You can have a good week behind the bar and still finish the month wondering where the money went. Sometimes trading was weaker than it felt. Sometimes costs were missed, duplicated or recorded in the wrong place.
Regularly reviewing the bank account alongside the profit and loss report is one of the most useful management habits a pub operator can build. It helps you challenge the numbers while there is still time to act. But the two reports need to be connected correctly.
Reconcile the bank, then explain the profit
Bank reconciliation matches the statement with the transactions in your accounting records and explains outstanding differences. The P&L answers a different question: what income and expenses belong to the trading period, under the accounting basis being used?
Under accrual accounting, paying an old supplier bill changes the bank and clears a liability; it should not create the same expense a second time. An unpaid invoice or accrued cost may already belong in the P&L. The aim is a complete, explainable set of accounts, rather than making every bank payment appear as a new expense.
Start with the money coming in
Compare till sales, payment reports and bank settlements. Card processors may pay the bank after deducting fees, while delivery platforms may deduct commissions or refunds. Recording only the net receipt can hide both the full sale and the cost of earning it.
Check cash banking, refunds, booking deposits and transfers as well. A transfer between your own accounts is not another sale. A customer deposit is not automatically revenue for the day it arrives. Ask your bookkeeper to explain the treatment, rather than accepting a number you cannot trace.
Give every outgoing a clear explanation
- Match supplier payments to the right bills and check for duplicates or unallocated credits.
- Review wages alongside employer costs, pensions and agency invoices.
- Check direct debits, card fees, subscriptions and bank charges.
- Investigate payments you cannot recognise, rather than leaving them indefinitely in a suspense account.
- Compare unpaid bills and expected costs with what has actually been recorded.
Some cash movements belong elsewhere in the accounts. Loan principal usually reduces a liability; interest is considered separately. Equipment purchases may be capitalised, with depreciation charged over time. VAT settlements usually move through VAT control accounts where applicable. These distinctions are worth reviewing with your accountant because they affect what “profit” means.
Look for the costs that have not arrived yet
The bank cannot show an electricity bill that has not been paid or a supplier invoice nobody has entered. Check expected bills, stock movements, annual insurance and other costs that relate to more than one period. For an accrual-based management P&L, ask whether accruals and prepayments are needed.
Stock is particularly important in a pub. Purchases and consumption are different measures. A large delivery near month-end can distort your view if stock movements and cost of sales are not handled consistently.
Turn the review into action
Set a short weekly review for new transactions and unexplained differences, followed by a proper month-end review of the management accounts. Track each query, its owner and the date it should be resolved. Compare the resulting margin and overheads with your budget and previous comparable periods.
Correct records do not guarantee a healthy profit. They give you a more reliable basis for finding out why the profit differs from what you expected. Keep a cash forecast alongside them so that tax, supplier and payroll payments remain visible even when the P&L looks healthy.
Agree the detailed accounting treatment with your accountant or bookkeeper. Your role as an operator is to keep asking for explanations until the numbers make commercial sense.
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