Running a successful coffee shop requires more than just mastering the art of brewing coffee and baking desserts. Whether you’re part of a chain or independent cafe, mastering the art of accounting is key to achieving long-term success. Running your own cafe will likely have you learning new accounting skills that may fall outside of your comfort zone. As such, we’ll cover 8 valuable tips to help your coffee shop’s accounting get on track and stay there.
1. Embrace Cloud-Based Accounting Software
Make technology work for you. As the saying goes, “work smarter not harder”. That being the case, you’ll want to utilize online software to manage your records. This approach offers several benefits. Firstly, cloud-based software allows you to access your accounting data from any device and location, enabling you to generate, store, and view invoices and financial information at any time. All you need is internet access and your login credentials.
Additionally, online software automatically generates backups, ensuring constant access to your coffee shop’s archive of financial records. Moreover, these systems facilitate easy collaboration, allowing multiple individuals to access the platform at their convenience.
2. Stay Up To Date with Daily Income and Expenditure
It goes without saying that monitoring your coffee shop’s income and expenditure is a central part of managing its accounting process. It’s a good idea to clearly categorize the payments you receive. This means that you should note whether a payment was made in cash, by card, or online.
It’s important to perfect your invoicing system in order to monitor outstanding payments, while also keeping a record of the more substantial payments made to your coffee shop in the past.
Similarly, you should clearly track expenditures by logically filing invoices and receipts. This allows you to accurately assess profitability while identifying emergent patterns and trends.
3. Track Labor Expenses
Monitoring labor costs can be surprisingly complicated.
Depending on the number of people that work for your coffee shop, you may feel overwhelmed by attempting to keep track of exactly how much you spend on wages every week. Moreover, it can be particularly tricky to account for overtime costs, as it’s challenging to predict what this will be on a daily basis.
Implementing a detailed scheduling system ensures that everyone has stipulated working hours. The scheduling program should also outline duties and responsibilities to maximize efficiency within your coffee shop. Running any business requires flexibility and the ability to view the proverbial “big picture”. Reassess your labor costs constantly to identify any potential lack of efficiencies.
4. Monitor Inventory
Monitoring inventory enables you to maintain a steady stream of orders for your coffee shop. This ensures that you can regulate monthly expenditure, as you’re not forced to make large and panicked purchases when your supply of beans runs dangerously low. Note the purchasing patterns of your customers so you can be prepared to meet any future demand.
Once you’ve established a pattern, you can automate certain orders, which ultimately simplifies your accounting and invoicing process.
5. Update Your Budget
So many business owners make the mistake of not continually adjusting and assessing their budget. Unfortunately, running a coffee shop is not always a stable source of income. Being unable to account for the fluctuations in customer purchases over the course of the year has been the downfall of many a coffee business. To address this, establish a flexible budget that accounts for this uncertainty.
In some cases, you may need to create an entirely different budget for the busy holiday season as compared to quieter periods throughout the year.
Your budget is the foundation of your coffee shop’s financial boundaries, and it must accurately reflect the financial processes of your business.
6. POS Compatibility is Vital
Ensuring that your point of sale (POS) system is compatible with your online accounting software is an absolute game changer. Many people neglect to utilize the timesaving potential of this feature—an option which frees up hours that you could spend sipping on a delicious cappuccino. Time is money and that’s clearly demonstrated in the fast-pace world of coffee shops.
Data integration ensures that information syncs across your various platforms, eliminating the need to manually enter data from your POS after your coffee shop closes for the day. Plus, syncing data ensures a level of accuracy which is simply not possible when tasks are performed manually.
7. Keep Business and Personal Expenses Separate
This may seem like a no-brainer. However, a surprising number of people think that it’s okay to merge personal and business expenses. For the sake of clarity and professionalism, you must maintain a clear divide between coffee shop expenses and personal purchases.
This separation is also important when it comes to filling taxes. You want to ensure that you’re certain about exactly how much money flowed in and out of your business in order to submit accurate information to the IRS. Failure to do so could result in serious legal and financial repercussions, which would be damaging to you and your coffee shop.
8. Outsource if Necessary
There’s absolutely nothing wrong with getting someone else to take care of your accounting for you. In fact, part of working smarter and not harder means efficiently delegating your workload. Admitting that you need help with managing your coffee shop’s financials is nothing to be ashamed of. That’s why the very field of accounting exists in the first place. Finding a good account will likely spare you and your business from challenges that could be anxiety-inducing and financially damaging.
A freelance part-time bookkeeper or accountant that takes care of everything from invoice processing to reconciling cash and card payments and filing tax returns can lift a huge weight off your shoulders. If you’re looking to hand over your accounting responsibilities, just be sure to verify the credibility of prospective candidates.
Set Your Coffee Shop Up For Success
In many ways, trying to run a coffee shop without a good accounting system is like trying to make quality coffee without good beans. It’s just not possible. While running a coffee shop is a challenge, it can also be a wonderfully rewarding experience. If you can master and maintain an organized and efficient accounting system, you’ll be setting yourself up for the best chance of success.