As financial stress continues in hospitality, Josh McNicol of operating system Zeller shares the financial pitfalls of business vs cashflow.
A pub full of punters doesn’t always mean a healthy balance sheet. Across Australia, many venues are seeing strong trade but tighter cashflow as rising costs and thin margins reshape the economics of hospitality.
In the throes of a recent rate hike and rising costs, Australian food service businesses have the highest closure rate of any industry, with CreditorWatch reporting one in ten venues closing in the last year. While pubs have been more resilient than some hospitality segments, operators are still feeling the impact of rising wages, supplier costs and higher borrowing costs.
Even busy trading periods can add to that pressure. To prepare for peak trade, pubs often roster additional staff, increase stock orders and extend operating hours before the revenue from those nights lands in the bank. That lag between rising costs and incoming payments can leave venues managing tight cashflow, even when the bar is full.
Margins are also thinner than many assume, making the timing of payments crucial. Data shows 12.4 per cent of food service B2B invoices are running more than 60 days overdue, compared with 5.9 per cent nationally, suggesting many venues are stretching supplier payment terms simply to keep operations running.
Late payments are a persistent challenge for many small pubs and bars. Data from financial operating system Zeller shows invoices paid online are settled up to seven times faster than traditional bank transfers, highlighting how payment timing can have a direct impact on working capital. Zeller is a financial operating system that connects payments, POS, accounts and cashflow into one system, giving businesses a single real-time view of their money.
Pubs are particularly exposed to unique industry pressures. Beverage-heavy inventory, weekend staffing spikes and event-driven surges tied to sport, public holidays and local events can create sudden jumps in demand that require significant upfront spending.
In response, many operators are becoming more disciplined in how they manage cashflow.
Closer monitoring of daily cash inflows and outflows, tighter stock forecasting and ordering, and stricter management of supplier payment terms when invoicing are increasingly common strategies during peak trading periods.
Beyond that, upgrades to cashflow monitoring enable publicans greater visibility if and when issues arise, reinforcing how critical cashflow visibility is to business.
Busy nights remain essential to the viability of Australia’s pubs, but in today’s operating environment success is no longer measured solely by how full the venue is.
For operators navigating rising costs and tighter margins, maintaining profitability has become just as important as customer volume.
