How do you know if your Hotel's Balance Sheet is correct?
Have you ever looked at an accounting schedule and thought to yourself,
“What the heck does that mean? I don’t have any idea what they’re talking about here? Wait, when is this due? How much am I paying?”
You see, when I look at most schedules, insurance schedules in particular, those are the kind of questions I typically come up with.
They’re difficult to understand and there’s a lot of information on there that isn’t helpful. It’s convoluted and as a hotel owner, management company, or general manager, you don’t need anything complex.
As a business owner myself I don’t want anything complex. You see, I’m not an accountant. I don’t have an accounting degree. And when I look at the vast majority of hotel supporting documents and schedules I feel like I need to go back and get my CPA to understand with what’s going on.
All I wanted to see what how much to who and when?
So to combat this frustration of schedule overwhelm and insane complexity we have our team develop clear concise, simple balance sheet support schedules.
Everything needs to go through the lens of, can someone with zero prior knowledge of accounting look at this and answer the following questions in 15 seconds or less:
1. What is this schedule for?
2. How is it being expensed?
3. When is it due?
Another way of asking these questions is for each of our staff to put every schedule through this lens “Hey, if Buck looked at this, could he understand it in 15 seconds or less? And if not, go back to the drawing board.”
You want to see things quickly and efficiently, you want to be able to look at it and say,
“Okay, what do I need to notice here? Is everything accounted for? What payments do we have coming up?"
That’s what I need, that’s what I want to see in a clear, concise format, laid out month-by-month. When it’s laid out this way, I can immediately know how to plan my cash accordingly?
So, your simple tip for this week is go back and look at your Balance Sheet support schedules.
Focus on those insurance schedules first.
Can you look at them and immediately pick out the key parts of the statement?
If not, ask your team to re-write them, clean them up a little bit, make it clear and concise, so that no matter what, you know immediately what it is for, how much is due, and when the next payment is needed.
By reviewing your balance sheet schedules you will have more confidence in your accounting and your books because you will know immediately where your money is going and how it is being expensed.