Bookkeeping consists of the regular tasks of tracking and recording all financial data, and handling accounts payable and receivable.
Restaurant accounting software can automate a big portion of your bookkeeping tasks.
Key Concepts To Know for Restaurant Accounting Software & Solutions
Restaurant Accounts Payable vs. Accounts Receivable
Accounts payable (AP) consists of your vendors that provide a service or product and in return, you pay them for it.
Many vendors offer multiple payment options and most of the time it’s based on your restaurant’s credit. The vendor will ask for bank and other vendor references, then base your credit line and payment terms on the info they receive.
Some of the most typical payment terms offered are the following:
Accounts receivable (AR) covers money owed to your restaurant for services or food provided. In the restaurant industry, this only occurs when a credit card is processed and payment is outstanding while it’s in transit.
You post your daily sales to AR and once the money lands in your bank from the credit card processor you offset that account. Since restaurants provide items consumed on the spot so they don’t have other accounts receivable.
Plate IQ connects your restaurant’s POS, AP, expense management, inventory, and accounting software. Its integrations enable a smooth workflow.
A whopping 95% of restaurant owners agree that technology improves restaurant efficiency in many ways.
All of your restaurant’s systems must be able to communicate with one another to reduce errors resulting from inputting data repeatedly in multiple systems. The flow of information will be smoother when all systems are connected and communicating with one another.
Your restaurant AP, expense management, and accounting software must be connected with your POS and inventory system.
Sales that flow right into your accounting system provide an accurate net income for each month.
And inventory that flows into your accounting system enables the calculation of monthly food costs.
This means expense management and accounting software should be able to seamlessly integrate with each other rather than being completely separate systems.
Does the term “GL coding” make you want to curl up into the fetal position in the corner? Hang in here for a nano-second longer and let us explain…
Your restaurant has multiple vendors providing you with a wide array of items, from food and kitchen supplies to chemicals and paper goods, and it’s crucial to analyze these invoices to double-check that each line item is coded correctly.
It’s important to confirm the proper tax amount being applied to the correct code — food isn’t taxed in restaurants but other items, like chemicals, are. The invoices will have a symbol or the letter “T” next to taxable items.
Each area of your restaurant should have its own expense category in order to monitor what, where, and how much is being used.
For example, when ordering from a food distributor, keep those invoices separate and label where each invoice belongs (i.e. catering, commissary, restaurant, bar, and bakery).
Plate IQ offers solutions to ease your load and simplify your invoice management.
Tracking and Calculating Recipe Costs
As a restaurateur, imagine being able to — enter each recipe + necessary ingredients to make it — in order to calculate costs for that dish.
You could then calculate and analyze how to price a specific dish in order to make a profit. It would take the guesswork out of pricing menu items.
You could also analyze which dishes cost the most and the least. That would enable you to make critical decisions as to which menu items go on the chopping block because they simply aren’t cost-effective.
Analyzing menu performance can also help identify which items are your front runners.
A study found that on average, 80% of restaurant sales come from only 16% of menu items.
It’s valuable to know not only the most expensive items but the most popular as well.
Crucial Reports for Restaurant Accounting Software
To better understand your restaurant accounting software, you should also understand its reports that come within it.
- Balance sheet — Gives a snapshot of your restaurant’s assets and liabilities, listing bank balances, credit card balances, loans, and fixed assets like equipment.
- Profit and loss (P&L) statement — Shows revenue minus all expenses and calculates the net income. This report shows all monthly expenses and how much and where money was spent. You can analyze and evaluate your P&L when deciding on the necessary adjustments or cuts needed.
- Cash flow statements —Shows your monthly income minus operating costs. Reviewing this statement is a biggie because it can help with expense budgeting to improve the cash flow for the restaurant.
- Prime cost reports — Displays food & ingredient costs plus all labor expenses. To calculate the prime cost use the following equation: Total COGS + Total Labor = Prime Cost
- Financial forecasts — Typically created from the prior year’s info. Harnessing those numbers helps set the new year’s sales goals to generate more revenue. It’s best to create your financial forecast at the end of the year or at the very beginning of the new year. Financial forecasts are part of ensuring your restaurant adheres to your yearly budget.
Restaurant Accounting Services
Accounting software can benefit you whether or not you have a CPA. Having your books streamlined and organized will put you on the winning side of the Sink or Thrive game of the restaurant industry.
Hire a Restaurant Accountant or CPA
Hiring a restaurant accountant or CPA is an important step towards your restaurant’s success and ability to monitor expenses and revenue.
Having a designated person analyzing this information on a monthly basis helps you know where your restaurant stands and when and where cuts may need to be made in order to keep your doors open — reducing employees or cutting back on recipes might help you survive tough times.
Or as your restaurant takes off, knowing when to hire more staff or expand your menu can keep your restaurant growing without lag time.
Your accountant should be able to perform all tasks, including accounts payable, accounts receivable, generating financial statements, creating budgets, and financial forecasting.
The Unique Challenge With AP in Restaurants
The wide variety of vendors, perishable items, and invoices that you must keep track of — presents a challenge to restaurant AP.
And it’s a challenge that you can’t afford to ignore.
Keeping up with your restaurant’s costs is the key to effectively managing the profit margins necessary to keep your business running for the future.
For example, your restaurant inventory is one of your biggest assets and needs to be monitored (and kept fresh). It’s essentially cash with an expiration date. Poor inventory management is one of the main reasons why on average, 10% of a restaurant’s food is wasted before it makes it onto a plate.
In addition, there are various other vendors that go beyond just inventory, and they’ve all got to be tracked to keep your restaurant growing, tables full, and customers fed and happy.
Use Plate IQ to Conquer Restaurant AP
Plate IQ was made for restaurants looking to turn their cumbersome invoice paper stack into an automated, intuitive tech-stack solution.
Automating your AP with Plate IQ cuts back on costs due to human error and saves a mountain of time by not having to transfer information from one system to the other.
The Plate IQ Editorial Team
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