Many small business operators today rely on software packages for their point-of-sale (POS), accounting, payroll and booking reservations. While this is a great approach to increasing efficiency, centralising information, and assisting in reducing the hours a business owner or operator must spend on “tedious” paperwork, it is only useful if the correct information has been entered.

With the advent of cloud based software, many motel and hotel owners assume they are recording every financial aspect of their business in real-time, and in an accurate manner. It is easy to become complacent and assume that these software systems understand the inner workings of your day-today business, simply because they are built for small businesses, or specialise in serving the hospitality sector. It is however important to remember, that the cost-effectiveness of some of these great POS systems, often comes with a trade-off, with functionality being quite general in order to serve a wider customer base of business types.

It is therefore important for motel and hotel owners and operators to familiarise themselves with the range of data their team need to input, and to also identify the best range of reports and measures to set-up, in order to provide an accurate review of trends and results – for greater operational efficiency.

As accounting service specialists in the hospitality industry , we are increasingly seeing data being incorrectly input into systems, resulting in inaccurate financial reporting and a misleading current trading position. We recently worked with a regional hotel and helped them to identify that for over two years, expenses were not allocated correctly within their accounting software and POS system, as they had not been set-up correctly when the system was first installed. We also found that the technicians tasked with system set-up failed to consider all of their current needs, and also failed to factor in future needs in staff and business growth. Often the wasted time and resources of a poorly established POS system are not discovered until tax or audit time, culminating in at least 12-months’ worth of wasted time and resources.

In another recently reviewed hospitality business’ financial reports, the business owner instructed us to identify key problem errors, because he could not “pinpoint” issues, and why there was “never sufficient monies in the bank.” The outcome of this review showed scathing gross profit results well below industry standards, simply due to the incomplete inputting of all operating expenses by key staff.

In reviewing this client, our first point of reference was the POS System. In conducting a full review of the POS System, it did not take us long to realise that the old adage of “Garbage In, Garbage Out” was occurring in this scenario. From actual ‘Food Sales’ showing on reports as ‘Beverage Sales,’ and discounts not being recorded correctly by staff, to the failure to record stock movement – the system was providing a false sense of security and was producing inaccurate information.

Once we were able to correct the current recording errors, we requested in-house training for key staff, on maintaining accurate basic data entry including appropriate set up of sale items in the
system. We set-up procedures for personnel to complete these tasks rather than being entered on an Ad-Hoc basis by “whoever was available to enter the data.” We then fine-tuned the sales data
being reported. We set-up ‘promotions’ appropriately, as the set-up was affecting the reporting of actual monies received. We ensured management were able to see exactly what types of
promotions were being rung-up (2-for-1 offers, Loyalty discounts, etc). This has now become a great management tool for in-house promotions to be managed appropriately.

Additionally, we needed to ensure the stock recording facility on the POS system was utilised. Key staff personnel were delegated to complete this task. We started with the basics – where food and beverage stock delivered must be checked and signed off before being accepted. Upon approval of the stock received, the information of what was received, the Landed Unit Cost (LUC) and quantity was then entered into the POS System. This also gave management an idea of any price movements for stock and whether they needed to source elsewhere for particular stock to gain a better cost

After another in-house training programme completed by the software provider, where key staff were taught how to accurately record stock levels and correctly decrement stock on hand when a product was sold, we were confident this hospitality business owner was equipped with information they could utilise on a real-time basis, to maintain optimal gross profit results against the industry standards.

With these changes the business was soon operating at an average gross profit of above 65%, which was the result of utilising the full potential of their existing POS system, putting procedures and
systems in place to be armed with accurate and useful information at any given time, and putting the onus on key staff personnel to correctly identify potential cracks.

For motels and hotels not currently using a POS System, there are always manual systems which can be implemented to achieve similar outcomes. Regardless of your approach, aim to ensure accurate and complete recording of your data, not only for day-to-day reporting but to avoid issues at tax time, audit or for the future sale of your business.