1. Keeping your cash flow strong
Forecasting is an essential part of cash flow management, especially given that cash problems can often be identified and isolated well in advance. By investing in a financial data analysis system which lets you model how likely different cash-related eventualities are and what your current circumstances might lead you to, you’ll be able to see ahead as much as possible. Given that hospitality firms often have to pay up in advance (perhaps by buying lots of furniture for a hotel, for example, or placing orders with catering suppliers weeks in advance), this sort of forecasting is handy.
A very practical way in which you can solve the problem of bad cash flow is to give appealing discounts to customers who settle their bills or pay a non-refundable fee early. This is a commonly accepted practice in the hotel industry, so it’s not something that is likely to raise eyebrows among customers. This can help ensure you get the cash in-flow you need.
2. Ensure your stock flow is controlled
For many hospitality businesses, stock is a delicate issue. A restaurant which over-orders perishable food, for example, may lose cash through waste. But a restaurant which fails to order enough food could lose cash by losing customers who fail to come back as they couldn’t get what they wanted from the menu! Investing in physical assets like freezers can help give some flexibility. And a shared, dashboard-centred data system which aggregates information from teams as diverse as the kitchen staff to the finance team can help ensure that accurate and precise insight into the relationship between stock flow, performance and payment is playing out. It also means that specific metrics – such as how much perishable food is consumed and how much is wasted – can be tracked, and this data can be fed into decisions taken further down the line.
A good flow of cash and stock is essential to any thriving business no matter what sector it operates in. But for the hospitality industry, it’s especially important to make sure that everything is functioning well at all times. And by judiciously investing in assets and software to avoid preventable problems and model your future performance, you’ll be able to give your firm the best possible chance of operating smoothly when it comes to cash and stock.
Are you having problems with the flow of stock and cash in your hospitality business?
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