Talking about accounting, many people probably shake their heads. Since this is considered a complicated matter, having to deal with a lot of numbers that cause headaches, some may think that it is difficult to do. However, accounting can be called the eyes of a restaurant or cafe, it would not be wrong. The numbers in the account do not only show income and expenses, but can also be detailed in many aspects, such as setting the right selling price, even knowing the best-selling menu, popular ingredients, stock management of ingredients, and much more.
Invite ' Thanai Nopphakun', accounting guru and Course Director of FlowAccount, to introduce how to do accounting to help reduce costs and increase profits. If you don't do it, what will your business miss? What are the basics that beginners should know about accounting? To provide ideas and guidelines for developing and expanding your business to move forward together.
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'Accounting work' that restaurant and cafe owners must have
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5 reasons why accounting helps reduce costs and increase profits
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5 things to watch out for: What are you missing if you don't keep accounts?
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Accounting Thoughts for Restaurant and Cafe Entrepreneurs in the New Normal Era
'Accounting work' that restaurant and cafe owners must have
For new restaurant-cafe owners who are just starting a business, besides thinking about opening a shop, whether it's a menu of food, desserts and drinks, designing and decorating the shop, finding chefs and baristas, and regular staff, one thing that is very important that must not be overlooked is accounting. Because if food and drinks are the heart of the shop, and the staff are the backbone, as mentioned earlier, accounting is like the eyes that will allow you to see the numbers moving in the shop. So what do restaurants and cafes need to start with accounting?
First of all, Dr. Thanai explained the accounting system that restaurant-cafe owners must know in a basic way. Accounting is the systematic collection of income and expense data. For beginners or those who want to make their shop systematic, they need to do the accounting as follows:
By requesting to separate into 'individual type' and 'legal entity type' shops (according to the shop owner's registration), for individual shops, what needs to be done is:
1. Income account for recording income data.
2. Expense account to collect expense data, break it down into items such as food costs, rent, employee wages.
3. Inventory account must keep data on products and raw materials, both purchases and withdrawals, which will allow you to know the status of your inventory, helping you not to be overwhelmed by unnecessary stockpiling.
The advantage is not only knowing income and expenses and calculating profit, but this accounting can also be used to calculate the selling price because it allows you to know the true cost of food and services. You can set the selling price as appropriate no matter how much profit you want. In addition, the shop should also register with the Department of Business Development.
Legal entities that have been properly registered as companies will have more rigorous accounting than individual stores because the law requires them to prepare accounts. The basic things to do are as follows:
1. Income and expenses account, similar to individual stores, but must issue a receipt and make a withholding tax invoice every time, including marketing costs, such as hiring influencers to review the store, etc.
2. Product stock account, similar to an individual store.
3. Employee salary account
4. After 1 year, financial statements must be submitted and taxes must be paid to the Revenue Department.
In addition, restaurants and cafes currently have additional income, which is the delivery application service. In terms of accounting, it is considered the same income as the storefront, which was originally received in cash, credit cards, or even transferred or paid into a bank account. However, the channels for receiving money are different, so reports must cover the delivery details as well.
5 reasons why accounting helps reduce costs and increase profits
Now that you have learned the basics of what accounts a shop must have, Ajarn Thanai has explained the benefits of doing accounting, with 5 reasons why doing accounting can help reduce costs and increase profits. If you want to be successful, doing accounting can help.
1. Know the cost of food
The first reason for doing accounting is to know the true 'cost of the product' because when we set the selling price of the product, the first thing we need to know is the cost of the product, whether it is the price of the raw materials purchased, the expenses related to purchasing the raw materials, and who we deal with.
When we have collected the correct product information, we will know what the costs are for each menu or service. This will allow us to set the selling price as desired. No matter how much promotion or discount we want, it will not cost more and affect the shop's income.
2. Know your stock
Another account that we need to give importance to is the stock account, which is useful in cases such as being able to collect information on which menus sell the best, which will allow us to know the amount of ingredients used to sell each menu, as well as knowing what food the store can cook. This makes ordering ingredients more realistic. It also helps reduce opportunity costs, and the store's money will not be tied up in unnecessary ingredient costs.
3. Able to manage finances
Accounting allows us to manage our finances correctly because it shows us the actual income. Separating costs helps us know where the 'shop's cash' is piled up, such as raw material costs, employee salaries, etc. This allows us to know which budgets are too much or too little, and whether they should be increased or decreased. For example, right now the economy is in a downturn, so the money that is with debtors must be quickly collected back as much as possible. As for creditors' money, we must find a way to deal with how much we can delay paying it off. Or the money that is tied up in merchandise must be quickly diverted into the shop.
4. Understand your financial status
When looking at it from a business perspective, if we do accounting, we will learn about money management. From another perspective, we will also see the 'numbers' of how much income comes in, compared to expenses, after deducting, how much profit is left? Does the profit come from the cash that is involved? A very common problem is selling products and making a profit, but the cash has disappeared somewhere. If we do accounting, we can fix this because it will help us know where the money is leaking.
5. Know the status of your business
When you know your own financial status, the important thing about accounting is 'If you do it, you will know how to plan your finances for the future'. For example, if you want the business to have more money next year, you can adjust and plan anything that is not good to reduce costs and increase profit channels.
5 things to watch out for: What are you missing if you don't keep accounts?
1. Don't know the cost.
If you don’t do accounting, it’s like being a blindfolded salesperson, like driving at night without turning on your headlights, because you won’t be able to set a reasonable price that matches the actual cost, which puts you at risk of loss. More importantly, if you’re registered as a company, not doing accounting is also illegal.
2. I don't know if the money was actually collected.
This issue looks at internal control because if there is no accounting, how can we be sure that the employees have collected the full amount or that money has gone missing?
3. Not knowing the cash flow of the business. If you don't do accounting, you won't be able to answer how much money comes in and goes out each day. A simple example is keeping cash in a cashier's drawer. If there is no recording of the data, you won't know how much money comes in, goes out, gets change, or how much cash to keep. If you can't answer a small point like change in the cashier, how can you answer the money coming in or going out? If you look at the overall financial picture of the business as a big picture, this point is very important.
4. Prevent corruption. If we do not keep accounts, we will not have the tools to monitor income, expenses, costs, and stock. Therefore, we will not be able to know what the accounting figures are. The shop owner must sit and watch the shop every day to make sure that there is no corruption, that the employees collect the money in full, and that the stock is disbursed correctly.
5. The business will not grow because if the shop does not keep accounts, it indicates that there will be no good data collection system. The owner's money and the shop's money will not be separated. The money will be mixed up, making it impossible to know how much money has been added to the sales.
Accounting Thoughts for Restaurant and Cafe Entrepreneurs in the New Normal Era
For new restaurant and cafe owners who are just starting out, accounting may seem 'difficult' and 'messy'. However, as suggested by Ajarn Thanai above, it should be an idea for all entrepreneurs to pay more attention to their shop's accounting. Finally, he also leaves some thoughts and encouragement.
“Restaurants and cafes are attractive and attractive businesses because they grow easily. So, if we are going to start a business, we need to know the costs, profits, and collections completely. We need someone to keep the documents, which is good accounting. Nowadays, new-age business owners have technology to help, making it much more convenient. Keeping accounting data used to be difficult because there were a lot of paper documents. Nowadays, some documents can be scanned and stored electronically, making it easier to know income and expenses than before. So, what I would like to leave you with is that if you keep good documents, you will know the costs and collections, and the restaurant business will grow quickly .”
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