“Eating is a necessity, but cooking is an art” goes the industry adage. On that note, keeping the business in top financial health and the account books up to date is nothing short of science – the rules are steadfast, and we are bound to follow them faithfully with no room for interpretation.

Continuous innovation is the only way to stay ahead in a competitive market. To maintain healthy profit margins, while ensuring the best possible quality and customer experience, the restaurateur must actively focus on what they do best in relation to the business and conscientiously leave everything else to the experts.

Responsible and effective financial governance is essential for success in the restaurants and hospitality industry. Sustaining growth over time typically involves a significant investment in staffing, training, technology upgrades and other overheads. Administration of payroll, managing stock, tax compliance, etc. are vital elements which are recurring in nature and require specialist knowledge to be continuously available.

Outsourcing everything but the chef and the waiters who run the daily operation is a viable option in this scenario, for reasons such as:

Cost-effectiveness

For many restaurants, employing a full-time in-house finance team is a major burden on their budget. This includes a lot of overhead expenses including salaries, benefits and management costs. To equip them with the training and technology they need is an additional investment. Outsourcing the financial management and accounting duties to a reliable partner can help the restaurant to offload all the overheads and replace it with a single predictable monthly cost, usually a retainer fee or a set fee based on specific services provided. The outsourcing company would have access to advanced financial management software platforms and highly trained employees that the restaurant can benefit from at a fraction of the full cost.

Access to domain expertise

A financial management professional will presumably be well-updated in his/her domain best practices and the tax laws that businesses in each sector must comply with. Any newly introduced financial regulations that have the potential to impact the restaurant’s business would be best understood and managed by a specialist professional. Any restaurateur navigating the complex financial landscape of the UK hospitality industry would greatly benefit from the support of such a specialist team.

Operational efficiency

Typically, an outsourcing company in this sector would be doing business with several restaurants and/or restaurant chains, concentrating exclusively on the critical aspect of finance and accounting for each of them. They can focus on elements like process efficiency, regulatory compliance, service delivery quality and industry best practices more effectively than their clients who have so much more on their plate to deal with. The restaurant management can devote their attention to core business activities, such as improving menu offerings and enhancing customer service, with the assurance that financial management is taken care of by experts. This is undoubtedly a more efficient use of the restaurant’s resources, promising better returns than a fully in-house model.

Better cash flow management

Effective cash flow management is critical for the sustainability of any business, especially in a cash-intensive sector such as hospitality and food services. An effective outsourcing solution can give the restaurant management access to crucial business data at their fingertips. This can help generate better forecasts, improve the quality of decision-making, effectively manage accounts receivable, ensure timely availability of funds, and give them the capability to negotiate favorable supply contracts to optimize their margins.

Enhanced reporting and analytics capabilities

In a heavily competitive and intensively monitored industry such as hospitality, it is good business sense to keep the financial data clear and transparent. This allows the business’s financial health to be effectively monitored, while detailed financial reports can be generated to provide key information in a secure manner to regulators and stakeholders. Insights into key performance indicators (KPIs) such as profit margins, labour costs, and inventory costs allow the management to view the trends, determine areas for improvement, and drive profitability.

Scalability and flexibility

The management needs of a restaurant depends on its size, which means that as the organization grows, its needs become more complex. Outsourcing is a practical approach to achieve the flexibility required for scaling financial services (up or down) as the restaurant may need based on season, or growth prospects. Opening a new location, revising the menu, surviving an economic downturn, etc. are some scenarios where this flexibility becomes necessary.

Conclusion

For restaurant owners seeking better profitability and financial stability for their business, outsourcing is a smart and effective strategy. Not only does it provide access to specialist expertise and flexibility need to navigate the complicated domain, but it also paves the way for financial success by allowing the restaurant management to capitalize on their core proficiency and deliver exceptional culinary experiences, without distractions. The key, of course, is to find the ideal outsourcing partner who can meet the restaurant’s needs and help them achieve their goals in a sustainable manner.

Mobile Money

Many employees were asked to work from home, which meant utilising Skype, Zoom, Microsoft Teams and accessing documents virtually. If ever there was a time to digitise paperwork such as invoices, receipts, pay slips and reporting, it was now. No longer could finance teams pop to the admin office to grab a document. Innovation was imminent. Not only did this make individuals aware of how much they needed to be able to access accounts online, it revolutionised how multiple team members could access them from anywhere in the world – more so than ever before.

A Sign of the Times

This new virtual necessity of being able to administer finances online is a trend that has been rising throughout the last few years. The benefits are plentiful. It increases productivity, organisation and the ability to search and extract with ease. Lockdown was an opportunity for businesses to invest in new applications and software to assist with accounts that could make this possible. In 2020 Xero saw a 19% increase in subscribers taking its reach to 2.45 million. The proof is in the profit for how finance teams relied more on the advantages of digital technology. It’s also worth noting that online sales went through the roof suggesting that it’s time to potentially offer e-commerce services for your business where possible.

Savvy Finance Teams

Data is king. As finance departments began to transfer their accounts digitally, a fresh new approach to accounting opened up. New data-management practices meant better automation, saving time and money in the long run for employers as a whole. Plus mobile and desktop apps integrated in a much more cohesive way that made the headache of number crunching a breeze.

Support for Businesses

Throughout the pandemic B2C SMEs took a particular hit, but there were a number of initiatives that were there to assist. From business rates relief to furlough schemes, grants and tax return extensions, it took the pressure off finance departments and allowed them to digest all this new information. However, adding up the numbers was a challenge as stocks changed patterns from previous years, customer numbers fluctuated and teams in general decreased. Finance departments were asked to cut costs and strong decision making was needed to let managers focus on the day job.

Forecasting For The Future 

We have taken away that forecasting for the future can be difficult when unexpected challenges such as COVID-19 arise and turn everything upside now. Finance departments now need to look beyond transnational activities, tax planning, internal audits and enforce financial risk management to prepare for another ‘worst case scenario’. Many have learnt to expect the unexpected. Although we are hopefully over the worst of the pandemic, the last 12 months have taught entrepreneurs and companies that emergency funds are a must. It’s also important to note what has and hasn’t worked, and what you need to plan for in case of a financial dip. But with this new way of working with virtual accounts, looking at the numbers over the last year is now better laid out in front of you in a way that’s easier to digest.

Just like the roaring 1920s, with the recent opening of pubs and restaurants in the UK, companies will thrive again. Financial forecasters have already predicted that hospitality is going to see an impressive boost – especially local businesses who rely on that community spirit.

This reflection has highlighted in particular that your finance department can be operated remotely from anywhere in the world. Perhaps it’s time to trust Virgate’s renowned service who can support your industry and sector with our dedicated team of experts. We were ahead of the curve with digitising finances and our clients have witnessed the benefits. See how we can support you by seeking the specialists who understand accounts, even during the hardest of times.

If you are looking to outsource your current accounts department, or are looking to introduce an accounts function due to business changes, then contact Virgate to learn how we can help.

Tel: 01452 226111

Email: hello@virgate.co.uk