Accounting Software for Smart Multi-Location Franchise Management
Organizing financials for a multi-location franchise business stretches you thin. Learn why you should use accounting software for better franchise management.
Almost 760,000 franchise businesses were expected to be operational by the end of last year. 53% of those franchise locations are controlled by multi-unit controllers. That means over 40,000 franchise owners manage more than one location!
The long-term stability for business franchises begins with great management. Franchise management is multi-faceted, and not for the faint of heart. The franchise business model has many advantages. Yet, franchises do come with real risk as well, like any other business. Being in the know, staying informed and learning from experts in the field will help you avoid risk.
A few of risks to consider include debt due to higher start-up costs, staffing challenges, and challenging sales targets. Knowing your financial health is one key component of great franchise management.
Accounting: Why It’s Important for Franchise Management
Accounting helps businesses determine the financial health of their franchise. Knowing the financial health of your franchise allows you to make better decisions on investments, and budget cuts, if needed.
A great place to start is by looking at the bottom line, or profit margin. Is your franchise business making money? If you are a multi-unit franchisee, which of your locations is profitable? To get a clearer picture of businesses financial health, there are many other financial metrics a franchisee should consider.
Three main areas that a company should take a look at are the companies solvency, liquidity, and operating efficiency. These three will give a better understanding of a franchises long-term profitability.
Solvency
Solvency is the ability to pay back a debt on a consistent basis, in relation to assets held. Assets are also known as equity. Having a good debt to equity ratio is essential in having long-term financial stability.
The goal is to get this number to decrease over time.
Liquidity
Liquidity, although related to solvency, is linked to a franchisee’s assets. To manage short-term debt obligations, a franchise must be able to “liquify” assets, or change them into cash quickly.
Liquidity looks at how fast an asset sells vs. how much money is made on the sale.
Operating Efficiency
Looking at the operating margin of your franchises will give a clear sign of operating efficiency. The operating margin looks at the revenue made on a sale and compares it with the cost of the sale.
Besides these three key indicators, franchise owners also need to keep on top of cash flow, as well as managing employees.
Accounting can confusing and time-consuming. It can be challenging to make time with all the other responsibilities of franchise management. Whether you are in retail franchising or one of the best restaurant franchises in the county, accounting is still a must!
Fear not! There are now automated systems to help your franchise’s accounting get completed with ease (and in less time!).
Automation: Why You Need It to Save Time (and Money)
Knowing where to invest your energy as a franchise owner is important. There are many things clamoring for your attention from payroll to cash flow.
Accounting is changing thanks to machine learning and artificial intelligence. As technology evolves, so should the processes we rely on. We can now reduce many manual tasks with automation that analyzes and interprets data. And it will only get better as the technology matures.
There are many ways in which automation can save your franchise time and money. The three most important ways are through point of sale data management, managing payroll, and keeping up on cash flow.
Point of Sale Data
Point of sale transactions are the most common transaction for franchisees. As a franchisee, you are already familiar with how essential point of sales transactions are. You are also familiar with how many come through on any given day and the challenges that come along with keeping that data organized.
Franchisees are now able to move towards storing their point of sale (POS) data in the cloud. POS franchise software systems are now helping accounting run more efficiently. They are also storing important information for easy access. Accessing the data POS software systems store is allowing franchisees to:
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Calculate discounts and pricing
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Process different methods of payments
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Automatically calculate sales tax
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Track inventory and sales history
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Manage loyalty programs
Like many business owners, you wear many hats, and may not have time to delve into a task such as this. Automation allows it to get done, while you put your time to something more urgent!
Managing Payroll
According to the American Payroll Association, automation of the payroll process reduces costs up to 80% for businesses. Payroll systems help franchisees track employee data needed for payroll.
The employee data collected includes:
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Employee schedule and hours worked
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Employee vacation time
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Employee absences
Calculating taxes and deductions can be tedious and confusing. Having an automated system that is able to accurately calculate wages owed and in turn taxes owed, is priceless. Having an automated system takes the guesswork (and tears) out of paying your employees.
Cash Flow
Cash is the most important asset to ensure your companies liquidity. Markets are always changing, but you don’t have to let that scare you! Managing your cash flow doesn’t have to be complicated anymore. Cash flow forecasting can help you stay ahead of the curve.
Being able to predict your cash flow will have long terms benefits for your companies growth. Not only will it help you make wise budgeting decisions, but it could help you prevent taking on unnecessary debt.
Accountants are able to forecast cash flow by looking at the history of your company. They glean the information they need from payroll, recent sales, bank transfers, and interest on debt. They use algorithms and statistics to calculate your companies payables and receivables.
Like many business owners, you wear many hats, and may not have time to delve into a task such as this. Automation allows it to get done, while you put your time to something more urgent!
Embrace the Change
As a franchise owner, knowing where to invest your time and energy is important for managing your business. Good franchises can now work smarter and more efficiently with today’s technology.
Franchise management doesn’t have to be a source of stress anymore. Automated accounting systems lessen stress for franchise owners and employees alike.
