System installations and upgrades have become a way of life in hospitality today. The sheer number of applications available is mind-boggling. Instead of looking at the latest and greatest in cool technology, let’s take some time and think about the core systems your business relies on and how that data is organized.
 

Ask any hotelier what the most important system is and they’ll likely say the property management system (PMS). That’s an accurate answer when it comes to daily hotel management. But accounting staff will tell you it’s all about the back-office accounting system (ERP). And don’t forget the restaurant point of sale system (POS) and sales and catering (S&C). 
 

These four systems are critical to any operation. They help us reach the same goal -- make as much profit with the least amount of cost while meeting guest expectations. Performance toward this goal is measured every month on the profit and loss statement.
 

So why does data organization matter? It’s all computer data. You can build a report to pull the right data and put it in the correct spot. That’s true, but if you’ve ever written code you can appreciate data that starts off in a logical order is much simpler to bring to a final presentable format.
 

Think about an Excel spreadsheet. Having a formula to add up a series of numbers already in sequence is easier than typing a formula that pulls numbers from lines that don’t fall in sequence.
 

Just about any system that uses a series of numbers to identify a specific data point will want to generate a report in a logical order starting with the lowest number and moving to the highest number. If the number has a lot of digits, the sort will always start with the left most digit. It’s the natural order of things.

 

Since the ERP is the end of the road for all the financial data, it makes sense to start here. We all know what it’s like to try to remember the correct general ledger account number to put on an invoice or expense account.  
 

Did you ever wonder who came up with these numbers? And why are they always so long? Well, if the chart of accounts has been designed properly, each segment of the account number has a meaning. When read from left to right, the account should follow a logic that clearly identifies things such as the property, division, department, and line level account. You can also think of it as a serial number that classifies the data into revenues versus expenses.
 

The natural order should follow the general layout of your financial statements. Throughout business, you’ll find that revenue comes first, followed by cost of goods sold, payroll and then other expenses. The summary page follows that logic and so do the individual department pages.
 

So why not have your chart of accounts do the same thing? For most of us, that’s already the case. But you may have to rearrange a few items because of changes to accounting classifications. Think about changes that were made when the latest edition of the Uniform System of Accounts for the Lodging Industry was published in 2014.
 

If you’re part of a large enterprise, you likely have a more complex chart of accounts. I worked for one organization that had 10 different segments in the general ledger account number with a total of 30 digits. Yet the system still saw it as one big number that was sorted naturally. The best part is this sequence followed the profit and loss statement. We also built it so you only needed to remember 8 digits (department and account) when coding invoices. The other 22 digits were part of the classification process.
 

A lot of ERPs will allow you to renumber accounts simply. Others may not be as forgiving. Either way, if it’s been a while since you looked at your chart of accounts and the logic in the segments, you should add this to your to-do list.

 

Don’t stop there. Look at your data logic in PMS and POS. Is there a pattern to the layout of posting codes? Are the room revenue codes grouped in a sequence without other revenues in-between? Does it closely resemble the same order as shown in the monthly profit and loss statement?
 

Standard reports for restaurant and retail POS can also follow a similar logic. When setting up individual POS revenue centers, the most common approach is to start with the three-meal restaurant and other venues, move on to room service, and finish with banquets. Again, this mirrors the order on the food and beverage page of the profit and loss statement.
 

Sales and catering applications are becoming more important as a revenue system. Most will generate a banquet check based on data in the banquet event order. But what happens when you go to print a report showing the day’s actual banquet checks or a look at future forecasts? Setting up logical revenue groupings in the sales and catering system is an often overlooked area. It doesn’t need to be that way, but it takes leadership to bring logic to an environment that doesn’t always come across as logical.

If you’re an IT professional, you owe it to your team to help them understand logical data design. If you’re an accounting professional, you can already appreciate having data in a logical sequence. Now go show the rest of the organization how rewarding life can be when you apply a little logic to the chaos.