Have you tried using your vending machine software as an accounting tool too?
You are probably already convinced about the advantages of using vending machine software for optimizing your vending business – software helps you keep better track of what sells best and gradually substitute all slow-moving products with high-rotation ones, keep inventory low, reduce or even eliminate losses from expired products, master route planning, and machine service scheduling, pre-kitting, etc. Yet, not too many vending business owners realize that the vending machine software could be your personal accounting consultant, bringing your business to a whole new professional level and eventually facilitating your relationship with the IRS.
Naturally, every business owner wants to know how efficient their operations are and every savvy manager should always be aware what comes in and what comes out of their business on a daily, weekly and monthly basis. Those of you who have tried to track your cash flow from more than a half-dozen vending machines will agree that spreadsheets are far from efficient when it comes to managing more than 2-3 machines. What’s worse, some of you might have learned their lessons the hard way! When you are unable to timely record and analyze your money flow (cash coming in and cash going out), you may end up in a situation where the cash that goes out of the business is equal to or is even more than the cash that comes in. Liquidity crisis (the lack of operational cash) is among the biggest reasons for small businesses to fail, especially when starting up. At this early stage, business owners face a bigger risk of running out of money as they accrue more expenses such as down payments for new/used machines, delivery van, inventory, etc. At that time, you probably have not registered any sales yet, and money will practically be pouring out of your pockets really fast. This is why it is vital for the health of your business to keep track of cash flow by running a cash flow report. A cash flow statement shows exactly how much money your vending company has received and how much it has spent over a period of time. Any accountant or accounting software can do that for you. If you are already sold on the idea of using vending machine software to manage your business, you can leverage it to pull out cash flow statements too. A good VMS would offer a cash flow statement as one of its standard reports which will broaden your operational and management capabilities and will give you the opportunity to independently keep track of your money flow.
Profit and loss statement (P&L)
An important metric in business operational efficiency is the gross profit accumulated over a period of time, and this is the sales revenue generated less the cost of the goods sold (COGS). COGS measures the cost incurred to acquire the goods your vending business sells. The Profit and Loss statement, known also as Income Statement is the key financial report that measures a company’s financial performance - it shows a company’s ability to generate sales, manage expenses, and create profits over a given period of time. It is different from the cash flow report, and both reports are integral parts of a corporate balance sheet. When selecting a vending machine software for your vending business, make sure the software offers both reports out-of-the-box for you. Otherwise, you might end up entering your daily expenses and sales data twice – first into your vending machine software and then once again into your accounting one.
Commissions and sales tax calculations
Before cashing in the profits of your vending business, you’ll need to pay commission to the location owner/manager. It’s common to pay the property owner 10 to 25% of the revenue from your machines, depending on the location type and quality of traffic. Seasoned vending business owners tend to offer a higher commission in exchange for exclusivity – their machines will face no competition at the location. Regardless of your approach, if you have placed machines at several locations, it’s quite likely that you’ll have to calculate different commission rates for each proprietor. This is where vending management software can come handy again. It offers you the ability to assign various types of commissions to each machine or per location. Also, you can easily calculate the total amount due to the location owner.
A vending machine software with comprehensive reporting will save you time and will reduce uncertainty by helping you make informed data-driven decisions. You can finally get rid of those complicated excel spreadsheets, and be able to slice and dice all the collected data like a pro.
In a nutshell: Once in the vending machine business, even novice entrepreneurs can gain a competitive advantage by implementing some industry best practices. No doubt, arming up your business with a vending machine software has been one of the game-changers for the past decade. It goes without saying that you should also think of your accounting needs from day one too. Instead of trying to implement and integrate several different types of software all at once, trying to merge and reconcile all the data captured within these different tools, be sure to check with your selected VM software vendor if their system provides the accounting-related reports on top of all the rest.
If you want to gain momentum ahead of your competitors, don’t hesitate. Start your free trial of VendSoft VMS now.