Successfully growing a franchise business is a team effort. Growth also leads to complexity, especially with your accounting. If you own multiple franchise locations, or want to grow from one location to many, this article is for you. We’ll discuss best practices for multi-entity accounting for franchise businesses.
Start with a Centralized Database
A centralized database will help you track financial information across all your franchise locations, giving you an overview of your finances. A cloud-based accounting automation platform like Docyt is a great way to centralize all your financial data, making it easier to access and manage every location’s financial data in one place.
Create a Standardized Chart of Accounts
Your chart of accounts should be standardized across all franchise locations to ensure consistent financial reporting. This will also make it easier for you to compare revenue and expenses between different locations since each business will be using the same categorization for each transaction type. As a result, it will be easier for you to identify trends and spot areas for improvement across your entire portfolio.
Track Key Performance Indicators (KPIs)
Tracking key performance indicators (KPIs) is important for understanding the financial health of your franchise businesses. KPIs such as operating profit margin, average ticket size, and customer lifetime value can help you identify areas of strength and weakness and inform decisions on how to improve operations.
Analyze Cash Flow
Analyzing cash flow is essential for understanding the financial stability of your franchise business. Take a look at your current and projected cash flow to identify any potential issues and plan accordingly.
Keep Track of Expenses
Accurate expense tracking is key to understanding the profitability of your franchise businesses. Make sure you are tracking expenses across all locations so you have a clear understanding of how much each location is spending.
Leverage Owner’s and Operator’s Reports
In order to grow the business, owners need to step out of the daily operations. That’s only possible if their general managers are empowered with the necessary information to run their location effectively. Docyt’s operator’s report gives managers visibility into the daily and monthly revenue for their location as well as the gross profit. With this financial data, managers will be able to track performance and adjust inputs such as labor, advertising, promotions, and hours of operation to increase profitability.
Additionally, owners will receive their own report which provides them with the complete financial picture across all locations.
Get Consolidated Financial Statements
Grow your business with confidence by leveraging consolidated financial statements. A consolidated balance sheet will provide you with the net worth of business owners and partners across all your locations. Learn the profitability for your entire portfolio with a consolidated profit and loss statement. Lastly, a consolidated cash flow statement will enable you to see your true cash flow position. If you look at it only on a store by store basis, you could get a biased perspective as an individual store could have a negative or positive cash flow. But taken in the aggregate, you’ll be able to keep a pulse on your total cash flow.
Knowledge is power. We’ve seen Docyt franchise owners double their number of locations within a year by using Docyt to unlock insights into their business. Docyt can help you grow your business portfolio.
Get Started With Docyt
Want to find out how accounting automation can streamline and standardize multi-location accounting and help you grow your business? Talk to a member of our team by scheduling a demo today.
