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5 Ways to Keep Your Restaurant Cash Flow Under Control

6/5/2022 | admin

If you want to keep your restaurant afloat, managing your cash flow is of prime importance. Unexpected expenses, overstaffing, and poor financial planning are some of the issues that can cause cash flow problems. If you want to prevent a cash flow problem, you need to look at ways of increasing the flow of money into the business and reducing your expenses. Here are some ways to improve your cash flow and the overall health of your business.

Take out restaurant insurance coverage

In the restaurant business, a single incident can affect your cash flow and put your business at risk. You could experience property damage due to a natural disaster like a fire. A customer could suffer an injury and sue you. If you have insurance, you can pay a monthly premium, so you don’t have to worry about the risk to your business due to an unforeseen event. It’s important to work with a qualified restaurant insurance broker to assess your particular needs and secure appropriate coverage. Learn more about restaurant insurance options and restaurant insurance costs at Scrivens.ca. Insurance costs can vary depending on the size of the restaurant and other factors.

Create a cash flow forecast

In your cash flow forecast, you will look at payments coming in and expenses going out. This will help you to estimate future revenue and expenses. Forecasting gives you more of an understanding of the amount of cash your business needs to meet its obligations. It helps you to anticipate cash flow problems before they happen. Your expenses are divided into fixed and variable expenses. Your fixed costs are costs you have to pay no matter what amount of revenue comes in, such as your rent, licenses and permits etc. When assessing your expenses, you can look at which variable costs you could adjust based on changes in revenue. Variable costs include food and beverage costs, labor costs etc.

Stay up to date with bookkeeping

You can’t manage your cash flow without keeping track of your income and expenses. Bookkeeping is necessary so you can see what income has come in and whether you have enough money to pay your fixed and variable expenses. The ability to run reports at any time gives you insight into the overall financial health of your business when you need it. Paying bills and taxes when they are due can help you to avoid costly penalties and interest. Consider outsourcing as a way to reduce your accounting expenses.

Make frequent and informed staff decisions

The restaurant business can fluctuate significantly depending on the season. A closer understanding of your seasonal needs is essential in the restaurant business. Sales and labor data help you to predict how much staff you need every day. You can create more purposeful schedules that you can adjust depending on actual sales coming up. Frequently evaluating labor and adjusting it accordingly will help your cash flow. In winter, you may experience a downturn in sales, and you may need less staff and inventory than in summer. Your summer months may be your busiest months, and you can look at increasing your staff, stock and marketing as they approach.

Optimize your inventory levels

Over purchasing inventory each week can seriously affect your business. If you have too much money tied up in inventory, it will negatively affect your cash flow. Ways to reduce your inventory include removing menu items that aren’t selling well or reducing your menu options, so you need to keep fewer items in stock. You can also think about how to cross utilize ingredients in menu items.

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5 Ways to Keep Your Restaurant Cash Flow Under Control