Hospitality Financial Leadership – Designing Your Financial Reporting System – A Wake Up Call


Having a financial system that produces regular information about your hotel and where it is headed is critical to your survival. Without these regular reports, you are really flying by the seat of your pants. But what exactly should you watch and who is producing it and when?

That’s what it’s about. I’ll outline the cast of characters you need to include, the documents they need to produce, and a timeline to follow. The beauty of this system is that it is quite routine and we repeat it every month, like the cafeteria menu. Having a simple system that everyone knows and can follow is wonderful.

Le Punch 1,2,3: Accrual, monthly & forecast or AMF, if you like acronyms

  1. We have to use the accrual accounting system and its characteristic is to produce a monthly financial statement which corresponds to all the income and expenses of the current month. The format of the statement is in the USALI layout and it includes year-to-date information and comparisons to the budget and latest forecast. If you are unfamiliar with USALI – learn more here.
  2. We need to do this on a regular, scheduled monthly basis. Waiting until the end of the year or the first quarter of the new year to tilt our annual fate is unacceptable. We need monthly reports. If you have to wait for your “accountant” to gather all the information at the end of the year, you condemn yourself to living in a kind of purgatory where you are unable to learn your own fate. Your business is in a permanent vacuum and this is neither necessary, nor professional, nor acceptable.
  3. Every month we update the previous financial statements and since the beginning of the year we also prepare the latest 30, 60 and 90 day forecasts and update the year-end 12 month forecasts.

Right now, if you’re reading this and completing this process within your hospitality business, you know what I’m talking about and you can stop reading. If you don’t do these three processes and want to, that’s your wake up call. You may have all kinds of excuses and reasons why you don’t know or can’t know: Without accurate and timely financial information, your business won’t be as profitable as it could be. Period, period, exclamation point.

Running your business with only annual statements and tracking current income is called cash accounting. It may have been fine for the past or the previous establishment, but not for you. So ask yourself, How can we make this move right now? This is the first step.

You may think it will cost more to produce this information and ultimately the results will be the same. Bad. The truth is, it may take extra steps and involve more people, but it’s worth it because it’s what is needed if you want to be able to properly manage your financial effort. You have made the investment in your business and taking the easy way out is a wise sum but a foolish pound.

Learn the detailed steps you need to take to create your monthly budget and forecast here.

The best way to use monthly reports and insights is to involve key members of your team. This brings up another tricky topic, which is the sharing of finances within your business. It’s a paradigm and changing the way you look at this matter of trust is the secret to mastering this dish. Find out how and why you should split finances here.

Finally, create the process, share the information, and make this transition stay what you want. It requires your leadership, your commitment and your willingness to learn and grow. I summarize the whole process to follow here.

If you’ve read this far, chances are you’re looking to change the way you manage your hotel finances or you’re bored. Anyway, it’s OK. If you need help and a path to better relationships, contact us. Waiting and worrying won’t help, but I can.

PS: If your accountant told you that this is not possible or practical, it’s time to create a new one. 😊

David Lund
The hotel finance coach
+1 415 696 9593
David Lund

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