Culinary Expert Paul Bulau Explains the Value of Prioritizing Daily Cash Flow Management in the Restaurant Business
Originally published on The Daily
It’s notoriously difficult for businesses to stay afloat in the cutthroat restaurant industry. If you want to gain an edge over your competition and achieve financial stability, making it a priority to manage your cash flow daily — not weekly or monthly — is a strategy worth exploring. Culinary entrepreneur and restaurant manager Paul Bulau explains.
Why Manage Cash Flow on a Daily Basis?
Not all businesses manage their cash flow daily. However, daily management has advantages because the restaurant business is inherently unpredictable.
Daily Operating Expenses Are Covered
Efficient cash flow management ensures there's enough working capital to cover daily operational expenses, such as purchasing ingredients, paying staff, and maintaining equipment, and helps build cash reserves.
Building Cash Reserves
Building up cash reserves provides a financial cushion for the restaurant. It can be used during slow periods or invested in improvements, marketing, or expansion.
You Instantly Catch Problems
If you wait until the end of the month to look at your finances, you might find that you won’t be able to pay your bills — and it could be too late to fix the issue. Looking closely at daily cash flow, you can pinpoint minor problems before they become major.
It Makes Forecasting Possible
When you know what your cash inflows and outflows look like on a daily basis, you can create relatively accurate cash flow projections. Accurate projections allow for spotting potential issues and acting before they materialize.
Paul Bulau likens it to driving — “Imagine you’re driving on a winding road and come to a blind curve. You don’t know what’s on the other side, so you don’t know how to prepare. Should you speed up, slow down, or slam on the brakes? But what if you had a map showing a hairpin turn right around the bend? You’d be able to get ready. That’s what forecasting is to cash flow.”
Tips for Daily Cash Flow Management
Daily cash flow management might sound like a lot of work. But if you strategize carefully, you can improve your restaurant’s overall performance. Check out some of Paul’s tips for managing your cash flow.
Use Technology
One of the best ways to save time and ensure accuracy is to use QuickBooks or another kind of business-specific software.“Daily cash flow management doesn’t mean spending hours poring over the books,” Paul Bulau explains. “With the right software program, it can be as simple as skimming over a few metrics on the screen.”
Create a Backup Plan
Daily cash flow management helps you identify crises before they happen. But then what? Ensure you have a detailed, actionable backup plan in case of a sudden cash shortfall.
Cut Back Where You Can
Eliminating unnecessary expenditures can do a lot for your cash flow. When looking at your daily cash flow, identify areas where you may be spending too much. Perhaps you can consolidate linen orders or cut the rarely-ordered menu item that requires a special ingredient purchase. All those little cutbacks can really add up!
Innovative Solutions for Business Success
Sometimes, improving your business requires a little out-of-the-box thinking. Analyzing your cash flow daily might seem like overkill to some, but it’s a fantastic way to stop financial crises and reach financial security.
About Paul Bulau
Paul Bulau has been in the restaurant industry for more than 25 years. After earning a degree in culinary arts and restaurant management from the Scottsdale Culinary Institute, Paul launched his first restaurant as a chef and sole proprietor. Since then, he has worked in management roles for several premier restaurants.
