Running a restaurant is about more than delicious food and happy customers—it’s also about making sure the money coming in and going out keeps your doors open. Even successful restaurants with strong sales can hit financial trouble if their cash flow isn’t managed properly.
Let’s break down what cash flow is, why it matters so much, and how you can take simple, practical steps (with the right support) to keep your restaurant’s finances stable.
What is Cash Flow?
Cash flow is the timing of money coming in vs. money going out.
Think of it this way: profits look great on paper, but if you don’t have actual cash available to pay staff, cover rent, or pay your vendors—you’ve got a problem.
Many restaurants that appear profitable can still fail if their cash flow isn’t managed. That’s why mastering it is essential for long-term success.
Why Cash Flow Matters in Restaurants
Here’s the tricky part: restaurants often pay vendors and employees before they’ve collected all their customer payments.
- Vendors might want payment within 15 days.
- Customers, especially large catering or event clients, may not pay until weeks later.
That timing mismatch means you can feel “broke” even when sales are strong. If this happens too often, you may find yourself dipping into credit, delaying payroll, or constantly scrambling to make ends meet.
A Real-World Example
One restaurant found itself constantly stressed around payroll. Sales were strong, but money seemed to disappear as fast as it came in.
Here’s what they did:
- Negotiated vendor terms from 15 days to 30 days.
- Launched an online ordering system for catering that required deposits upfront.
This small shift in timing made a massive difference. Payroll was always covered, and instead of scrambling for credit, they had steady cash available when it was needed.
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The Role of a Good Bookkeeper
Cash flow isn’t just about timing—it’s about visibility and planning. And this is where a good bookkeeper becomes essential.
A skilled bookkeeper can help your restaurant:
- Track weekly cash flow forecasts so you always know what’s coming in and what’s going out.
- Spot patterns in expenses or sales that may be draining your cash reserves.
- Advise on vendor negotiations by showing where payment terms hurt or help.
- Keep you compliant with payroll and taxes so you avoid expensive surprises.
Think of your bookkeeper as the “financial sous chef” working behind the scenes. They make sure the kitchen (your finances) runs smoothly so you can focus on what you do best—serving customers.
Action Steps to Improve Restaurant Cash Flow
Here are three strategies you can start implementing right away:
1. Negotiate Longer Terms with Suppliers
Don’t be afraid to ask vendors for extended payment terms. Even an extra 15 days can give your restaurant breathing room to collect customer payments before bills are due.
2. Encourage Faster Customer Payments
- Require deposits for catering and large events.
- Offer incentives for early payments.
- Make paying easy with online or mobile options.
3. Set Aside a Small Weekly Reserve
Even setting aside a few hundred dollars a week builds a cushion. That way, when unexpected costs pop up—equipment repairs, slow weeks, or last-minute vendor bills—you’re not caught off guard.
FREE BONUS:
✅ Quick Cash Flow Checklist
⬜ Do I know my weekly cash flow forecast?
⬜ Have I negotiated better vendor terms?
⬜ Do I require deposits for large events?
⬜ Do I have a bookkeeper helping me track and plan cash flow?
Ready to get started?
Take routine bookkeeping off your never-ending to-do list with the help of a certified professional. At Eric Buchholz Bookkeeping, we can help ensure that your business’s books close every month, and you’re primed for tax season. Our expert certified QuickBooks ProAdvisors have over 25 years of experience working with small business bookkeeping across various industries.
Whether you’re learning how to streamline your accounting to save time, or how to set-up your chart of accounts for the first time, Eric Buchholz Bookkeeping can guide you down the right path. Schedule your FREE phone consultation today!… Simply CLICK HERE.
