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5 Tips For Managing Brewery Financials And Accounting Best Practices

Cash flow can make or break a brewery and its growth plans. Here are five accounting best practices to help you manage your brewery cash flow.

October 4, 2022

You’re not the only one who wants your brewery to be successful. Your friends, employees, local media, neighborhood, and out-of-town guests do, too.

However, a brewery cannot succeed on will alone; it needs the numbers to work out, as well. Brewery accounting is both an essential part of brewing good beer and ensuring the longevity of your business.

Here are five brewery accounting best practices for cash flow management and accounting.

1. Know your cash flows and plan for seasonality or downturns

Understanding and forecasting your cash flows is critical to ensure a long and prosperous future for your business. Start with a rolling 90-day forecast to ensure you have sufficient operating capital to get through your production, inventory, and AR cycles and extend the forecast horizon as needed to plan for seasonality or downturn. 

Action: Build a cash reserve into your forecasted outflows so your tactical cash management plan leans conservatively. This will set you up with liquidity during unplanned, but guaranteed downturns or seasonal ebbs. 

2. Use regular cycle counts to maintain inventory accuracy

Supply chain unpredictability and frequently changing consumer demands have forced breweries to diversify their product offerings. This requires more regular inventory reconciliation to ensure Days of Inventory (DOI) meets demand and that inventory valuation aligns with the reality of sales. Thankfully, mobile technology has simplified the inventory-taking process, giving you access to your data in real-time while eliminating the need to record inventory on paper and manually input that into a computer days or weeks later. 

Watch-Out-For: Save yourself from writing off what should be laid-in inventory costs by working with your production staff to ensure all production orders were entered into your brewery management system prior to your inventory count.

3. Expedite your AR through automation

The days of sitting around and waiting for a check to show up should be behind you. In an industry where cash is critical, the best accounting departments utilize a wide range of automated AR management and payment collection tools to ensure 100% on-time customer payments. 

Action: Improve quality of life at the same time you expedite cash flows by using a payment processing tool. You can eliminate wasted time by collecting payments with flexible, contactless payment solution options like remote check capture, card, or ACH instead of collecting physical checks. 

4. Know your margins like the back of your hand

During times of cost and capacity pressure, it's imperative for brewery leadership to know product margins inside-out, backward, and upside down. Margin by SKU, distributor, segment, with overhead, without overhead, etc. should all be tracked and reviewed regularly with leadership teams to ensure your product portfolio and pricing are optimized for cash returns. Since supply chain volatility is increasing raw material pricing, it’s imperative to stay on top of product margin changes over time.

Watch-Out-For: Be sure to only allocate manufacturing overhead to your product cost which may require splitting expenses between brewery, taproom, and corporate office if you have many shared costs (building, utilities, management salaries, etc.).

Watch-Out-For: Remember to weight overhead based on tank time. We all love those lagers, but styles with longer fermentation should carry a bigger overhead burden. 

5. Remember… budgeting is your friend, not your enemy

Budgets are like weather forecasts, nine times out of ten, they are going to be wrong. That is why what was once considered an annual exercise, should be refreshed more regularly (we recommend monthly) for changing business conditions to ensure company strategies can be pivoted well before it's too late.

Action: Save yourself time and effort by using a driver-based forecasting tool that can dynamically update based on changes to sales, production, or staffing assumptions. If your general ledger system can handle it, track actuals against a budget and forecast separately so you can use changes to your forecast to dial in your next annual budget. 

With the right attention and intention, your brewery can experience positive cash flow which will enable you to focus on other ways to grow at the same time you ensure your guests continue to have a favorite brewery to keep coming back to.

If you’re interested in a modern ERP solution with fully integrated financials that empower your brewery to get the cash flow right and have more time to build your brand, consider looking at our Orchestra Cloud solution. 

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