The evaluation of business performance always starts with an income statement. An income statement tells the story of a company for a given period of time — and is one of the most important financial statements because of its indication of profits and its classification of revenues and expenses.
For casinos specifically, income statements — when compared to budgets — can be used as a tool to empower leadership to make informed decisions for their operation. For example, if revenue is less than budgeted, leadership can take action to pivot and boost revenue, whether it’s with an impromptu event, general play promotion or high-value customer loyalty promotion. Income statements can also allow leadership visibility to see where they can cut spending if expenses are greater than departmental revenue. The underlying point here is that the greater visibility leadership has across all departments in the casino, the more informed decisions they can make for the enterprise.
The Consequences of Manually Creating Income Statements
For many casinos, the process to create an income statement is tedious, manual and not detailed. Plus, if they are a multi-location enterprise, the data integrity can be poor. Daily sales numbers are hand-keyed into manual journal entries for posting to the general ledger, but this is only after revenue audit has completed their daily audit. At best, this results in a one- to three-day lag.
We often find that accounts payable is hand-keying invoices and expenses into their software with no way to digitally track the actual document at the transaction level. Finally, the month-end close process must happen in order to complete monthly entries. This involves the review of financial statements and transactions by multiple staff and the manual process of redundant reconciliations.
As a result, it’s not uncommon that department managers aren’t seeing their monthly financials until 8-15 days after month-end, which means the only way to make business decisions is reactively, not proactively. By then, half of the current month has passed, and at best departments can make a push for the last week or two of the current month based upon stale and un-detailed financials.
Without any automation, each department within a casino is forced to devote significant time and resources each month to create income statements. This results in a very inefficient process and also puts the casino at greater risk for inaccuracies in their data since everything is manually entered.
How Automation Streamlines Income Statement Creation
The traditionally manual process of creating income statements within casinos presents an incredible opportunity for casino-specific accounting software to streamline every aspect. Below are three key ways casino-specific accounting software such as CasinoEdge (powered by Sage Intacct) streamlines income statement creation:
1. Greater Accuracy
Perhaps the most significant impact on a gaming organization when making the change from manual processes to automated processes and controls, is eliminating the presence of data risk. With data being hand-keyed into systems and manually consolidated from multiple sources — often multiple times by multiple people — the likelihood of mistakes being made is inevitable than when compared to an automated process through integrated audit-ready software solutions.
Assurance that the data is delivered with integrity is not the only benefit here. By integrating the feed of this type of data into the casino GL system, leadership gains deeper insights at the individual transaction level, with supporting documentation. In turn, managers can have greater confidence in the accuracy of the data, and each department is able to dissect their own P&L and better assess true department performance.
2. Numbers Are Posted Instantly
With casino-specific accounting technology, there’s no lag time between revenue audit completion and the posting of revenue or daily sales figures. The daily flash report becomes an impactful exercise.
Everything is posted and created at the time of request, ensuring that revenue and expenses are instantly reviewable. Month-end statements are also streamlined by the use of integrations and recurring journal entries. The automated posting of bank reconciliations is a system process viewable daily.
As a result, duplicate entries are removed form the equation, saving employees valuable amounts of time throughout the financial statement creation process.
3. Enhanced Visibility for Better Decision-Making
A manual income statement process can drag out more than two weeks into the next month before impactful final information is available to leadership. Consequently, decisions are made reactively.
On the other hand, leveraging casino-specific accounting technology to automate the process helps to create instant income statement visibility across all departments.
Automation allows for data to be posted quickly for each department and streamlines the process — meaning financials and performance data are able to be pushed out to key stakeholders for every department. This access to real-time data presents a more accurate visualization of how each department is performing in the present, rather than 15 days in the past.
With this real-time data at the fingertips of department managers, they’re enabled to make more informed, proactive decisions that will ultimately position the casino to pivot for short-term gains and achieve long-term sustainable success.
This content was originally posted here.