Fall sports season is in full swing, and for our nation’s food and beverage chains, it’s a time of high demand and a surge in revenue. However, for CFOs and their teams, this surge in business presents high-stakes complexities. Not only are finance teams managing year-end close processes, but they must also effectively handle increased cash flow from a spike in sales during this season. This requires careful planning and execution, as even a slight mismanagement can lead to financial errors, compliance issues and missed opportunities for growth.
With the food and beverage industry projected to reach $8.9 trillion by 2026, and businesses grappling with risingoperating costs and cash flow challenges, financial close process optimization is more than a compliance task; it's a strategic imperative for long-term success.
By understanding the industry’s revenue surge, exploring current successful financial strategies deployed by major food and beverage chains, and diving into year-end close best practices, leaders in the industry will be well-equipped to effectively navigate a period of revenue influx during year-end close with confidence.
The impact of fall sports season on food and beverage revenue
National stadium events, including regular season and post-season games, rack in substantial profits for the food and beverage industry. For example, beverages have the highest profit margins at stadiums, often exceeding 90 percent. Right outside the arena, tailgaters contribute a staggering $35 billion in food and beverage sales.
Let's not forget about the fans watching at home or elsewhere. The NFL season significantly boosts revenue for the food and beverage industry, as average food items sold on game day Sundays jump by 2%, compared to out-of-season Sundays.
These insights beg the question: as the industry continues to grow, are leaders certain that their financial systems and processes are equipped to handle the increased profit margins during peak periods?
To efficiently manage the upcoming surge in demand for the World Series and NFL season, we can tap into the playbooks of enterprises like Domino’s and Coca-Cola — who have mastered the art of handling high revenue streams during peak seasons — for proven financial close methods.
Coca-Cola’s financial playbook
Coca-Cola is continually swamped by a high volume of financial data. For this enterprise, the complexity of financial processes such as managing thousands of general ledger accounts across various regions can lead to significant inefficiencies. Inconsistent reconciliation methods, fragmented technology use and a lack of standardized procedures across regions can result in time-consuming processes. These include reconciling accounts manually, which often involves hundreds of employees and thousands of hours each month.
To address these challenges, Coca-Cola has turned to technology-driven strategies that automate, continually monitor and standardize financial close processes while enhancing reporting analytics.
These methods have led to the automation of tedious tasks like the reconciliation process. In fact, since Coca-Cola automated their reconciliation process, they've reduced the number of employees involved in the financial close process by over 50%. This shift saves costs and improves the accuracy and timeliness of financial reporting, which is critical during peak revenue periods like the Fall sports season.
The move towards automation and process standardization has also resulted in substantial cost savings. Coca-Cola reported annual savings of more than half a million dollars by reducing the need for manual interventions and streamlining reconciliation processes.
Domino’s game plan
Recognizing the need to adapt to dynamic markets, Domino’s has also optimized its financial close processes to efficiently manage high-revenue periods. With 40 million transactions processed monthly, Domino’s faced the challenge of maintaining financial accuracy, which is time-consuming and error-prone when done manually. To address this, they implemented advanced automation tools that match 99.9% of transactions, significantly cutting down on manual efforts and freeing up financial teams to focus on complex, high-value analyses.
By automating routine reconciliations, Domino’s not only improved the efficiency of its financial operations but also empowered its finance teams to take on strategic roles and support other departments with actionable insights. Now, Domino’s is fostering a collaborative environment where finance plays a critical role in driving the company’s strategy and overall success.
Overcoming year-end close and high-revenue challenges
Coca-Cola and Domino's have demonstrated effective financial strategies for managing high-influx revenue streams. As enterprises navigate increased profits during the critical year-end close period, here are a few additional best practices to consider:
- Comprehensive Financial Review: Analyze revenue, expenses, assets, and liabilities to identify trends and potential issues.
- Reconciliation and Accuracy: Reconcile bank and general ledger statements, correcting errors to maintain financial integrity.
- Financial Record Preparation: Create detailed income statements and balance sheets to provide a clear overview of your company's financial health.
- Regulatory Compliance: Ensure your financial reporting adheres to all applicable accounting standards and tax regulations.
As the Fall sports season intensifies, food and beverage businesses face a unique opportunity to capitalize on increased revenue. However, effectively managing this surge during the year-end close process requires careful planning and execution. By understanding the industry's revenue patterns, leveraging successful strategies from industry leaders like Coca-Cola and Domino's, and implementing best practices for financial close processes, businesses can optimize their operations, improve financial accuracy and ensure long-term success.
AUTHOR BIO
Mark Partin is CFO at BlackLine, ensuring its finance organization continues to drive growth. Previously, Mark served as CFO at global Software-as-a-Service (SaaS) company Fiberlink Communications, and at Headhunter.net (now Careerbuilder.com), helping lead its IPO. He holds an MBA from the Harvard Business School.
