How to Outsource Your Restaurant’s Accounting for Optimal Efficiency

Many restaurants and hospitality-oriented organizations are navigating high volumes of financial data and increased business demand with limited resources and minimal internal accounting teams.

The changing industry landscape, the challenge of financial optimization and the pressures to uphold a high-caliber business model lead many restaurants to outsource their accounting functions.

Outsourced accounting allows these businesses to conserve resources, elevate financial accuracy and access new and valuable insights. But for organizations that have always kept their accounting functions in-house, it can be difficult to know where to start.

Here, we’ve outlined how you can successfully transition to outsourced accounting so you can optimize your restaurant’s financial operations.

1.   Identify Your Needs and Purpose

Before beginning the process of looking for an outsourced accounting provider, you first need to define your current state and identify inefficiencies. Ask yourself questions that can pinpoint your needs and help you understand your requirements for a provider:

• What is causing choke points in your current processes (the magnitude of daily transactions, reconciling bank statements, payroll and invoicing in your financial system, etc.)?
• Do you need help in a specific area, or does your internal accounting need a complete overhaul (payroll, tax, accounts payable, accounts receivable, etc.)?
• Why do you want to outsource your accounting (reducing overhead and labor costs, increasing accuracy and remedying errors, accessing deeper insights, etc.)?
• What are you hoping to gain from a revised accounting process? What insights would you like for an outsourced accountant to provide (understanding recipe cost calculations to make sure your menu prices are compatible with your ideal profit margins, using previous data about your customer traffic to project your future staffing needs, etc.)?

Starting from the ground up to define your pain points, purpose, goals and expectations will help you more appropriately vet potential vendors and the services they offer.

2.   Research and Select Your Provider

Begin your search by considering firms that align with your goals and have a positive performance history within the restaurant and hospitality industry. Then, narrow your list by evaluating whether the services they provide fit the scope of the needs you’ve already identified.

Restaurants in particular should consider a provider’s familiarity with the industry’s unique health codes, compliance regulations and labor laws. You should ensure your advisor has the restaurant-specific intel to guide you in a way that:

• Complements your business model (e.g., if you have passive foreign investment company holdings)
• Heightens efficiency (through the ability to analyze financial data to identify areas of waste)
• Strengthens cash flow (to ensure your profit margins are competitive in comparison to the larger industry

Finally, consider the software that providers use, and ensure that it will work with your existing systems. Some software tools can produce standardized reports and monitor key performance indicators so you can accurately understand your business’s financial activity each month.

Once you’ve narrowed your search to a few providers, request a proposal or fee structure to compare pricing.

3.   Create and Implement a Transition Plan

After you’ve selected a provider, it’s time to onboard them as a vendor—but it isn’t always a straightforward process. Disruptions will most likely occur. For a smooth transition, work with your new provider and your internal team to establish a plan for shifting the workload away from the internal team to the new provider.

Collaborate with your vendor to clearly define roles, responsibilities, scope of work, timelines, deadlines and deliverables. Take into account any seasonal patterns your restaurant experiences (such as tourism trends, holidays or weather implications), and discuss scalability plans that would support these specific demands on your organization. Because restaurants uniquely work with perishable inventory, fluctuating demand and fast-moving payments, it’s important to set expectations from the beginning to streamline the process and increase the transition’s efficiency.

Conduct a meeting with your internal team members who will be affected by the transition to sort out any problems, establish a confidence and set a bright outlook for the new opportunity. Since the processes and technology will be new to the team, set aside training opportunities so your team can ask questions or voice concerns.

4.   Establish Continuous Feedback and Communication

Even after the transition is complete and your outsourced provider is running at full capacity, it’s still up to you to periodically evaluate the performance of your provider to ensure that the goals you set in the beginning are being met.

At least monthly, work with your provider to review your financial data and to discuss their insight for and support of your organization. Consistent conversation topics with your outsourced accountant should include:

• What is the status of our accounts payable and our vendor relationships? Are we sourcing our ingredients in the most cost-effective way?
• What is the overall status of our organization’s financial health? What is the financial health for each restaurant location? Do the numbers indicate any opportunity for growth or improvement?
• How have changes in the cost of ingredients impacted our profitability recently? How have costs changed since last month?
• Do our points of sale show any indication of abuse or fraud?
• Are there any potential cash flow issues we should know about? How are current industry trends impacting our cash flow?
• How effective is our inventory management? Where can we improve to reduce waste?

Keep open lines of communication with your provider and intentionally work to establish a strong relationship over time for the greatest mutual benefit. Both parties should be receptive to feedback and open to change.

Get Started With Outsourced Accounting Services

Outsourcing your accounting can lead to tremendous advantages, but success relies heavily on proper planning and transparent communication. To learn more about how your unique organization should get started with outsourced accounting, reach out to your Warren Averett Advisor directly, or ask a member of our team to reach out to you to get the conversation started.