Does month-end closing feel like a guessing game? Many operators struggle to measure performance accurately. This causes missed opportunities for growth and profit. Precise financial closing is more than an accounting task. It is a critical tool for better decisions.
Square Away Your Sales Data
Complete all daily sales reports. Verify every transaction from the month’s last day. Use your Lavu POS system to cross-reference credit card settlements with cash drops. Look for discrepancies over $50. Accurate sales totals are the foundation of your financial reports.
Incorrect sales figures distort all other financial calculations. Account for every penny. This step confirms your revenue numbers are solid.
Count Your Stock, Know Your Costs
Physically count all food and beverage inventory. Do this after your last service for the month. Assign a monetary value to each item based on its purchase price. This gives you an accurate ending inventory figure.
Subtract your ending inventory from your beginning inventory plus purchases. This shows your true Cost of Goods Sold (COGS). Aim for a food cost percentage between 25% and 30%. This number helps you price menu items correctly and find waste.
Analyze Your Team’s Efficiency
Review all payroll data for the month. Ensure every shift is logged correctly. Calculate your total labor cost. Include wages, tips, and benefits. Divide this by your total sales to get your labor cost percentage.
A healthy labor cost percentage is often between 28% and 32%. Lavu POS tracks employee hours and sales by server. Marty, Lavu’s AI, flags shifts with high labor costs versus sales. This helps you adjust staffing for the next month.
Reconcile Operating Expenses
Gather all vendor invoices, utility bills, and other operating expenses. These include rent, insurance, marketing, and supplies. Match each expense to its payment. This prevents duplicate payments and missed bills.
Categorize all expenses carefully. This makes financial reporting clearer. Accurate expense records are vital. They help you understand your true profitability. They show exactly where your money goes.
Generate Your Profit & Loss Statement
Compile all your financial data. Include total sales, COGS, labor costs, and operating expenses. Use these figures to create your monthly Profit & Loss (P&L) statement. This report shows your net income or loss.
A P&L statement shows your restaurant’s financial health. It helps you find strong performance or areas of concern. Lavu POS integrates with accounting software. This simplifies the process, making financial reporting straightforward.
Understand Your Cash Position
Analyze your cash inflows and outflows for the month. Include cash sales, credit card settlements, and vendor payments. A cash flow statement shows you exactly where your money goes and comes from.
Understand your cash flow to prevent liquidity problems. This helps ensure you have enough cash for upcoming expenses. This review differs from profit; profit does not always equal cash.
Learn From Your Data, Plan for Growth
Review your P&L and other reports. Look for trends in sales, costs, and customer behavior. Did your new dessert item increase profits? Did food waste reduce your margins?
Marty, Lavu’s AI, gives deeper insights. It predicts future sales or pinpoints inefficiencies. Use these insights to set goals for next month. Make data-driven decisions for smarter operations.
FAQ
How often should I perform these closing procedures?
You should perform a full closing procedure at the end of each month. Daily reconciliation helps keep data accurate for month-end.
What is a good food cost percentage?
A good food cost percentage typically ranges between 25% and 30%. This can vary based on your restaurant concept and menu.
Can a POS system help with end-of-month closing?
Yes, a POS system like Lavu automates sales tracking, labor hours, and inventory data. This simplifies the closing process.
What is the most common mistake during month-end closing?
A common mistake is inaccurate inventory counts. This directly impacts your Cost of Goods Sold and overall profit calculation.
How does Marty AI assist with financial analysis?
Marty AI analyzes your Lavu POS data. It provides predictive analytics and flags areas of concern for sales or costs.
Is cash flow review the same as profit review?
No, profit is your revenue minus expenses over a period. Cash flow tracks the actual movement of cash into and out of your business.
What is the purpose of a P&L statement?
The P&L statement shows your restaurant’s profitability over a specific period. It helps you understand if you are making or losing money.
