Best Practice Guidelines for Accounting & Finance

Establishing an organized accounting process is not an easy task, but implementing these general best practice guidelines can help you make sure your operation’s ledger is accurate and up-to-date.

Larry Conner, chief financial operating officer of REGYMEN Fitness, contributed to this article.

To run a successful business, you need to manage a financially feasible business model and keep careful track of all of your income and expenditures. Additionally, monitoring Key Performance Indicators (KPIs) can help you determine what is working and what isn’t—and then adjust as needed.

This article is one in a series of 28 Best Practice Guidelines for Operating a Fitness Facility.

4 Things Your Financial Accounting and Reporting Should Do:

Help owners, investors and managers assess the amount, timing, and uncertainty of cash flows.
Provide information about financial resources and be able to prepare more accurate financial forecasts and budgets.
Allow monitoring and evaluation of company management.
Provide information on a company’s financial performance.

General Accounting and Finance Best Practices

Choose an Effective Accounting System

First and foremost, select an appropriate accounting system (software) relative to the size and complexity of your business. The best accounting software will provide you with the right number of features and accounting capabilities needed to grow with your business and keep things running smoothly.

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Report Your Operation’s Financial Statements

To ensure uniformity, transparency, and comparability, report and present financial results and data according to GAAP (Generally Accepted Accounting Principles) for United States operators and IFRS (International Financial Reporting Standards) for international operators.

Keep Your Business Compliant

Follow all applicable national, state, regional, and local laws & regulations regarding employment, fees, taxes, licenses, and permits required for operation. Legal responsibilities will vary depending on location.

Monitor Financial Performance for Your Business

Consider the KPI’s (key performance indicators) appropriate to your operation. This will allow you to determine operational and financial achievements across your organization.

11 Accounting and Finance KPI’s to Consider Tracking at Your Business

Payroll percentage of revenue. Payroll should include salaries and wages, contract labor, payroll taxes, workers compensation (or equivalent, where relevant), insurance, and benefits.
EBITDA(R) percentage of revenue. This measures operational success. EBITDA and EBITDAR are comparable for facilities with rent and without.
Visits and attendance. Track average visits per customer per week, the percentage of customers visiting at least once per week, and the number of customers that haven’t visited in over 60 days.
Customers, clients, and members. Monitor daily unique customer visits and total customers.
Costs and revenue per visit. Track variable costs (hourly payroll and supplies) and variable revenues (food and beverage, spa services, personal training, and other programs) per visit. Stay engaged with business at hand and costs associated with it.
Attrition. To calculate your membership attrition rate, divide total dropped memberships for the 12 months by the 12-month average beginning memberships.
Calculate your current ratio. The Current Ratio is a liquidity measurement that helps gauge a company’s ability to pay debts due within the next year. A Current Ratio of 1.25 – 2+ is favorable showing enough liquidity to cover current liabilities plus more.
Working capital. Find working capital by subtracting current liabilities from current assets. The difference should be enough to cover an appropriate time of operating expenses.
Non-dues/membership revenue as a percentage of total revenue. (Revenue – Access Dues and Fees)/Total Revenue
Revenue per square foot or metre. You can find this by dividing revenue by square foot or metre of your facility.
Department-specific revenue. This indicates the percentage of total revenue.