Systematic financial management for a food and beverage (F&B) business aims to give us a comprehensive understanding of revenue, expenses, and profit. This data reflects the overall financial health of the business and involves accounting processes and procedures. Funny how we used to take accounting lightly in school, right?

Who is this important for?

Financial management/accounting is crucial and involves everyone connected to the food and restaurant industry:

• Guests/Customers – We can monitor the costs involved in serving customers to ensure the restaurant remains profitable. Understanding the restaurant’s financial status helps us plan for customer satisfaction.
• Employees – We need to account for employee costs such as wages, taxes, EPF (Employee Provident Fund), SOCSO (Social Security Organization), and the benefits they are entitled to (like healthcare benefits).
• Suppliers/Vendors – We need to assure them of the business’s creditworthiness, earning their trust!
• Owners/Investors – This is especially important if we are the owners or investors. Financial information must be accurate and accessible when needed. We need to understand the overall financial state of the business for monitoring and decision-making. Financial reports are also required for submission to relevant authorities (like SSM, customs, and the tax department) and for bank loans.
• Government Agencies – There are legal requirements to provide proper financial reports.

Don’t we have accountants for this?

Maybe you have other responsibilities and think:

“No need to worry about all these accounting matters, just leave it to the accountant!”

Right? But hold on… read this first…

Why is financial management important?

We need to understand financial management in order to:

• Have the necessary information to control the restaurant in both the short and long term.
• Understand the financial reports being prepared.
• Correct certain situations to improve the restaurant’s profitability.
• Make informed decisions based on the potential or impact the financial reports show on the business.

How can we learn about this?

The easiest way to understand financial management is by learning and doing it! Maybe, in the beginning, we do it ourselves. Once we understand it, we can hand it over to the accountant. After all, it’s a small business. But eventually, hiring an accountant becomes necessary! And once you understand it, you’ll know exactly what to do with the accountant’s reports!