Running a brewery can be a fun and rewarding experience as you experiment with recipes and deliver quality beverages to loyal customers. It may not be the sexiest piece of the puzzle, but brewery accounting is a critical part of effective brewery management. Industry reports continue to show rising costs that outpace beer prices, making it more important than ever to get the financial equation right and optimize your profit margins.
The accounting process touches every part of your brewery. Tracking inventory, optimizing production costs, managing sales, and ensuring regulatory compliance all require a tight handle on your finances. The complexities of each step can also make the accounting process overwhelming when you don’t have the right tools in place.
At worst, your financials can distract from and even harm your brewery’s core business. The good news is that it doesn’t have to. With the right software on your side, you can simplify and streamline your brewery accounting while driving your business toward long-term financial health and success.
The Potential Power of Effective Brewery Accounting
Businesses in any industry need effective accounting setups. For breweries in particular, that setup can become crucial for long-term sustainability and success. That’s because everything in the brewery industry requires keeping your finances straight.
Inventory management is only possible when you know which bulk prices your budget allows. Setting price points depends largely on knowing exactly what your operational costs are. And of course, you also have plenty of reporting requirements that only successful brewery accounting can solve.
When you have the right tools in place, the power of a successful accounting system can be immense:
- Gain full business visibility, from payments and sourcing of your ingredients to storing the recipes of your batch sales.
- Automate the data collection you need for reporting and auditing requirements set by the Alcohol and Tobacco Tax and Trade Bureau (TTB).
- Build a single source of truth for all of your data to keep it accessible for anyone on your team who needs information like cost of goods sold (COGS) and sales.
- Build core capabilities to plan for future inventory costs and product sales with comprehensive data and easily digestible reports.
Best of all, building out your accounting processes means you can improve competencies in areas where other breweries might struggle. That puts you ahead of the game, ready to succeed in this increasingly competitive industry.
Tracking Inventory From a Financial Perspective
Effective inventory management for your brewery has always been vital. Knowing when to reorder ingredients and packaging materials is a core part of keeping the operation running smoothly. In addition, keeping track of your finished beer enables you to avoid any spoiled products getting into the hands of your customers. Of course, it’s vital to keep the financial perspective of inventory management in mind as well.
Industry reporting shows that beer inflation continues to have a profound effect on inventory management. Beer prices are going up, and though the rate may be slower than this time last year, it’s still enough to make managing your inventory costs a necessity.
In other words, as the costs rise higher for procuring new inventory as compared to the inflating beer prices, it becomes more important to keep a tight grasp on your finances for buying those products.
Related: Brewery Accounting Made Easy: Software Solutions for Brewers
Do you know how much the next batch of barley will cost? How about the glass and aluminum needed for bottling and canning? And how will those costs pass downstream throughout your entire production? A software product that can help you with these and related variables can go a long way to ensure that every part of your inventory costs is spent wisely and with the goal of balancing quality with profitability.
Minimizing Potential Accounting Pitfalls in Daily Operations
Rising beer prices aren’t the only challenge in the craft brewery industry. Sales volumes are continuing to fall, making it more important than ever to eliminate inefficiencies in your brewery management processes. While brewery accounting isn’t the only step you can take to build efficiencies, it can play a major role in avoiding potential pitfalls that can otherwise become devastating.
First and perhaps most importantly, the right accounting software can help you avoid data errors that could be costly. Working on outdated spreadsheets or manual paper can lead to incorrect data and calculation errors that make tracking your financial operations more difficult. With a software platform that automates inventory tracking, these types of errors are eliminated or become much less significant.
In addition, the automation capabilities of brewery accounting and management software can become an immense benefit. Records that automatically reconcile with each other can help ensure the numbers line up. You can also account for future costs while making current changes. Finally, automated daily financial reporting can save valuable time, enabling your team to focus on more strategic tasks.
Building a Better Sales Management and Tracking Process
Naturally, building better operations should include the sales part of the process. Keeping track of your sales data helps you better understand not just daily profitability but also how that income impacts your margins. The ultimate result is gaining insights to make further improvements to your business operations and sales.
That’s especially true if you have multiple revenue streams. Selling online has different implications than sales from your brewpub or distributing kegs to local bars and restaurants. Each one requires different accounting, and keeping track of it all can be stressful.
Fortunately, brewery accounting software can help in this part of the process too. It can dynamically account for all your sales, tracking through individual recipe and revenue streams as well as combining them for more comprehensive reporting. Its organization and data tracking enable you to achieve better sales management that plays a central role in improving sales and profitability.
Optimizing Your Financial Reporting Practices for Reliable Compliance
Running reports on your finances is also a major consideration when running a brewery. Accounting software can help through standardized reports that pull in all relevant information to create your income statement, statement of cash flow, and balance sheet to track key performance indicators, such as labor per barrel produced, gross margin, and current ratio.
But that’s just the beginning. Brewing also requires financial reporting to ensure that you follow compliance requirements with state and federal authorities. For example, the Brewer’s Report of Operation is a TTB requirement to track your alcohol inventory and sales. You’ll also find equivalent reporting requirements at the state level. Depending on your production levels, you’ll be responsible for reporting and paying excise taxes as well.
Related: Streamlining Brewery Accounting with QuickBooks: Tips and Tricks
Running these reports manually can take hours every month, and if you’re audited, the time drain can be even more significant. With the right accounting software automatically tracking your finances, you can streamline the process while increasing accuracy to work your way toward achieving and maintaining compliance.
Comprehensive Integrations to Drive Sustainable Success
Don’t underestimate the power and potential to integrate your brewery management and accounting systems. While closely related, both have different requirements that ultimately matter to their own core competency areas. With the right integration, you can ensure that you’re covered on both sides, helping you run a comprehensive and more efficient business.
For example, there’s a reason that QuickBooks dominates the market share among small businesses. Its ability to keep track of your finances and manage your bookkeeping, combined with inherent user-friendliness, makes it a great fit for craft breweries. On the other hand, it’s focused solely on finances, so finding an integration between QuickBooks and a dedicated brewery management system can pay off big time.
The same is true for other integrations like point-of-sale (POS) systems. Key software integrations allow you to build an operations ecosystem that streamlines not just your accounting but your entire brewery.
Take Control of Your Finances With the Right Brewery Accounting Solution
Building a comprehensive brewery accounting system can positively impact every aspect of your business. From inventory management to financial reporting, sales management, and more, you can gain confidence in every part of the financial equation for your business.
Effectively streamlining your operations requires the right system. Harnessing the capabilities of brewery software enables you to gain more control over your finances, which helps you focus on what matters most: crafting exceptional beer that your customers will love.
The next step is finding and adopting the right software. The ideal system becomes a single source of truth for not just your finances but every part of the brewery process. The more focused it is on your specific niche, the better.That’s where Ekos enters the equation. Trusted by craft beverage makers on six continents, our solution is tailored to streamline your business processes. Ready to learn more? Book your demo today to see how Ekos can optimize your brewery finances and operations at every level.
