Benefit Of Having Good And Timely Financial Report

While there are numerous benefits of having accurate and timely financial reports, we have identified few key benefits of financial statements.
1. Understanding the Financial Status of Your Business
The complete financial status of your business can be presented in a quality financial statement. The three main financial statements are the balance sheet, the income statement and the cash flow statement. The balance sheet reflects the owner’s equity after the liabilities are subtracted from the assets. The income statement which is also known as the profit and loss statement shows the profit derived from income over a defined period of time. A cash flow statement is a valuable tool for showing if there is enough cash coming in to pay for the operations of the business. A cash flow can be projected out over several months. The Income Statement shows how the restaurant and hotel perform over a period of time (i.e. a week, month or year). It takes all restaurant and hotel expenses into account, from prepaid expenses to expenses paid in the future. Overall, the Income Statement tells the operator if the business is making a profit. From there, the operator can begin making changes in policy and implementing strategies that will help the restaurant achieve its goals. Should new sales programs be implemented? Does food cost in line with menu prices? Is the restaurant hitting its budgets? Can the owner(s) make distributions to the partners? These are some of the key questions that need to be addressed. The basic formula for an Income Statement is:
Sales – Cost of Goods Sold – Expenses = Profit/Loss
The Income Statement is everyone’s favorite financial statement to review because it reveals the nature of the restaurants and hotel success. Restaurant and Hotel financial statements should be broken down into the following categories:
• Sales/room revenue
• Salaries
• Employee Benefits
• Controllable
• Occupancy
• General and Administrative
• Depreciation
• Interest
• Other Income

If sales and expenses are broken down into specific categories, the operator can easily compare and analyze his or her restaurant and hotel to industry standard percentages. Timely financial reporting will help to control the cost of goods sold like beverage cost food cost
The health of a restaurant and hotel can be analyzed from the Balance Sheet at any point in time (i.e. today, last month or tomorrow). The Balance Sheet allows operators to forecast short and long-term cash flow. As important as it is to review the Balance Sheet, few restaurants ever bother to prepare it. By checking the accuracy of the Balance Sheet, an operator can ensure the accuracy of the Income Statement. The Balance Sheet lists all the assets, liabilities and equity of the restaurant. The formula for the Balance Sheet is:
Assets = Liabilities + Equity
In the simplest terms, assets are what the business owns such as equipment, inventory or cash. Liabilities are what the business owes such as vendor bills, loans, notes, and leases. Even a gift certificate is a liability because the restaurant owes someone a meal at a future date. Equity is the ownership of the business.
It is important that assets and liabilities are properly classified on the Balance Sheet. To get a clearer picture of the business, an operator should break down the Balance Sheet into subcategories. The breakdown is explained as follows:
• Current Assets: assets with the life less than a year (i.e. cash, credit card receivables, inventory and prepaid expenses).
• Fixed Assets: assets with a life greater than a year that directly attributes to producing revenue (i.e. equipment, computers, furniture and leasehold improvements).
• Other Assets: assets with a life longer than a year that is not directly involved in the production of revenue (i.e. security deposits, trademarks and artwork).
Liabilities require a similar classification and are broken down as follows:
• Current Liabilities: debts due within one year (i.e. accounts payable, accrued expenses, short-term loans and even gift certificates).
• Long-Term Liabilities: debts due that extend beyond one year (i.e. notes payable or long-term leases).
There is so much information to be gained from the Balance Sheet. For example, a restaurant and hoteliers that have large debts may have major cash flow problems. Identifying the current debts from the long-term debts on the Balance Sheet help determine the short and long-term cash needs, as well as the business potential success. Restaurateurs and hoteliers who take on large debts upon opening could be shooting themselves in the foot. The restaurant may show large profits based on the Income Statement, but the restaurant may not have money because it is paying out the outstanding debt (which is revealed in the Balance Sheet).
Most restaurants and hotels are set up as Partnerships or Sub Chapter S corporations, they have to explain all business expenses and income to all partner.
2. Sales Pattern
Financial statements reveal how much a restaurant owner and hoteliers earns per year in sales. The sales may fluctuate, but financial planners should be able to identify a pattern over years of sales figures. For example, the restaurant owner and hoteliers may have a pattern of increased sales when a new product is released. The sales may drop after a year or so of being on the market. This is beneficial, as it shows potential and sales patterns so executives know to expect a drop in sales.
3. Financial Statements Will Help Prepare A Budget And Make Financial Decisions
Timely financial reporting will help you prepare a budget and make an easy way to take the financial decisions to grow the business.
4. Improved financial management
Timely financial reporting helps you to examine and correct any weaknesses in your financial systems. Improved financial management allows you to focus on current financial matters and develop future plans.
5. Better resource management
Due to timely frame financial report the restaurant owners and hoteliers will get accurate numbers of resources, therefore, they can use optimum use of all resources.
6. PERFORMANCE EVALUATION
Under this type of accounting practice, Business Owners may assess the performance of the Employees in the financial performance of the business.

Capturing the Boomer Dollar

You will have to have been residing in a cave the last few years to not know that the Baby Boomer Generation is one of the wealthiest, most active generations yet. I am proud to be counted among that number. Another truism about my generation is that if your business reaches me, it will also reach my parents, my children and my grandchildren. I stay abreast of all of their likes and dislikes so that I can use my buying power to provide travel, entertainment, clothing and dining for them as well as for myself.

We Boomers do not belong to a generation that adheres to the concept that we have never needed that type of (technology, transportation, entertainment, etc.) before so why should we invest in it now. We Boomers want to embrace the new while at the same time retain our appreciation for the old. I want to know the terminology of the younger generation but do I want to be greeted by a “Howdy” when I walk into the establishment staffed by that generation. The answer to that is a resounding “No!”

That’s why marketing to us is not only a challenge, it can be a rewarding teachable moment. Just like when I started watching the new animated films with my grandkids. Did I go into the theater expecting to be entertained? No, of course not. Was I expanding my horizon or merely pleasing my grandkids? I will be honest and say that I was merely tagging along to play the “grandma dollar card” and see the smiles. Because I have an open mind, it was blown away by the creativity, the underlying humor, the exceptional message and also by the smiles.

That’s when I started paying attention to the markets and marketers who approached me. For instance I learned when I went into a store to purchase a new computer system that I was practically invisible. Salespeople walked right by me in an attempt to go visit with either a younger customer or go back to their station to visit with other salespeople. When I did leave the store with no computer in tow and was asked if I found everything I needed, my response was that “I would have spent a lot more money if someone had actually paid attention to me!”

Boomers are not invisible, we are on the cutting edge of technology, we are stylish, we are financially savvy and we have realized that we can’t take it with us, so we are more generous with our spending power. We will pay more for good service and we will remember the server. We will cultivate new social circles that will be multigenerational. We have a healthy admiration for the younger population and know that their future will be full of change and charged with energy and success, but are very thankful that we grew up with party lines, no remotes, no GPS systems and we learned patience when ordering items because “next day delivery” wasn’t even a concept much less a realization.

So here is my suggestion for businesses who want to romance the Boomers:
• Invite a Boomer to a training session to critique the verbal interchanges that may take place within your organization.

• Stand back and actually “look” at that market. Watch the purpose in their step, the pride in the way they carry themselves and what their eyes settle on when they enter your establishment and the expression on their faces.

• Be visible and attentive but not overwhelming.

• Anticipate some of the questions they might have and have the answers.

• Be prompt.

• Be neat.

• Smile.

• No “Howdys”.

• Don’t stand in the corner on the phone where we can see you.

• Don’t gossip about people around other salespeople because I could be that person’s mother/cousin/friend or…

• Realize that my initial visit may just be a walk through or I may have a distinct purpose, treat me the same either way.

• I would not expect you to be tolerant and appreciative of my generation if I cannot extend you the same courtesy. I am not above learning how to be a courteous consumer.

Effective Internal Control Systems and Optimal Processes and Procedures

How do firms choose their strategic control systems? What is the nature and function of strategic control systems? What are the critical elements of strategic control systems? What is the nature and function of internal control systems as critical element of strategic control systems? These strategic policy questions relate to the role of optimal organizational internal control systems, processes and procedures designed to create and sustain operational performance excellence that maximizes the return on investment and shareholders’ wealth while minimizing risks exposure and the cost of operations, simultaneously.

Clearly, effective internal control system is correlated with optimal operational performance excellence and critical to sound organizational systems and strategies designed to maximize the wealth producing capacity of the enterprise. In these series on organizational performance excellence, we will focus on the pertinent strategic control system questions and offer some operational guidance. The overriding purpose of this review is to highlight some conceptual framework, quality management theory and practice, strategic relationships, and industry best practices. For specific financial management strategies please consult a competent professional.

Internal controls as integral part of the strategic control systems is interrelated series of activities imposed on the standard operating procedures of an organization, designed to safeguard assets, minimize errors, and ensure that operations are conducted pursuant to standards. While strategic control systems establish standards and methods for measuring performance, determine whether actual performance matches the standard-expected performance, and execute corrective action, internal controls are designed to mitigate the level and types of risks to which an organization is exposed.

Further, while control systems ensure operational effectiveness, control activities frequently slow down the routine process flow of business operations, which may reduce its overall efficiency. Consequently, the design of internal control systems requires management to balance risk mitigation with operational efficiency. This process can sometimes result in management accepting a certain amount of risk in order to create a strategic profile that allows an organization to operate more efficiently and effectively, even if it suffers occasional losses because controls have been deliberately reduced.

Additionally, all organizational strategies subject to constrained optimization have costs and benefits. The critical question is: Do the benefits justify the costs? In practice, executive leadership applies the net present value approach to weigh the costs and benefits of structures, systems and strategies. The optimal option maximizes the net benefit by equating marginal costs and benefits.

Some Operational Guidance

In general, no organization is immune to misappropriation, embezzlement or corruption-whether it’s inadvertent or deliberate. Many organizations don’t assess misappropriation or corruption threats until they have already occurred. Effective internal control systems should be designed to mitigate the level and nature of risk which organizations experience. In practice, as integral part of internal controls, organizations leverage technology-enabled solutions to scan across the entire spectrum of operational risks, promptly.

The ability to identify potential high-risk internal and external transactions quickly before they adversely impact organizations is critical to optimal internal control systems designed to create and sustain operational performance excellence derivative of business intelligence, risks mitigation, data analytics and evidence-based knowledge driven effective organizational systems, processes and procedures.

Moreover, internal controls should provide the mechanisms, rules, and procedures implemented by organizations to ensure the integrity of financial and accounting information, facilitate accountability, and mitigate fraud and the entire spectrum of operational risks. Besides complying with laws and regulations, and preventing employees from misappropriating assets or committing fraud, internal controls should facilitate operational efficiency and effectiveness by improving the accuracy and timeliness of financial reporting. Effective internal control objectives should include regulatory compliance, accuracy, validity, physical safeguards, and error mitigation. Control procedures should include separation of duties, access controls, random physical audits, standardized documentation, trial balances, periodic reconciliations, and approval authority.

Controls should always include policies and procedures put in place to ensure the continued reliability of accounting systems. Accuracy and reliability are paramount in the accounting systems. Without accurate accounting records, managers cannot make fully informed financial decisions, and financial reports may contain devastating errors. Control procedures in accounting should be broken into several categories, each designed to prevent fraud and identify damaging errors before they become problems or crisis.

Control system should fully address regulatory requirements, meet stakeholder expectations and protect organizations from potential catastrophic financial and reputation damages. When properly deployed and integrated, organization’s risk mitigation, anti-misappropriation, anti-bribery and anti-corruption technology-based solution should use digitally enabled analytics and advanced monitoring tools to help organizations scan across the compliance and operational risks spectrum, so they can more intelligently anticipate, mitigate and manage risks.

While smaller organizations with limited resources cannot always afford elaborate internal controls including segregation duties and decisions, system of internal controls tends to increase in complexity as organization increases in size. Establishing standards and methods for measuring performance; determining whether actual performance matches the standard-expected performance; and taking corrective action should always be integral to effective internal controls.

Finally, internal control is most effective when it is embedded and supported by a culture of assessment and continuous improvement. Therefore, effective internal control should consist of an integrated process for assuring organization’s objectives in operational efficiency and effectiveness, reliable financial reporting, and compliance with laws, regulations and policies are being met. Controls should include effective use of firewalls and encrypted passwords that limit internal and external access to critical business intelligence, proprietary, accounting and other financial information. Systematic measurement, analysis, and knowledge management require internal control results to be collected, analyzed and used for continuous improvement.

In sum, control systems should provide processes and procedures by which an organization’s resources are directed, monitored, and measured. Internal control system should include human elements such as board of directors exercising effective oversight and independent internal auditors conducting random periodic audits and unscheduled verification. Control systems, processes and procedures are critical in detecting and mitigating high risk activities and preventing various types of misappropriation and protecting the organization’s resources, both tangible and intangible resources.