Restricted by tight margins and seasonal fluctuations and vulnerable to consumer spending trends, every penny counts for food and beverage outlets and tourism-related companies. Many hospitality businesses currently face unsustainable costs due to high UK inflation, impacting the industry’s profitability and causing many companies to close their doors.
Using the services of hospitality accountants to maintain records, ensure timely payments and get advice will help you navigate this challenging economic period and futureproof your business for long-term success. Discover exactly how accurate accounting is important, from cash flow management to tax compliance.
Cash flow management
Especially in the hospitality industry, which is heavily influenced by consumer demand, cash flow is rarely steady and can be stressful to manage. Knowing how much you’re spending and when will help you make the necessary arrangements to stay in the black with your operations, even during costly periods such as low season and Christmastime.
Accountants will help you understand your spending trends and advise on how much you should save each month, giving you more leeway when you need it and the confidence that you’re not going beyond your means. Accurate information is also essential for investors.
Costing and budgeting
When juggling the many aspects of running a business, it’s easy for budgeting to fall by the wayside. However, this is key to financial stability, ensuring expenses are paid on time, you have an emergency fund for hard times, and spending and income are balanced so you turn a profit.
Using your financial data, accountants can maintain an accurate budget for your business so you have early warnings of danger points and constant insight into the health of your operations. Pricing in particular is hard to gauge as the cost of services and supplies can vary widely year on year and should be updated regularly to protect your profit margins.
Tax compliance
As you’ll know, UK companies must adhere to government guidelines on business tax and VAT. These rules can be complex, especially if you have overseas operations, and are frequently updated. Failing to comply can lead to underspending and related fines which increase with interest until settled.
Keeping accurate records helps to ensure no tax charges are accidentally missed so there are no issues with your yearly tax return. Accountants are well-versed in tax requirements and make it their business to stay ahead of the latest regulations so you can be sure of compliance.
Business strategy
Having a clear idea of your finances means you can make informed decisions regarding business strategy. Whether you have dreams of expansion or want to move your operations online, achieving your ambitions while avoiding debt relies on knowing exactly how much you can put towards your project.
Recording data also means your accountants can analyse your financials and identify areas for improvement in your business strategy to minimise your costs and boost your earnings.