Many operators in the tourism industry do not have enough knowledge regarding the following important financial aspects of their businesses:
• Managing business cash flow
• Client funds vs business funds
• When to take profits from the business.
• Reading and understanding financial reports – both the profit and loss and the balance sheet.
The financial system that you choose and use to manage your business is an important resource if you understand how it works and you can read the reports that it produces.
Business is dynamic and seasonal. It is no longer adequate to wait for the accountant to produce your accounts after the end of each financial year.
To run a good “financially sound” business – tourism operators need to have as minimum, monthly accounts, so that they know where they are at financially at any point in time.
Your business may be responsible for handling millions of dollars of clients’ funds, but it is only going to retain a small proportion of this to run the business.
Tourism operators need to understand what portion is theirs and when they can use it.
At what point in the sales process does your accounting system recognize profit?
Can you take this from your business then?
What safeguards do you need to have in place to ensure that your accounting system is running properly? Like any system it needs checks and balances.
Financial reports are a valuable source of information for business owners if they understand them and run the system properly.
Let’s avoid any business collapses that could spoil the great success story that is tourism and wise up on the finances.