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Choosing an effective accounting or cost management software
By Wayne McKay
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The first step is to recognize the difference between accounting and cost management software.
Accounting software is typically used to track all incoming and outgoing payments, to provide you with accurate and timely information about your business' financial situation. Cost analysis or management software is used to track all operational expenses, with the goal of cutting costs, reducing waste and improving profitability.
Be sure to choose an accountant who understands, sorts and reports your different revenue and cost categories in the same way as your management software. This will help you to get a fuller and more accurate picture of the true costs associated with your restaurant. Always remember that your accountant will report the financial results using accounting software, while you or your managers will keep an eye on costs using cost management tools.
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When using cost management software, it is essential that all costs are carefully and accurately categorized. Too often, non-food items are included in the "food cost" category - a simple way to avoid this confusion is to remember, "if you can't eat it, it's not food cost." It's worth it to take the time up-front to ensure that all costs are accurately entered. This is the only way for you to manage and project future costs with confidence. The best way to track costs is also on an ongoing basis - don't wait until the end of the month to enter all of your data!
Here are a few things to consider when looking at different cost management software options:
* Determine what type of reports you need, and how you would prefer to measure and document your costs and sales. These can be broken down into different categories, or you may want to use the same cost/revenue categories as used by your accountant.
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* It is also important to use a dependable point-of-sale (POS) system because it can provide "real time" financial data on your food and labour costs, giving you a month-to-date reporting of costs in an instant. Flash reports retrieved from a POS system will provide a good basis for understanding your ongoing costs, will help you to better predict your operation's profitability, and can also help to prevent serious financial losses. Some systems can even be monitored by your cost control management support person via an online E-global monitoring service.
* Choose a point-of-sale system that offers cost analysis reporting capabilities - this is a quick and simple way to measure the cost and profit performance of your operation's menu. Make sure that the POS system is also backed by qualified data/menu inputting services.
* Request references from the POS personnel assigned to your account. Seeking references is another due diligence activity that will protect you from hiring the wrong person to do the job. The person inputting your information must truly understand the art of food costing. If you are not sure what questions to ask or the answers to look for, consider consulting a food cost-systems specialist.
* Make sure to get a clear picture of how much of a time commitment will be required each week to maintain the system for weekly and month-end reports.
* Always remember that when it comes to data entry and analysis, the results are as simple as "garbage in, garbage out." Don't forget to "kitchen test" your recipe data, to be sure that the portions served on the line accurately match the true food costs...entered into the system. This is essential in order to produce dependable menu cost analysis reports.
About the Author:
Wayne McKay is an Executive Chef and Corporate Food & Beverage Cost Controller with a passionate interest in providing cost analysis tools and training for front-line staff. He is the founder of Menu Tools Inc. - a foodservice cost analysis software and training company owned, a trademark owned and operated company of Hospitality Solutions of Riverview, N.B. Wayne can be reached at 506-387-4401, by fax at 506-386-5705 or by e-mail at blmt@nbnet.nb.ca .
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