This article was written for Accounting Today by Brett Miller, Chief Financial Officer of Restaurant365.
It is common practice for businesses to start their journey with generic accounting software. However, as day-to-day bookkeeping tasks become complex, it can be difficult to make informed decisions to improve profitability while growing a business without features that industry-specific software provides. Having a full scope of intercompany transactions, POS integration as part of the software, automated bank reconciliation, and real-time reporting specialized for a specific business can make a significant difference in company success.
Here are some common differentiators in industry-specific accounting software:
1. POS integration
A point-of-sale system contains information essential to many business operations. Generic accounting systems require operators to import data manually, often resulting in hours of additional work and inevitable human errors.
More specific accounting systems that include POS integration allow operators of stores and restaurants, for example, to effectively pull detailed data automatically. This saves the expense of a custom POS integration, but it also facilitates accurate accrual journal entries in the accounting general ledger.
2. Real-time P&L access
A P&L statement is critical for tracking sales revenues and operating expenses. Being able to view a P&L as real-time data allows users to make immediate, data-driven decisions when there are anomalies in the numbers.
Many generic accounting solutions are not able to manage operations in industries with many moving parts. A business dealing with rapidly changing inventory and variable scheduling may struggle without the purchase and integration of additional, more expensive back-office tools. Full integration between operating and accounting data for custom reporting will keep information together and in-check.
3. Cloud based
A cloud-based system is a flexible, highly scalable foundation for the future growth of a business. Cloud-based accounting systems give companies with multiple locations the ability to share and update data from anywhere.
4. Addresses industry-specific challenges
Each industry faces unique challenges. From highly perishable inventory to management of hourly employee payroll, the challenges of maintaining balance are frequently multiplied when groups have many locations.
5. Real-time access to accounting data
With generic accounting software, to find a data point from multiple store locations, the accounting team would need to run reports in multiple systems and then tracking timely accounting data is an incredibly valuable tool for team members overseeing day-to-day business operations. Industry-specific accounting solutions offer real-time access to accounting data across a business from higher-up positions to store-level managers.
6. Permission-based security
Without tiered, permission-based access, accountants have access to the books, but store-level managers don’t have direct access to the numbers. This creates another layer of administrative work where the accounting team needs to manually send reports to managers.
Permission-based security in an advanced accounting system enables parameters to be set for the permissions for different users. This functionality opens real-time access to data while streamlining duplicate data entry.
7. Custom reporting periods
The function of a reporting period is to compare performance over time. However, for some businesses, an uneven number of weekend days each month means that reporting by the calendar month doesn’t always provide a meaningful comparison, forcing manual workarounds to be performed. Because of the nature of some retail, restaurant and bar businesses, a month that lines up with the maximum number of weekend days will look significantly different on labor and food cost or inventory cost than a month that doesn’t include full weekends.
For many businesses, the optimal solution is to set up reporting based on a system that ensures the same number of each day in each period. The most common examples include an annual 13 accounting periods of four weeks, or a 4/4/5 accounting period (which divides the year into four quarters of 13 weeks, grouped into two four-week months and one five-week month).
8. Automated bank reconciliation
Tracking and reconciling bank transactions daily is an effective way to manage the books and identify discrepancies immediately. Generic accounting software may pull data or provide a summary, but it cannot automate bank reconciliation for restaurants that have multiple locations and need to add efficiency.
9. Automate accounts payable
Manually paying vendor invoices adds time and cost to the vendor payment process. Many industry-specific accounting tools can capture invoices and upload them directly into the accounting software, centralizing approval, and payment within the same system. AP automation helps eliminate the extra time and cost of processing vendor invoices and prevents the errors inherent with manual invoice entry.
10. Automated intercompany entries
Most generic accounting software isn’t set up to handle multiple entities in a single database. With generic software, an accounting team must manually input due to/from entries for each location. With an industry-specific accounting platform, intercompany reconciliation and elimination can be automated. This automation can save hours of time for the accounting team while also increasing accuracy.
11. Automated record stock counts and journal entry adjustments
One major shortfall of generic accounting software is that it doesn’t offer a way to store inventory items or record stock counts. And yet, at its core, inventory is an accounting transaction. While it is possible to do manual inventory imports or pay for a custom integration, some solutions can remove those headaches by including inventory as a central feature of the system.
12. Vendor integration
A feature allowing vendors to upload documents into the accounting system with a direct integration enables vendors to add their own invoices and credit memos. Without the accounting team or store managers manually entering the data from these vendor transactions, the AP automation process is simplified, saving time and money.
This vendor integration also improves accuracy and allows automatic updates on regularly changing costs and inventory. When researching accounting solutions, make sure to specifically inquire whether vendor integrations are part of the software, or if they will need to be added on with a custom integration for an additional cost.
One franchisee with more than 300 locations reported that it used to take a full day to process weekly franchisee billing, equating to 20% of the accounting team’s time. By automating the process, it now takes only 30 to 45 minutes from start to finish.
The bottom line
Accounting is an essential part of running every successful business. But it is even more important for tight-margin industries where every dollar spent needs to be accounted for to increase profitability. With industry-specific accounting systems that are integrated directly with the POS system, operators can save both time and money through the automation of time-consuming tasks such as scheduling, inventory, ordering, paying vendors, producing financial statements and more while reducing the chance of errors.