15 Effective Strategies to Improve Cash Flow for Your Business

Now, calculate all outgoing cash; loan payments, rent, utilities, payroll & taxes, inventory expenses, supplies, regular payments, and more. It begins with your assets, or what you own; Items such as your house bank, cash operating accounts, and large asset purchases such as furniture, equipment, and leasehold improvements. In addition to a cash Restaurant Cash Flow Management flow forecast of your own, keep an eye on other things going on around you that could affect your restaurant. If you’re in the kitchen or serving customers all day, you rarely have time to do the books. Rather than accepting offers of credit from your suppliers, find out if they will give you a discount if you make an immediate payment.

• It allows for a unified view of finances, making it easier to track and compare the performance of each venue.
• Additionally, it records wages and salaries, purchases of inventory, all the miscellaneous expenses of keeping the lights on and the doors open, and changes in accounts receivable and accounts payable.
• Just like you have a specific recipe for your signature dish, you need a clear recipe, or policy, for payments.
• Reducing unnecessary expenses can free up cash for other areas of your business.
• These measures enhance the security and integrity of cash handling processes.
• Sometimes simply spacing out your supplier bills helps make cash flow more manageable too by eliminating peaks and valleys in your budget.
• Electronic payments are faster and more efficient than traditional methods, reducing the time it takes to receive and process payments.

Set Up a Reliable Credit Line

This allows you to have fewer people on during the slow times, but have more people in on the busy periods to help maximise sales. Forecasts are especially helpful when it comes to making capital expenditure decisions, or deciding whether or not to cut an expense. You can also gain insight into your business by comparing actual figures to what you forecasted. Not to mention, it can streamline your operations, automate data entry, increase efficiency, and boost productivity. Identify and project upcoming expenses, including fixed costs like rent and variable costs like inventory.

Enhance Your Inventory Management

This strategy improves your Cash Flow and strengthens customer relationships by rewarding prompt payment. For the non-cash transactions, your accountant will consult your balance sheet, recording changes in assets and liabilities. Note that accounts receivable (AR) decreases are added to net earnings, while AR increases are deduced. This method is used by companies that run their accounting on an accrual basis. Cash flow from Operating Activities lists the transactions that form your average restaurant’s bulk of cash flows. Operating activities include the revenue generated from food and beverage sales, merchandise sales, and rental receipts.

• There is a related decrease in cash flow when there are increases in assets.
• In restaurant accounting, a good financial manager can help with the tactics.
• This practice accelerates the collection process and reduces the risk of delayed payments affecting your Cash Flow.
• The first place to improve a steady stream of cash is with your point-of-sale system.
• After you have a few months under your belt, you’ll see patterns in the projection that will help with accuracy on your staff scheduling and inventory purchases.

Tap to Pay on Android with Fleksa: Essential Tips for Restaurant Owners

Maybe your first quarter of the year sees less business, so you don’t invest in new uniforms or an expensive piece of equipment during that time. If you forecast that the summer months are busier, that may be the time to make big purchases. We implement the full cash cycle including customer invoicing, payment processing, vendor bill payments, and cash flow reporting. If applicable, we will help you factor your receivables and coordinate the factoring process. Offering discounts for early payments is a powerful strategy to encourage customers to pay their invoices sooner. By providing a financial incentive, you can accelerate cash inflows, reducing the waiting period for payments.

Cash Register Management

These metrics give you a granular look at your employee hours for your limited operations. Tracking the variance over time, especially on an item-by-item level, allows you to dive into the reasons behind the variance. For food waste in particular, tracking the variance can lead you to the root cause of the https://www.bookstime.com/ issue. Comparing variances across multiple locations enables you to focus on the locations that need the most attention. With additional tools like a foodwaste log and regular inventories, you and your team can mitigate food waste and reduce the amount you’re spending on food costs across the enterprise.

Simple cash flow management strategies for multi-venue restaurants

Business Type

Cash Flow Operating Activities

How to calculate your restaurant’s cash flow

• Efficiency, accuracy, control, and security are all elements that a restaurant cash management system introduces to cash handling processes.
• When there is an increase in financing activity, there is also an increase in cash flow.
• As a result, you can create accurate forecasts to improve your financial planning.
• By adopting these best practices, you’re not just cooking up delicious dishes, but also a healthy financial future for your restaurant.
• Effective cash flow management is a cornerstone of a successful restaurant business.
• Nory’s restaurant management software offers comprehensive features for tracking and analysing cash flow across multiple venues.