It’s no secret that hotel businesses are often challenged with balancing their monthly cash flow and keeping their head above water. There are a variety of reasons for this, but in many cases there is something amiss with the company’s financial records and data.
To help you identify these potential issues, we’ve compiled a list of some common red flags to look out for.
You never know what comes next
This can be good or bad. It all depends on how you look at it. If the future of your business is uncertain, this is a good thing. While uncertainty can be a little scary for some, it also gives you the chance to find new opportunities or take risks that would not have been possible.
For example, if you are in the construction industry, there are many job openings on the horizon with various federal agencies. Much of this work is contract based and very hard to predict, but for those with the right set of skills and experience, it could pay off big time over time. … Look for opportunities before they become open positions.
You don’t know how much money you’re really making
There’s little question that using hotel accounting software and technology more effectively can increase your bottom dollar. However, you can only do so much to increase your profits if you don’t know how much money your business is really making.
Once you know the sales and profit numbers for your business, it will be a lot easier to have a sense of where your income stands relative to expenses.
You are wondering if it’s all worth it
If you’ve been in business for a while, there’s one thing that you should already know-it’s never easy. In fact, many hoteliers look back on the first five years of their business as the toughest time in their professional lives. By getting accurate financial information about your hotel now, you can make better decisions about what to focus on moving forward.
You don’t keep your books up to date
Oftentimes hotel businesses get so caught up with day to day work that they neglect bookkeeping duties. This is not just an accounting issue, but also a revenue issue as well because if you do not keep your records up to date, the odds of late payments increases dramatically.
You’ve made a lot of changes, but they didn’t pay off
One of the first steps in getting your hotel back on track is to take an honest look at every area you can improve. By setting goals for yourself, you’ll have a better idea where you stand financially. Then, you can use that information to make necessary adjustments to your business.
Your expenses aren’t matching your income
It’s good for a hotel business owner to know what expenses are coming up so that they can plan accordingly and make sure the money is there when the bills are due. However, there may be a problem if you can’t match your expenses with your income. This could mean that either you’re not doing enough to promote your business, or there are some expenses that don’t really make sense.
There are different ways to find this information and it’s worth the time to do so.
You’re making a lot of purchases, but you don’t know why
This is another sign to look for when you’re looking over your accounts. If you’re making a lot of purchases, but it does not seem to have any impact on sales, there is a problem.
One way to find out what’s going on is to create purchase orders for every purchase. This way, you can clearly see how much money is coming in and going out each month.
You’ve never done a ‘cash flow’ analysis
When you hear the word “cash flow,” what comes to mind? Perhaps when you picture cash advances made to your business by investors or the proceeds from selling off some of its assets.
The truth is that cash flow can be a lot simpler. To get an honest idea of your business’ cash flow, you should conduct a cash flow analysis.
You’re getting behind on payments or invoices
Many hoteliers avoid this issue because they believe it will not be an issue for them. They don’t want to think about the possibility that their business may need to pay down their own bills. Unfortunately, this is one of those things that can quickly snowball out of control and lead to some serious problems down the road. In fact, a lot of business owners find themselves in hot water with their creditors if they don’t pay off their bills on time.
It can be hard to keep up with all of the data in a business, especially if you have a lot of it or if it is spread across multiple systems and software. However, with our list of red flags below, you will have an easier time keeping track of what’s going on in your cash flow and where money is coming from and going to in your business.
Besides, cloud based hotel accounting software can be a boon overcome throughout the process and lets you evade all the possible red flags.
