The leading accountants in Leeds for restaurants and cafes.

Cash flow management is vital for any business, but in the restaurant industry, where the margin between success and failure is razor-thin, it becomes even more critical. Without a healthy cash flow, your business can quickly run into trouble. At MSF Associates, we’ve spent nearly 20 years helping food and hospitality businesses manage their finances, and we've seen firsthand the biggest causes of cash flow problems. Here are seven best practices to help you avoid these common pitfalls and maintain a healthy cash flow. 1. Understand Your Cash Flow Cycle For any restaurant, café, or takeaway, it’s crucial to understand how cash flows into and out of your business. This includes knowing when your busiest times are, how often your suppliers need payment, and when to expect revenue from customers. Analysing your cash flow cycle, including seasonal trends and payment patterns, can help you anticipate cash shortfalls. A professional bookkeeper can assist you in mapping out this cycle, providing valuable insights to keep you ahead of any financial issues. 2. Maintain Accurate and Timely Financial Records Accurate and timely financial records are the foundation of good cash flow management. Keeping track of daily sales, expenses, and supplier payments allows you to forecast your cash flow needs and make better decisions. Regular reconciliation of your accounts will provide you with a clear picture of your financial health, enabling you to make well-informed decisions about inventory, staffing, and other operational needs. 3. Implement Strict Credit Control Procedures If you offer credit to corporate clients or caterers, it’s important to implement strict credit control procedures. Late payments can seriously impact your cash flow. Make sure to conduct credit checks on new clients, define clear payment terms, and send invoices promptly. Follow up on overdue accounts and consider implementing penalties for late payments to encourage compliance. 4. Optimise Your Payables Management Just as it’s important to get paid on time, managing when and how you pay your suppliers can also have a big impact on cash flow. Negotiate longer payment terms where possible, and take advantage of early payment discounts if they offer significant savings. However, ensure you don’t deplete your cash reserves too quickly by paying too early. Balancing this can help you stabilise your cash flow. 5. Prepare for Emergencies with a Cash Reserve Unexpected expenses can arise without warning in the food and hospitality industry, whether it’s equipment repairs or unexpected staff shortages. Having a cash reserve can help your business navigate these crises without putting your operations at risk. We recommend setting aside a portion of your cash flow into an emergency fund. The amount will depend on the financial health of your business, but having this buffer can be the difference between riding out a storm and facing a cash flow catastrophe. 6. Utilise Cash Flow Forecasting Technology Many tools and apps are available to help businesses like yours predict future cash flows. These can be especially useful in the hospitality industry, where business can fluctuate with seasons, holidays, and local events. By using cash flow forecasting software, you can predict future sales and expenses more accurately, helping you plan for any potential shortfalls or periods of surplus. 7. Regularly Review and Adjust Your Strategies The hospitality industry is always changing, so the cash flow strategies that worked well last year might not be as effective this year. Regularly reviewing and adjusting your cash flow management strategy is essential. Whether it’s tightening credit control during quieter months or adjusting staffing levels to match seasonal demand, working with a professional accountant or bookkeeper to refine your approach will help keep your business on solid financial footing. Conclusion Managing cash flow effectively is critical for restaurants, cafés, and takeaways, and it’s much more than just checking your bank balance. With nearly two decades of experience, we are here to help you protect your business from cash flow problems. Contact us today on 0113 240 4100 to learn how we can support your business and keep your cash flow healthy.

Running a restaurant, café, or takeaway is no small challenge, and payroll management often tops the list of most tricky tasks. And while no one starts a restaurant with the desire to manage a staff payroll, getting it right is essential. Missteps here can cost you precious time, and even some costly headaches from the taxman later on. So, let’s take a quick look at some of the common payroll blunders in the hospitality industry – and how you can avoid them! 1. Mixing Up Pay Rates for Different Roles We understand – your head chef, wait staff, and part-time cleaner all have different pay rates. But when staff work varying shifts and occasionally cover different roles, payroll mistakes can easily happen. Accidentally paying your kitchen staff as waiters or miscalculating overtime for your cleaning team can lead to unhappy employees and an admin headache. Our advice: invest in a reliable payroll system or software that tracks hours and pay rates for different roles automatically. It might seem like a big leap, but it’ll save you a lot of manual correcting down the line. 2. Forgetting About Holiday Pay In the rush of day-to-day operations, it’s easy to lose track of your employees’ holiday pay – especially with a rotating door of part-time workers. But not offering the right amount of holiday pay, or forgetting it altogether, is a surefire way to run into trouble. Keep track of each employee’s holiday accrual and ensure it’s being applied correctly. A good payroll system will help you stay on top of this. If you’re unsure how holiday pay works for zero-hour or part-time contracts, ask us – we can help! 3. Miscalculating National Insurance and Pension Contributions When it comes to National Insurance and pensions, things can get tricky – especially with a mixed workforce of full-timers, part-timers, and casual staff. If you’re not calculating these contributions correctly, you might end up under or overpaying, which can lead to penalties or confused employees. Stay updated on the latest contribution rates and make sure your payroll system adjusts automatically. If you're unsure about the latest regulations, we can help you stay in the loop. 4. Muddling Up Staff Tips Tips play an important part in many hospitality workers’ pay. But are you handling them correctly? Whether it’s cash tips, card tips, or tips shared through a service charge, the tax treatment can vary. Confusing? Absolutely. But getting this wrong could mean tax penalties down the line. So, set up a clear system for handling tips and make sure everyone knows how it works. It’s important to know when tips are considered part of wages and how to report them properly. We can help you figure out the best method for your business and keep you compliant with HMRC. 5. Missing PAYE Deadlines Missing PAYE deadlines is more common than you might think. But late payments or submissions to HMRC can result in penalties – the last thing any business needs. To avoid this, set reminders for key dates, or better yet, use payroll software that sends out alerts when PAYE submissions are due. If you’re feeling overwhelmed, outsourcing payroll management might be your best move. 6. Not Keeping Records Organised We've seen first-hand how chaotic things can get in a busy restaurant, and so paperwork can often take a back seat. But payroll records are essential for tax purposes and protecting yourself in case of any disputes. HMRC requires you to keep certain payroll documents for at least three years, so keeping everything in order is a must. Consider digitising your records to save time (and paper!). Use cloud-based payroll software that keeps everything neatly stored in one place. If you ever need to refer to old payroll records, you won’t have to dig through stacks of paperwork. Key Takeaway Getting payroll right in the hospitality industry can somtimes feel like a circus-level juggling act. But avoiding these common mistakes will save you time, money, and a lot of hassle in the long run. If payroll feels like one more thing on your overflowing plate, don’t hesitate to reach out to us. Restaurants, cafes, and takeaways can benefit greatly from working with a specialist accountant. If you hadn’t noticed already, we are specialist accountants in Leeds for food service businesses, so unlike most accountants, we have years of experience working with businesses just like you. If you're interested in finding out more about how we can help your restaurant become more profitable, book a call with one of our accounting experts or call us on 0113 240 4100.