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Since banking relationships are difficult for restaurateurs, there are times when other forms of financing are necessary. Extreme care must be exercised since it is easy to focus on the cash being received without planning on how the debt is to be repaid. If a restaurateur has a particular need that is of a very short term nature, possibly a seasonal shortage of funds, or an unexpected expenditure, the option of pre-selling credit card receipts can be useful. While it provides quick funding, it must be kept in mind that it is an expensive process and even more importantly, future cash flow will be hampered by having sales for which minimum cash is received. A plus, of course, is if the program generates new customers for seats that may be otherwise empty. So, it really has to be planned and thought about carefully.
The information given is provided for general, non-specific educational purposes only, and should not be relied upon as advice relating to your specific circumstances. For company-specific advice, consult directly with your tax advisor.
James Conniff is the Managing Partner at Bacall & Conniff, P.C., a full service CPA firm that provides industry specific accounting solutions for restaurateurs. Their services include: Weekly flash reports, Monthly financial statements, Web-accounting, Optional bookkeeping & payroll services, and Comprehensive tax & advisory services. They can be reached at 617-367-3250.
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Finance 
