Managing finances can be overwhelming for those in the hospitality industry.
Luckily, Xero offers an easy-to-use accounting software specifically designed to help restaurants, hotels, and other hospitality businesses track expenses, process payments, analyze data, and more.
In this post, we'll explore how Xero can help hospitality managers take control of their financial operations - from customizing chart of accounts to integrating with POS systems to leveraging real-time reporting.
Introduction to Xero for Hospitality
Xero is an online accounting software that provides tools to help restaurants, hotels, and other hospitality businesses efficiently manage their finances.
Some key features that make Xero well-suited for the hospitality industry include:
- Integration with common point-of-sale (POS) systems like Square and Toast to automatically track sales, payments, and sync data. This saves time on manual data entry.
- Tools for tracking expenses, generating invoices, managing vendor bills, and running payroll. This helps hospitality managers maintain cash flow and financial visibility.
- Robust reporting and analytics on sales, profits, inventory costs, labor costs, customer transactions, and more. This provides data-driven insights to inform better business decisions.
- Add-on apps from the Xero App Store like Deputy for scheduling workers and Hubdoc for simplifying expense management. These optional apps extend Xero's functionality.
- Different pricing plans based on number of bills/invoices per month. This allows scalability for restaurants or hotels of any size.
With features purpose-built for hospitality needs, Xero aims to help restaurants, cafes, bars, hotels, and other establishments simplify financial processes so they can focus on serving great experiences.
Can Xero be used for bookkeeping?
Xero provides powerful tools for streamlining bookkeeping workflows. With its user-friendly interface, customizable reporting, and seamless integration with popular apps, Xero enables bookkeepers to work more efficiently and provide better service to their clients.
Some key benefits of using Xero for bookkeeping include:
- Real-time visibility: Xero updates transactions and reports in real-time. Bookkeepers can access up-to-date financial data to keep books accurate.
- Collaboration: Xero has collaboration features that facilitate communication and file sharing between bookkeepers and clients. This improves transparency and coordination.
- Integrations: Xero connects with many apps like Square, Expensify, Bill.com etc. Automatic syncing with bank feeds, invoices, bills etc. reduces manual data entry.
- Multi-entity support: Bookkeepers can manage books for multiple business entities from a single Xero organization. Easy to switch between different clients.
- Advisory tools: Xero provides insights and benchmarks for ratios like working capital, debtors days sales outstanding etc. Helps bookkeepers better advise clients.
- Accessibility: Xero can be accessed anytime, anywhere via web and mobile apps. Easy for bookkeepers to work remotely.
With robust tools tailored to bookkeeping workflows, Xero enables bookkeepers to take on more clients and focus on value-added advisory services for their clients rather than manual data entry.
What accounting method do restaurants use?
Most restaurants use the cash method of accounting because it aligns well with the nature of the restaurant industry. With the cash method, revenue and expenses are recorded when cash is actually received or paid out. This makes sense for restaurants since customers typically pay for their meals right away.
Here are some key reasons the cash method works for restaurants:
- Customers pay at the time of service so there are no accounts receivable to track. This simplifies bookkeeping.
- There is less paperwork because invoices and bills don't need to be sent out or tracked. Expenses are recorded when vendors are paid.
- Matching revenue with expenses incurred is straightforward. The cash method provides an accurate picture of profitability.
- Tax planning can be easier since revenue is recognized right away. There's less opportunity for discrepancies.
The cash method still allows restaurants to track inventory, depreciate assets, and accrue certain expenses like payroll taxes. But overall it's a simpler system well-suited for the unique needs of the restaurant industry. The key is ensuring proper controls and documentation are in place to track all cash inflows and outflows accurately.
What is the best accounting software for a small hotel?
When it comes to choosing accounting software for a small hotel, Xero is an excellent option to consider. Here's why Xero stands out:
Simplicity and ease of use: Xero is designed to be user-friendly for non-accountants. It has an intuitive interface that's easy to navigate. You don't need extensive accounting knowledge to use Xero effectively.
Scalability: Xero allows you to start small and upgrade as your business grows. They offer different pricing plans based on the number of transactions you need to process. This scalability makes Xero a great choice as your hotel expands.
Integration with other software: Xero offers over 1,000 third-party app integrations through the Xero App Store. For hotels, some useful integrations include Square for point-of-sale, Deputy for scheduling, and Hubdoc for streamlining expense management. These integrations help you centralize financial data.
Specific functionality for hospitality: Xero offers industry-specific features for hotels through their Xero Early plan. This includes the ability to track housekeeping status for each room and accept deposits from guests. The plan also includes purchase orders for stock management.
Affordable pricing: Compared to other accounting platforms, Xero offers exceptional value. Their Early plan starts at just $27 per month. And you can add unlimited users to a single Xero organization at no extra cost. This keeps your accounting software budget under control.
For these reasons, Xero stands out as the best accounting software choice for most small hotels. The platform balances simplicity, integration capabilities, industry-tailored features, and affordability. This makes financial management seamless for hospitality businesses.
What is the biggest business Xero can cope with?
Xero is designed to be scalable for businesses of all sizes. However, it's recommended capabilities are:
- Up to 50 sites with 500 staff and associated costs (50,000 transactions per year)
- Processing capacity of 96,000 transactions per year
So in summary, Xero can comfortably handle a business with:
- 50 locations
- 500 employees
- 50,000 transactions annually
- Budgeting/expenses for those 50 locations and 500 staff
The software is built to scale far beyond this as well. So Xero can support much larger enterprises with:
- More locations
- More staff
- More transactions
- More overall budget
As long as your business fits within or below Xero's recommended capabilities, the software should handle your accounting and financial management without issue. The scalability means it can grow with your hospitality business over time too.
If your business exceeds the guidelines above, it's still worth exploring Xero, as they offer customized enterprise plans. You can discuss your specific needs with their sales team to determine if Xero is still a good fit.
The key is finding the right plan and add-ons to match your business requirements. This allows Xero to cope with the complexity and transaction volumes required in larger hospitality businesses.
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Choosing the Right Xero Plan for Hospitality
Hospitality businesses have unique financial management needs compared to other industries. Choosing the right Xero plan can simplify accounting and provide valuable insights to improve profitability.
Understanding the Xero Early Plan
The Xero Early plan is best suited for very small restaurants and hotels just getting started with digital accounting. Key features include:
- Track income and expenses
- Generate financial reports
- Send unlimited invoices
- Integrate with popular POS systems like Square and Toast
While basic, the Early plan can help fledgling hospitality businesses begin digitizing their finances without advanced accounting needs. It may suit independent restaurants or boutique hotels with 1-2 locations.
Benefits of the Xero Business Plan
As hospitality businesses scale, the Xero Business plan unlocks additional capabilities:
- Multiple users with customized access permissions
- Advanced invoicing tools like repeating invoices
- Integrations with Deputy for scheduling and Hubdoc for automating data capture
- Up to 1 million transactions per year
Mid-sized restaurant groups and hotel chains can leverage these features for robust financial oversight across locations while controlling access.
Custom Xero Plans for Large Hospitality Groups
For hospitality corporations managing an extensive property portfolio, Xero offers customized plans to meet unique needs, including:
- Special pricing for 500k+ transactions
- Custom integrations with proprietary systems
- Consolidated reporting across the organization
- Dedicated customer support
Large chains can work with Xero to tailor accounting functionalities to their established financial workflows for centralized visibility and control.
With three tiers of plans, Xero gives hospitality businesses an accounting solution scalable to their size and functional requirements. Choosing the right level provides the necessary financial tools without paying for unnecessary extras.
Key Features of Xero Accounting Software for Hospitality
Xero offers several key features that make it well-suited for restaurants, hotels, and other hospitality businesses:
Inventory Management in the Hospitality Industry
Managing inventory efficiently is critical in hospitality. Xero allows you to:
- Track stock levels and costs of food, beverages, amenities, and supplies
- Create purchase orders and receive inventory into the system
- Manage suppliers and relationships
- Gain insight into usage and waste to optimize future ordering
This level of inventory control helps minimize costs and ensure adequate stock levels.
Streamlining Purchase Orders with Xero
Xero facilitates supplier relationships and purchasing workflows. You can:
- Maintain a database of preferred suppliers integrated with accounting
- Create, approve, and send purchase orders to suppliers electronically
- Receive and match deliveries to purchase orders for seamless tracking
Automating this supply chain communication reduces administrative work and costs.
Real-Time Reporting for Financial Management
Xero generates reports with real-time data on:
- Sales and revenue
- Costs of goods sold
- Labor costs
- Operating expenses
- Overall profitability
Customized reporting gives hospitality managers the insights needed to make informed decisions.
Integrating Payroll Systems with Xero
Connecting Xero to payroll systems like Deputy provides robust personnel management by enabling you to:
- Sync employee data between platforms
- Import payroll journals into accounting
- Pay staff and contractors
- Track taxes, deductions, reimbursements, and more
Integrations streamline payroll and provide a single source of truth.
Integrating POS and Other Tools with Xero Accounting System
Connecting POS Systems like Toast and Square with Xero
Integrating your point-of-sale (POS) system with Xero can help restaurants and hotels streamline their accounting processes. Popular POS systems like Toast, Square, and Deputy can sync transaction data directly into Xero to eliminate duplicate data entry. This automation saves significant time and reduces the likelihood of human error.
Here are some tips for connecting your POS to Xero:
- Carefully map your POS system's chart of accounts to match Xero's accounting categories. This ensures transactions flow into the correct general ledger accounts.
- Set up automatic daily or weekly data imports from the POS system so transactions are recorded in real-time.
- Configure custom fields in Xero to capture valuable hospitality-specific data from the POS like table numbers or room numbers.
- Use POS integration apps from the Xero App Store if your POS platform lacks native integration. Popular options include Kounta and Vend.
Automating Document Management with Hubdoc and Xero
Manually handling piles of receipts, invoices, and statements is tedious for any business, especially in the fast-paced hospitality industry. Hubdoc seamlessly automates this document management by extracting key details from digital or paper documents and importing them into Xero.
Benefits of connecting Hubdoc include:
- Automated capture of expense receipts from emailed e-receipts.
- Automatic bill and invoice approvals using customizable business logic.
- Bank statement and credit card statement data flowing directly into Xero for simplified reconciliation.
- Document archive in Hubdoc providing long-term storage and easy search of all imported paperwork.
With these digital workflows, hotels can efficiently manage high volumes of paperwork while restaurants streamline their limited accounting capacity.
Exploring the Xero App Store for Hospitality
The Xero App Store offers hundreds of add-ons to enhance Xero's accounting and financial management capabilities. Hospitality businesses can discover specialized solutions to further optimize their restaurant or hotel accounting.
Useful apps to explore include:
- Deputy: Offers shift scheduling, time clocks, payroll, and labor cost tracking specifically designed for hotels and restaurants.
- Timely: Allows guests or customers to pay invoices online and integrates seamlessly into Xero.
- SimplePayroll: Automates payroll tax calculations and filings for hospitality businesses.
- Expend: Captures and manages corporate credit card expenses, simplifying reconciliation with intelligent matching to Xero transactions.
Evaluating these apps can help hospitality finance teams build an integrated technology stack tailored to their unique needs and streamline accounting operations even further.
Setting up the Accounting Framework in Xero for Restaurant and Hotel Finances
Customizing the Hospitality Chart of Accounts
Xero provides a customizable chart of accounts that allows hospitality businesses to track income and expenses in a way that aligns with their operations. Here are some tips for setting up the chart of accounts:
- Create separate accounts for different revenue centers like rooms, food and beverage, spa services, etc. This allows you to see the profitability of each area.
- Within the room revenue account, break it down further by room type - standard, deluxe, suite, etc.
- Set up accounts for different cost centers - housekeeping, kitchen, front desk, maintenance. This enables analyzing costs by department.
- Have accounts for both cash and credit card payments to simplify reconciliation.
- Include accounts for typical hospitality expenses like food costs, beverage costs, linen costs, guest supplies, etc. Granular categories improve reporting.
Tracking Performance by Departments
Xero has divisions that act like independent businesses within the overall company file. Use divisions to track performance for different parts of a hospitality business:
- Create a division for each revenue outlet - restaurant, bar, room service, spa, shop, etc.
- Build divisions around operational departments - rooms, food and beverage, sales and marketing, general management.
- Set up divisions for profit centers if you operate multiple properties or franchises.
Divisions provide P&L reports for each area and roll up into a consolidated view, giving immense visibility into what's driving profits.
Streamlined Payment Processing with Xero
Hospitality businesses have customer touchpoints like point-of-sale systems and online booking engines. Integrating these with Xero automates payment tracking:
- Use Xero's 200+ app integrations like Square and Toast to sync POS transactions.
- Connect channel managers and booking sites to import reservations and room charges.
- Enable Stripe or PayPal payments within Xero invoices.
- Let Hubdoc fetch and code supplier bills automatically.
Automated data flows reduce manual entry and ensure payments are properly categorized - key for accurate financials.
Conclusion: Achieving Financial Mastery with Xero in Hospitality
Xero provides a robust set of features tailored to the hospitality industry that can help restaurants and hotels gain greater financial clarity, control costs, optimize decisions, and boost productivity.
Key benefits of using Xero for hospitality financial management include:
- Real-time reporting and insights: Xero gives instant visibility into sales, costs, profits, and other KPIs that enable data-driven decisions. Dashboards and reports provide actionable insights.
- Menu and inventory cost tracking: Precisely track food, beverage, and supply costs to identify waste and optimize menu planning and pricing. Integration with POS systems captures granular data.
- Workforce management: Tools like Deputy integration enable scheduling based on sales forecasts, managing timesheets and payroll, and monitoring labor costs.
- Accounting automation: Automate tasks like accounts payable, receivables, invoicing, and more to save time and minimize errors.
- Mobility: Manage finances on-the-go with real-time data access from mobile devices. Useful for managers overseeing multiple locations.
With Xero offering robust accounting functionalities tailored to restaurants and hotels, paired with powerful 3rd party app integrations, hospitality businesses can achieve the financial control, insights, and productivity needed to thrive. The unified data and flexible tools within Xero create a central financial hub to run operations with confidence.
