The UK’s vibrant and dynamic hospitality industry contributes to the economy and serves people from all walks of life. But while providing exceptional experiences and services is at the heart of this sector, hospitality accountants work hard everyday to ensure their clients’ financial reporting is accurate, as proper accounting is equally important for sustained success.
In this blog post, we delve into why that’s the case so you can understand why you should spend time on your financial reporting.
Transparency and accountability
In any business, it’s essential to remain transparent and accountable. That way, you can demonstrate your commitment to ethical responsibility to key stakeholders. That can help you retain staff and customers, and attract investors and lenders — crucial for raising finance in the hospitality sector.
But accurate accounting also helps you demonstrate how financially responsible you are, which is critical if you want to attract investors and secure funding. If there’s a mistake in your figures, that’s not going to reflect kindly on you.
Financial reports will also help them make an informed decision about whether your hospitality business will give them a return on their investment.
Think about it this way: if an investor realises the figures in your reports are too high compared to reality, they’re probably not going to run the risk of partnering with you. If your figures suggest a poorer financial position than is actually the case, then you may miss out on much-needed funds. Make sure to get the numbers right.
Lenders also appreciate financial reports, as they can use them to assess the creditworthiness of your business. So if you know you need a bank loan, make sure your financial reports and accounting are accurate.
In the world of hospitality, you need to be able to make decisions that benefit the business — decisions you can only make with accurate information.
Therefore, you need precise financial data to create realistic budgets and forecasts that reflect actual performance and market trends. That, in turn, enables effective resource allocation, prevents overspending and contributes to your overall financial stability. If you’re acting on faulty data, the chance of your plans going awry skyrockets.
Furthermore, the world of hospitality is a fast-paced one. As a result, you need to be able to make decisions quickly, efficiently and without any doubt. So, if you first need to spend time correcting your records before you can make a financial decision, that’s precious time wasted.
Compliance with regulatory requirements
If you run a limited company, you must ensure all your financial information is correct before submitting your annual accounts to HMRC and Companies House.
Your annual accounts form the basis of your tax return, so if your figures are incorrect, your tax calculations will also be wrong. Needless to say, that could land you in hot water — or more specifically, with a penalty of up to 30% of the tax you owe — all for a careless mistake.
Wok with hospitality accountants to improve financial reporting
Accurate reporting and accounting is essential for businesses to remain transparent with stakeholders, make smart decisions and keep up with their reporting duties.
But maintaining accurate records is easier said than done.
If you’re a hospitality professional, we’re here to help you navigate the complexities of financial reporting. With a deep understanding of the industry and a passion for financial excellence as hospitality accountants, we’re committed to optimising your financial management practices.
Get in touch with us for help with your accounting.