Service Accounting (Restaurants, Hotels, and Banks)
Service Accounting (Restaurants, Hotels, and Banks): Core Specifics
Service accounting is the engine behind “intangible” businesses. Unlike trade, your product is “time” or “expertise” or “hospitality.” This means your service costing logic focuses on labor, overhead, and departmental profitability. Whether you manage a restaurant, a hotel (USALI), or a bank—understanding these specifics is key to accurate financial reporting—Digital Salla.
- The fundamental logic of Service Accounting and the “Intangibility” challenge.
- How to calculate Service Cost (Labor + Materials + Overhead).
- Restaurant Accounting: Managing POS, COGS (Food Cost), and waste.
- Hotel Accounting: An introduction to USALI and departmental profitability.
- Bank Accounting: Liquidity, interest management, and provisions.
- Monthly control Checklist + ready-made tools.
1) What is Service Accounting? (The Intangibility Challenge)
In service accounting, the product is consumed as it’s produced. There is no “inventory” of services in the traditional sense. This shift requires accounting to focus on Resource Utilization and Departmental Contribution rather than just physical margins.
- High Labor Component: People are the main cost driver.
- No Finished Goods Inventory: Services cannot be stored for later sale.
- Indirect Cost Allocation: Rent, utilities, and management are often large relative to direct costs.
2) Service Costing Logic: Labor, Materials, and Overhead
To determine the price and profitability of a service, you need to capture three elements:
| Cost Element | Examples | Measurement Method |
|---|---|---|
| Direct Labor | Chef wages, Consultant hours, Teller salary | Timesheets / Hourly rates |
| Direct Materials | Food ingredients, Room amenities, Office supplies | Issue notes / Consumption per service |
| Overhead (Indirect) | Rent, Marketing, Administrative IT | Allocation bases (Floor area / Revenue %) |
3) Service Accounting Cycle: From Transaction to Profitability (SVG)
The service accounting cycle must capture revenue and costs simultaneously by department.
4) Restaurant Accounting: Managing POS, Food Cost, and Waste
Restaurants are a hybrid: they manufacture a product (food) and provide a service (dining). The focus is on Food Cost (COGS) and Waste management.
Customer/Product Profitability - Excel Template
- POS Reconciliations: Matching daily sales reports with cash, card, and delivery app settlements.
- Theoretical vs. Actual Food Cost: Comparing what should have been consumed based on recipes (BOM) vs. what was actually used.
- Waste Control: Daily tracking of spoilage, breakage, or return errors to protect the margin.
5) Hotel Accounting (USALI): Departmental Profitability
Hotels follow a global standard: the Uniform System of Accounts for the Lodging Industry (USALI). The core idea is to separate Operating Departments from Undistributed Expenses.
| Operating Departments | Undistributed Expenses (Overhead) |
|---|---|
| Rooms (Occupancy/ADR) | Administrative & General |
| Food & Beverage (F&B) | Information & Telecom Systems |
| Other Operated Depts (Spa/Gym) | Sales & Marketing |
| Miscellaneous Income | Property Operation & Maintenance |
6) Bank Accounting: Liquidity, Interest, and Provisions
Banks operate under strict regulatory frameworks. Their “inventory” is cash, and their main revenue is the Net Interest Margin.
- Liquidity Management: Ensuring enough cash is available to meet withdrawals while maximizing interest-earning assets.
- Provisioning (IFRS 9): Calculating Expected Credit Losses (ECL) on loans and investments.
- Asset & Liability Matching: Balancing the maturity dates of deposits (liabilities) and loans (assets) to manage interest rate risk.
7) Key Performance Indicators (KPIs) for Service Sectors
Common indicators to measure efficiency and profitability in the service sector:
| Sector | Key KPI | What does it measure? |
|---|---|---|
| Hospitality | RevPAR | Revenue per Available Room (Occupancy × ADR) |
| Dining | Food Cost % | Efficiency of ingredient use and menu pricing |
| Professional | Utilization Rate | Percentage of billable hours worked vs. total hours |
| Banking | LDR | Loan-to-Deposit Ratio (Liquidity indicator) |
8) Monthly Review Checklist for Service Companies
Checklist
- Revenue Audit: Match POS/Booking system reports with bank settlements and digital payments.
- Payroll Allocation: Verify that labor hours are correctly assigned to the relevant departments.
- Overhead Review: Adjust allocation bases for rent/utilities if operational shifts occurred.
- Waste/Spoilage Report: Review variance between theoretical and actual consumption (F&B).
- Accruals: Ensure unbilled services (WIP) and unpaid departmental expenses are recorded.
9) Ready-made Tools for Service Accounting Management
Daily POS and Cash Reconciliation – Excel Template
Essential for restaurants and hotel outlets. Reconciles daily sales with physical cash, card receipts, and delivery app statements.
Specialized Sector Chart of Accounts Library – Ready Excel Files
Includes pre-structured COA for Hotels (USALI-aligned) and Restaurants, allowing you to track revenue and expenses by department from Day 1.
10) Frequently Asked Questions
What is meant by Service Accounting?
It is accounting specialized in companies providing intangible products, focusing on labor costing and departmental profitability.
How is service cost calculated?
Service Cost = Direct Labor + Direct Materials + Allocated Overhead.
What is USALI?
The Uniform System of Accounts for the Lodging Industry—a global standard for hotel financial reporting.
11) Conclusion
Service accounting turns the intangible into measurable figures. By identifying service costs accurately, separating departmental profitability (especially in hotels and restaurants), and maintaining strict POS control, you gain the visibility needed to optimize pricing and resource allocation.