Should Your Restaurant Outsource Accounting Functions?
Standardizing and simplifying finance and accounting processes is an essential characteristic of a well-run organization. Whether the accounting function is in-house, co-sourced, or outsourced, it’s key for restaurants to ensure they have strong process components, creating a scalable and easier-to-manage company that’s ultimately more profitable. When thinking about the best way to handle your accounting functions, consider how three of the most prized commodities — time, real-time data and dollars saved — could be impacted:
Ben Franklin’s old adage, “Time is Money,” speaks to opportunity cost. By outsourcing non-core activities, a restaurant manager’s time can be spent increasing profits by focusing on core functions such as growth through strategic opportunities, increasing margins, and improving customer service. Trusting external professionals to tackle the time-consuming task of bookkeeping not only ensures your records are maintained accurately, but also frees up resources once dedicated to non-core business activities to take your business to the next level.
On the flip side, a restaurant’s accounting needs may be very specific and distinct. An in-house professional’s proximity to the ground and ability to live and breathe a single business’s operation day-to-day could ultimately save time when it comes to getting engrained in your business functions and how they evolve over time. Time as it pertains to immediacy of receiving answers, for example, could be impacted by the distance of your accounting professional and the form of communication—whether it be in-person, via email or phone.
If you have a question about finances or accounting, or need to see historical information, getting an answer could be a more expedited process if all the data, and the individuals managing it, are under your same roof. And when it comes to security and privacy, many restaurant owners are more comfortable maintaining troves of data within their walls.
However, leveraging cloud-based technology means that financial data may be accessed anytime from anywhere. Current platforms have the capability to import real-time activity using a variety of applications. By implementing multiple solutions that seamlessly integrate into your accounting software, many functions, such as time tracking, bill paying and expense reporting, may be streamlined. Books are easily closed faster and more accurately. Cutting-edge tools provide the ability to effortlessly monitor cash flow and use key performance indicators that empower you to make more informed business decisions. Consolidated reporting allows multi-unit or franchise restaurants to compare performance by location, affording insight into operational strengths and weaknesses.
Therefore, building a strong accounting system using contemporaneous, centralized data is a best practice that allows for more timely and accurate reporting and ultimately, a healthier bottom line. Depending on your business’s available resources and technological capabilities, you may need to leverage outside professionals and/or new technologies, or bring an outside professional in-house, to manage these new systems.
Consider the resources your business already has in-house. If you’ve employed an individual or team of in-house accountants who have grown with your business, the decision to outsource would likely be driven by the need to scale up or down, and whether you have the resources at hand to do so efficiently. Outsourcing could cost more than maintaining your in-house function if it involves independently getting an external accountant up to speed on your business without the ability to adequately train and engage them upfront.
However, maintaining in-house accounting systems can also be costly. If you do not have an individual or team in-house who have grown with your business or who can quickly onboard, hiring an in-house bookkeeper or controller involves not only finding the talent, but also training and supervising them. Further considerations include vacation and sick days, which may cause delays in service. Partnering with a provider provides access to talent at all levels, in addition to intentional redundancies that ensure records are consistently maintained and kept up-to-date.
In today’s complex and quickly evolving business environment, all restaurants should focus on developing the tools and strategies required to streamline the book-closing cycle, as well as develop and monitor benchmarks that provide opportunities to optimize the use of working capital. Whether you’re engaging a dedicated professional in-house, a proactive, industry-specific accounting team, or a co-sourced partnership between the two, consider how well they understand your unique business needs and can deliver measurable improvements in reporting and financial systems.